COMMENT In her editorial this past weekend, EG’s editor asked how U+I should respond to our experience of these difficult economic times. In doing so, Sam raised a question that all of us in our industry should be thinking about – how do we adapt our business models to survive the pandemic and its economic effects, and deliver the kind of places to allow others to do the same?
All of life happens in and around property. Other than in the wilds of the open countryside, there is no part of our lives that is not housed, contained or delivered in property or the spaces we create and manage around it. Consequently, as investors, developers, builders and custodians we have an enormous responsibility to deliver places that work. We are not here simply to satisfy our own demands, only those of the people we build for. The result, of course, is that if we do it right then everyone benefits and there is profit to be made for us, our shareholders and those who work for us.
Investors in infrastructure
When times are hard it is even more important that we understand what our customers need to underpin our ability to survive. Look around our industry now and you’ll see huge amounts of good work being done in productive collaboration between developers, occupiers, communities, and local and national government. It is at times like these that government particularly comes into its own as an investor in infrastructure to unlock private sector investment. This is no time for us to retreat into isolated self-interest, but a time to do exactly the opposite – to double down on understanding the market’s needs and adapt what we do swiftly and profitably to meet them. Together.
This is what we’ve been doing for the past 10 months. I said in our interim results presentation last week that we came into this pandemic facing some challenges. But we’re coming out of it strong. And I know we’re only doing what many of our peer companies are doing – keeping our heads up, our eyes looking out and adapting to what we see on the horizon.
But far from characterising what we need to do as an industry as drawing in our horns and seeking lower-risk activity, I believe now is the time we should be focusing like a laser on what sets our companies apart, explaining what we do with greater clarity and precision and rallying our troops to deliver with even more pace, clever risk management and careful cost control. For us it’s about thoughtful, inclusive, sustainable regeneration projects that create the environment needed for communities, business and local government to thrive, and the opportunity to create consistent and superior returns for our shareholders as a consequence.
In his book Do Purpose, entrepreneur David Hieatt describes how to build a unique business that drives shareholder value through clear purpose and behaviours. He says this is particularly effective in times of economic strife, when it’s even more important to develop a competitive edge. He argues that dull, purposeless companies have little to compete with other than price. And that has only one consequence for the quality they can deliver and the value they can offer their customers – a negative one. Great companies that deliver what their customers and investors want inspire confidence and loyalty – and their bottom lines benefit.
And so, what must we do to make sure we not only survive this pandemic but thrive for the long term? As well as clear purpose, business overheads are crucial. As Sam pointed out in her editorial, at U+I we have spent a great deal of time cutting our cost base. We will move from our beautiful office which has done so much to define the values of our business – not just in how it appears to those who visit, but how it facilitates the creative work our team does. But that’s alright. We need a smaller office for our reduced team, and one that will work for a new, flexible work from home set-up going forward. It doesn’t mean we’ll have a less exciting workspace, just a less costly one. As Hieatt points out in his book: “Smaller budgets require great ideas and great ideas cost no more than rubbish ones.”
Constant progress
Across our industry we will also have been looking hard at our portfolios. I have just kicked off a 100-day review of ours. The purpose is not to change what we do, but to focus on what we do best and lose everything that gets in the way of us working smarter. Everyone in our industry should be asking the same right now. What do we do best and how do we ensure we can do it better? The easiest way is by removing the distraction of projects that don’t fit a clear analysis of your company’s values in action.
For us, that inevitably has meant the consequent loss of some colleagues. It’s always difficult to lose hard-working people you care about. But we have taken the tough decisions and that process is all done for us now. With those people who can remain and all of those who serve our industry as members of our professional teams, now is the time to hug them close, inspire them to do the cleverest work they have ever done and look after them. It is those people who will be the make-or-break factor when times are really tough.
Anita Roddick, the inspirational founder of The Body Shop, wrote a book in the 1990s called Body and Soul that told the story of her extraordinary business success. Its first line is “I hate the beauty business”. Now, of course, she didn’t hate the beauty business at all – she just had an issue with how it was traditionally done. She thought it didn’t deliver what women really wanted, so she set about doing it differently, and to great financial success. I have, at times, been a tough critic of the ‘way things are done’ in our industry. Sometimes that has been misunderstood as being different for different’s sake. What I have tried to argue is that maybe we should learn from great business leaders like Roddick who knew instinctively what her customers needed and served it up with great confidence and passion. In times of economic difficulty this delivered the cushion against risk of huge customer loyalty and demand.
We have huge challenges ahead of us as an industry, but we are also uniquely placed to take advantage of opportunities to work together in pursuit of what our country needs for recovery – huge and sustainable socioeconomic growth. The safest thing we can do for our businesses and the shareholders who invest in them is, like the new president Biden, to focus on our purpose, remind ourselves every day what we’re good at and deliver it single-mindedly without distraction.
Richard Upton is chief executive at U+I
