What is your recovery modus operandi?

June 23, 2010

Nobody’s perfect. An old adage that is time worn, tested and true.

In a service industry like ours, there is a term called “recovery” that deals with the approach to corrective action you take in the face of adversity. First of all, you should never assume you are going to be mistake proof. No matter how much you plan, prepare or prognosticate, we are, at our core: fallible, human.

The key: How, ultimately, we communicate and then correct the inevitable error?

Recently, I was having lunch at one of my favorite Detroit-area restaurants, Bacco, when a member of the staff realized they had made a mistake with my meal. The very minor faux pas was immediately acknowledged, apologized for and, further, the “corrected” fare was provided to me as a carryout. I was, in turn, appreciative and look forward to many return visits.

How Bacco handled things is absolutely how Dover and our property management arm, Paragon Properties, LLC., approach “recovery.” First and foremost, we are very conscientious about how we serve our customers and property residents. Our clients know that we will do whatever it takes to serve them to the greatest extent possible. And, when we do make a mistake, they also know we will communicate to them with transparency (not try to skirt the issue or “cover our tracks”), apologize and inform them as to how the problem is being corrected. (Then, we do what we say we are going to do).

All of this said, we are forever focused on making sure mistakes do not occur and that if and when they do, we are learning from and avoiding them in the future. That, in turn, builds trust, credibility and a reputation of integrity—vital components for retaining and attracting residents and customers.

Creating a sound decision-maker

June 2, 2010

As a mentor who has helped develop executives over the course of my career, I have always stressed one major aspect of the job: competent decision making. After all, one poor decision can send a company crumbling while good decisions can lead to expansion and increased profitability.

In the beginning, young executives in training need an explanation of how and why certain decisions are made. In time, they should be allowed the latitude to begin making business decisions. I like to inquire as to the process they went through to get from point A to B. Did they consider all pertinent factors prior to making that decision, including the possible impact one, two or even five years from now? I don’t second-guess the choices made; rather, we discuss the rationale and thinking involved, which is important in promoting confidence and understanding their thought process.

Anyone can make the “right” decision, by accident or even luck, but examining the process will help you decide whether or not you’ve got a true leader on your hands. The process is equally important as the outcome. Your budding executive should also understand the business from the ground up and how their decisions affect those in the organization.

Taking a Zen-like approach to business helps decision making as well. This style allows you to take a step back and see the whole picture, one where you must accommodate for personalities, organizational evolution and the long term impact of your decisions.

Mentoring that next generation of decision makers is both rewarding and vital to the future viability of any organization. Search for that person who enjoys being in a team environment but is also comfortable in a decision-making role.  Most important, find that person who exhibits good common sense and strong judgment and you’re almost there.

Decision-making in business

May 26, 2010

I’m a big believer in having minimal layers in business. It helps to eliminate “red tape” and ensures operations run smoothly. Too many layers tend to slow down decision-making and decrease efficiency.

If you need group meetings to make every decision, you should re-think your business plan. Meetings should be for information gathering rather than decision making. You gather 75 to 80 percent of the information from a meeting or sources, and the rest is strong business intuition. Think Lee IaCocca or Jack Welch, guys that made intelligent decisions based on a combination of information and intuition. Consider some of these great IaCocca quotes.

Ideas for discovery, change and improved efficiencies should come from the bottom up. Decisions regarding compensation, benefits and major structural changes in an organization and the like are made at the top and distributed throughout the organization.

A good decision-maker has great instincts, can cut through the noise and not get distracted. They understand the weight of a decision and its short and long term implications; appreciates the potential unintended consequences of any significant decision; and appreciate the fact-finding and information-gathering process. They also take into account the “top-10 percent influence”, which tells us decisions involving PR, crisis management and financial issues should be made at the very top, by a competent CEO. But don’t underestimate basic common sense and good judgment.  They’re the foundation of any good decision maker.

How do you and your company make decisions? Does the process work, or do you need to reevaluate processes and outcomes?

Contemplating Michigan construction cones, zones

May 19, 2010

On a lighter note this week, you know its spring when both the trees and the orange barrels start to bud.  Of course, the former is eagerly anticipated while the latter seems to become more and more frustrating and confusing with each passing year.

Even with the recent availability of stimulus dollars, municipalities, counties and the state are fiscally challenged.  You would think, then, that there would be more method to the madness aimed at greater efficiencies.

Travel to states west and northeast and you will see more roadwork at night. Worker overtime is involved, but overall productivity also increases when minimal late-night traffic and delays allow large stretches of roadway to be completely shut down. My office is on Telegraph Road in Bingham Farms in the midst of a construction zone that limits travel for many miles both ways. Why not smaller stretches at a time?

And what is the rationale behind simultaneously closing or limiting traffic along parallel routes? Why not coordinate and consolidate? Focus resources so that they don’t compete but, rather, get completed in a more time-effective manner without throwing a metropolitan area in a state of gridlock. Such methodology might also work to ease some of the financial duress on businesses along throughways embattled by roadwork. High-profile, advance notice can also make a difference. Remember “Dodge the Lodge?” You knew what areas to re-route around and, thankfully, alternatives I-75 and I-96 were not similarly plagued.

Here’s another one for you: Work on Orchard Lake Road in front of West Bloomfield High School is currently wreaking havoc on a zone already known for its bumper to bumper traffic. Isn’t school out in just a few more weeks?  It would seem some of those involved are already “out to lunch.”

Getting a fiscal house in order

May 12, 2010

Of vital importance in running a big city, as I mentioned last week, is getting finances under control and balance sheets resonating black. Unfortunately, the City of Detroit has operated far too long without a proper system of checks and balances and without city officials working in the best interests of their constituents. The City needs to run more like a business. Mayor Bing is trying to accomplish just that.

Take, for example, bus routes in the City. While there is no denying that public transportation is necessary and often lacking, there also exist many routes that travel where very few people live. Mayor Bing is now trying to make the tough, unpopular decisions that must be made to not “downsize” but rather, “right size.” There is simply no way around it.

If such moves are not enacted, the only alternative I see for the City is receivership. Bonds have helped Detroit Public Schools recently, and can help the City as well. But it’s only a temporary fix to a problem that has plagued the City for far too long. Because of Detroit’s tentative financial condition, its credit rating has been reduced, bordering on “junk” status. Hence, some past bond issues not sold out or future bond issues will cost the City much more due to having to pay bondholders a much higher interest rate. Investors see a much higher risk of bond defaults if the City does not get its fiscal house in order.

Mayor Bing recognized that increasing taxes is not an option. Detroit already has significantly higher property taxes than elsewhere in the state. Raising taxes will only exacerbate the problem of suburban flight.

Instead, the city’s return to profitability will be predicated on attracting a larger population of those living and working in the city; Rock Financial’s pending move to Detroit is a step in that right direction. Prudent cost cutting, including the “right sizing” of some services must also continue.

Bottom line: Detroit must operate more like a business; getting its fiscal house in order to increase its bond rating from “junk” to investment grade and create a climate which is an incubator for new business

Best practices

April 27, 2010

Every business has an unspoken set of basic rules and guidelines. We’ll call them best practices – basic fundamentals that can become pillars of success. Listen, learn and plan before taking action.

The same principals have applied for years in our multifamily business with any upgrades we perform. Customer comments and suggestions often then become trial programs; our version of R&D, to improve resident life and our communities overall.

And let’s not kid ourselves here. Our goal is to rent as many apartments at the highest possible price to net the best bottom line. The only way to do that is to listen and relate to your customers, providing them with the best resident/customer/living experience possible. Although we rent apartments, we’re still in the service industry.

So going back to R&D – at Dover Realty Advisor-managed properties, we take customer suggestions and our own thoughts, and pick specific sites to implement trial programs. This can range from anything to new technology upgrades to interior design improvements aimed at surpassing our customers’ expectations; ideally, providing them with amenities, services and conveniences they cannot find elsewhere. When we find a successful plan and work out the kinks on the micro level, we can then apply it on the macro to additional properties.

In the end, we focus on the bottom line while driving top-line revenue through a positive customer experience, mindful all the while of budgets and overall profitability.

Quality people = Quality product

April 20, 2010

What’s the old adage: You’re only as good as your people? There is much truth to that time worn belief.  Personnel decisions are often the hardest to make within a company, but also the most important. Who you choose to run and work with your business can contribute directly to your successes or failures. But with your plate already overflowing with responsibilities, how can you also ensure the right people are on your side?

First, you need to start with defining roles. Are you looking for the particular individual to be an operational driver or passenger? Both roles are important in an organization, but asking that simple question up front can eliminate potential internal conflict when a new team member is brought on board, including that associated with expectations.

Second, does this person want to be a part of the team and contribute (a career) or are they looking to go through the motions (a paycheck)? Surprisingly, this is a more difficult question to answer, as resumes and interviews can only reveal so much about one’s work ethic.

Lastly, trust your gut. If the stars align but something doesn’t sit right with you, it’s ok to pass.  Great team members often have a certain look in their eyes or a particular demeanor. They’re driven and want to succeed. They want to win every time they’re set up with a challenge.

Unfortunately, no perfect formula exists for selecting the perfect team member. Experience often evens the odds of getting it right.  Yet, the above steps give some insight for ideal qualities, with the third point sometimes being the most difficult to follow.

Bottom line – know your team and who will fit with them, and whether you need a passenger or a driver to augment that team. Too many drivers and you’re headed off the road, but too many passengers and you’re not going anywhere. Find a good mix, and with the right guidance and support at the top, more often than not, you’ll find yourself on the road best traveled.

The Era of the great Operator

April 12, 2010

As I mentioned previously, finding a great operator is essential to enjoying success, regardless of economic realities. Operating, managing and leading multi-family real estate investments for 30 years, I’ve come to know a few things about keeping a great operation going.

Other real estate professionals from around the country, also feeling the real estate pinch, ask me how I survive in the real estate business in Michigan; what my secret is. My response? Overcome the war by winning the daily battles. Put another way: sweat the small stuff.

We are in the era of the great operator. The person or persons who run your operation(s) is much more important to your business than ever. Tech upgrades no longer help you stand apart. High-speed Internet, unless it’s Google Fiber,, cable TV, flat-screens – they’re everywhere. The customer experience and interaction, set by the operator, is once again the rarest and most unique of commodities. You distinguish yourself today through service, service, service, not bells and whistles and smoke and mirrors.

Everything else is truly secondary. A great operator can make a mediocre asset perform in outstanding fashion. On the flip side, a mediocre operator can ruin a great asset. At the end of the day, the battle is no longer between properties and amenities, it’s about the whos, whats, whens and hows of the operator, and the best operator/operation always wins.

At Dover Realty Advisors, we survive by doing what great operators do – rolling up our sleeves every day, going to work wanting to be the best, never resting on yesterday’s successes, knowing how and when to react, and understanding that change is sometimes necessary. I also work hard to find the right people and instill these same values in them. More on that next time.

Are you a Driver or Passenger? A primer for effective real estate investment management

April 5, 2010

In the last several years, investment real estate in Michigan and the Midwest in general has suffered, which is not breaking news to anyone. But when I sit back and think about why, I feel it’s beyond the simple excuse of a “bad economy.” Rather, investment is suffering because of a lack of what I call “great operators.”

In economic downturns, great operators can produce significantly better investment returns then those of mediocre competitors.  Great operators are “drivers” of value while mediocre ones are “passengers;” they choose to sit idle and allow market conditions to be the determining factor for success or failure.

Ten years ago, it was easier to produce favorable investment returns as the strong market pulled everyone along including the “passenger” operator.   In today’s environment, the “passenger” attitude—where one accomplishes marginal results at best—won’t cut it, at least not for long. Those who are “drivers” continue to learn, improve and employ best practices, those practices built on a strategy of constantly maximizing investment value.

The current economic climate has emphasized the need for the great operator.  The key in an economic battle is to recognize great operators and provide them the platform to perform.

I’m reminded of Warren Buffett, the great investor and businessman, who stood by several tenets when entrusting companies with his money – invest in businesses you understand, never invest in the average company, and target the great operators, those who are on top. Because when the average drops, the great operator will fall slightly, but still be ahead of the curve.

Now how do you find a great operator? We’ll continue to discuss that in later posts. Meanwhile, thanks for reading, be sure to drop by again soon.