4 Things Your Competitors Can Teach You About Real Estate Development
When we look at the world of entrepreneurs, innovators and visionaries, it is rare to see someone who first completed a business degree. Indeed, many came to success from either a sciences background (think Akio Morita, the co-founder of Sony) or no qualifications at all (eg Richard Branson). They learned more by making mistakes and moving on. To underscore this point, Morita wrote a book in 1966 called Gakureki Muyō Ron (“Never Mind School Records”) in which he stressed that one’s performance in school is not necessarily an indicator of success in business.
One of the key takeaways from this book is that he wasn’t a big believer in market research, but rather, suggested to carefully observe others and get an intuitive sense as to what might work. He noted that, like children, we all learn by imitating and then as we grow up we combine what we have learned with what we have intuited and apply this to our own success. He was also quite humble and believed that if you go through life convinced that you are the only one who is right, then the best ideas will pass you by.
Applying these then to real estate development, it would appear there are some lessons we can apply, the first being to see what others are doing and learn from them.
What are these common lessons?
I’ve had the pleasure of working with several successful developers in the last couple of years. We’ve been through every stage of the process—creative conceptualization, finding the right partners, navigating local laws—and I have noticed four solid traits that good developers share and which could be imitated.
1. It’s Not All About Money!
Sounds counterintuitive, right? After all, the whole purpose of real estate development is to hit on a project that makes a dollar, whether by selling the property or earning revenue. The really successful developers I’ve seen though have nothing against money—but they don’t let it rule their creative vision! First comes a strong conceptual framework, then comes the tireless push to make it real. If the vibrancy of the idea is maintained, profit tends to follow. If the idea is compromised, then so is the profit.
2. Flexibility is Good
Successful developers do have strong ideas and they work hard to see them through. At the same time, they are not rigid or uncompromising. Like a modern bridge or skyscraper, they are flexible enough to move when the ground shifts beneath them. It may be necessary to forfeit certain elements of the original vision, either for technical or commercial reasons—but good developers find a way around the problem. Their willingness to consider alternatives often allows them to match or even exceed their original ideas.
(If you’re not convinced, and have a few hours free, check out this Cambridge University Doctoral Thesis on the importance of flexibility on real estate development!)
3. Good Advisors Make a Difference
So much of real estate development is networking with the right people, knowing the rules, understanding how to get a deal through and working hard to bring an idea to fruition. The best developers don’t try to figure everything out on their own. They create the vision, but then assemble a solid, trustworthy team around them—people who understand the vision, and the tricky aspects of making it happen in the real world. And then they stick with them.
4. Patience Is a Virtue
A real estate developer who expects to carry off a project without a single bump in the road will almost surely have a miserable time of it. Every State in Australia (and every place in the world, actually) has its own unique way of bringing delays and unexpected problems to development projects. The key is to anticipate as many eventualities as possible—and when the unexpected does arrive, not to panic! Governments and laws can change at local, state and national levels. Countless other snags can be encountered. What good will hot-headedness and rash decision-making do? Not much. Good developers keep their heads about them and stay cool under pressure. This is an area where expert advice comes in handy. Having the right people involved allows the project to navigate obstacles and keep moving toward the desired outcome.
Akio Morita said there is no secret ingredient or hidden formula responsible for the success of the best companies,but if we can put our egos to one side and learn from others, we are a good step ahead of the crowd.
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