The CoreNet Global European Summit attracted nearly 300 senior-level executives to Lisbon's Le Meridien Hotel. A panel of leading practitioners from Europe designed a diverse programme around the theme of 'New Maps for Real Estate: Europe's Expanding Reach'.

'The Lisbon Global Summit explores real estate perspectives on Europe's expanding reach to cultures, markets, businesses and partners in the Middle East, Africa and other locations,' Dr. Prentice Knight, CoreNet Global CEO, commented during the Opening Session. Knight also announced the selection of London as the host city for the 2007 European Global Summit.

What will be the modern New World version of globalization? Portugese explorers like DeGarmo and Magellan gave us the earliest definitions.

Perhaps she is a Ferdinand Magellan - exploring, then mapping, the reality behind an idea called responsible globalization.

Like the storied Portugese explorer and discoverer, Dr. Noreena Hertz outlined a new map for the corporate real estate industry to follow in her opening keynote presentation to the CoreNet Global European Summit.

The former free-market advisor to Boris Yeltin's economists tied the meeting's theme of "New Maps for Real Estate: Europe's Expanding Reach" beyond Europe by focusing on a dramatic power shift that she began tracking more than five years ago.

Hertz, an author and political economist, told the audience of almost 300 industry executives gathered here that the power, trust, influence and credibility of governments worldwide is waning fast.

"More people vote for who's going to stay on 'Big Brother' (the reality TV show) than in government elections," she quipped, obviously stressing a key indicator to the growing leverage that globalization of commerce and industry is having on the world.

Multinational corporations hold increasing sway over governments worldwide, political economist Noreena Hertz advised in Monday's Opening General Session keynote presentation, advised political economist Noreen Hertz. Responsible globalisation practices by corporations could help determine a new world social order, Dr. Hertz outlined.

Her research confirms the anecdotal evidence: Voter turnout is down and getting lower in most democracies, and more people are voting with their wallets at the supermarket or with their stock portfolios at annual shareholder meetings, she reported. The reason is growing apathy and distrust toward elected leaders.

"People's trust in politicians started collapsing," Hertz observed, when government could no longer address voters' fear of losing control of their local environments and economies. The collapse in trust is being fueled by globalization issues such as climate change, social injustice, global economic inequality, and even obestity. Global issues have emerged and overtaken local or national issues, and politicians are largely unable to solve them.

Adding to the quandary are governments known for human rights abuses.

That's why we are seeing more popular support for world "causes" and the groups associated with them. These include Amnesty International, Greenpeace and Oxfam, which are winning higher approval ratings than governments and corporations combined, Hertz pointed out.

Their impact is becoming appreciable. Hertz offered the example, however ironic, that Greenpeace is advising the Chinese government on environmental matters.

Not since major social movements such as anti-slavery or women's right to vote has there been such a pronounced influence of special causes on societies and economies, she added.

Hertz offered a globalization scorecard of sorts showing survey results with a 76% trust level for Amnesty International compared to 27% for any political party, 35% for Coca-Cola and 27% for McDonald's. Groups like Greenpeace represent one of four "key forces" shaping the future of corporate globalization, a category she defines as "Activists."

"Morgan Spurloff, who produced the film 'Supersize Me,' made it the fourth-biggest grossing documentary in history," she related. Al Gore's new film on global climate change, 'An Inconvenient Truth,' is also setting box office records for this new social genre of film, making the former U.S. Vice President an example of a new leading Activist.

Aside from the Activist category, Hertz identified three other key forces: government; political shoppers and employees. Governments can do more to address globalization. Political shoppers will boycott a company whose products are made with questionable environmental or labor resources. And employees can affect a global corporation's reputation.

The tipping point between acceptance and potential rejection of globalized products and services is that workers increasingly identify with the companies they work for in a positive way if that employer is doing something that has social benefits, whether it's reflected in its business model, workplace practices, commitment to the environment, giving back to communities, or in some other manner. No doubt the Gates Foundation, now the world's largest charity, is a good example of bridging corporate wealth and global reach into community reinvestment.

"Employees don't like working for bad companies, especially when the feeling of community and society are more elusive than ever before," Hertz said. Companies benefit too, because they attract and retain more talent, thus minimizing turnover costs.

Governments are now operating in a "politically emasculated environment," as Hertz described the evolutionary impact of globalization. "It's the fourth force shaping this new global 'tension,' not only because of what government is failing to deliver but what it's demanding."

There are more and more companies that are increasingly supplanting the purpose and services once delivered reliably by the public sector. Basic infrastructure like water and power are often provided by corporations expanding into emerging markets located in poor, remote regions, for example. Corporate support of communities even extends to schools and health care, Hertz added.

For corporations that understand how to responsibly globalize their operations, the opportunities to influence markets and societies are actually quite enormous. Rock super star Bono has launched his "Red" meta-brand, and companies like American Express and Nike are buying into the formula through which a percentage of sales revenue goes to causes including AIDS eradication in Africa.

In this manner, global companies can gain a share of another form of emerging markets, the support of socially- and environmentally-aware customers and consumers. At the same time, enterprises engaging in socially responsible globalization are moving up on people's 'most trusted' or 'can be trusted' lists. Hertz cited Goldman Sachs, Standard Chartered Bank and Kellogg Corp. among the list of the more enlightened global operations embracing this still-relatively new concept.

"Smart companies are investing in understanding this new environment, and how to manage within it," she commented.

Referring to the CoRE 2010 triple bottom line of sustainable business models, she advised that by being more progressive, global companies "reduce their own risk, increase their own reputations and enhance their profits."

This transformation isn't limited to companies. It also includes institutions. "Seventeen U.S. pension funds recently confronted ExxonMobile on climate change," Hertz told the CoreNet Global audience. "The Norwegian Petroleum Fund, the world's largest of its kind, has hired an ethicist."

Yet government itself still has chance to reinvent itself. Hertz remarked how Britain's conservative party recently "rebranded itself as the 'Green Party.' There's not a government in the world that can ignore green issues."

In closing, Hertz asked the audience of business executives, "How creatively are you thinking about the legacy you can leave?" She paused, adding, "Don't confuse my ambition for you as a utopian vision. Hope is not a lottery ticket, it's an axe we wield to affect change. It's a call for action for each of us to take responsibility for the kind of world in which we live."

It will be a new world view, as drawn by the likes of a Magellan himself.

The panel on Navigating Needs at Record Speeds was an interactive demonstration of JCI's Solutions Navigator needs assessment game/tool. JCI's Annie Corrway facilitated the playing of the Monopoly-like board game that actually provides for comprehensive data input, while moderator Jeff Elie of Kaplan, Inc., works the flip charts.

The new maps for corporate real estate, as Dr. Prentice Knight, CEO of CoreNet Global, remarked during his welcoming remarks for the Lisbon Summit – are being drawn, and each individual and organisation holds a different vantage point on the important boundaries and lines. Geographic, cultural and business perspectives govern our view of the world and the solutions we bring to corporate real estate. The challenge is to identify those specific differences, address them and ultimately provide better solutions.

Johnson Controls presented an engaging, interactive and compelling methodology to find the specific differences in perspectives that determine our perspective on a given solution. The Solutions Navigator^TM starts with a simple game board by which participants rate their level of satisfaction and perceived importance to a series of questions relating to facility management. Taking about a half-hour to complete, many interesting discussions come up even as you attempt to answer the questions. Once completed, a data set is collected. The process concludes with interesting visual charts (or even maps) to express these differences in perspectives. Differences begin to appear: service providers rate topics such as workforce productivity higher than do end users, who focus on tactical concerns. This might prove to be useful feedback for a service provider positioning their company as a high-level solutions provider, where their clients are looking for their assistance in meeting budgets, timelines and solving day-to-day challenges.

The comparison doesn't need to just be between service providers and end-users, we also looked at data comparing the results geographically from past CoreNet Global Summits. North American summit attendees tended towards the delivery side to the same set of questions, favoring the tactical day-to-day challenges facing their businesses. Differently, the attendees of the Beijing Summit were interested in workforce productivity. Those at the Sydney Summit, however, gravitated to issues of globalisation and environmental impact.

For Corporate Real Estate professionals the Solutions Navigator^TM turns a potentially long and laborious data collection and analysis project into a very quick and compelling tool for exposing different viewpoints, and learning from different perspectives on the same problem.

Microsoft's Nick O'Donnell framed the technology giant's emerging market strategy in these terms: 'If there are more than one-million people there, we will be there.'

This land known for its discovery of new worlds offered an appropriate backdrop to the increasing focus on emerging markets in corporate and commercial real estate. With trillions of euros and millions of customers at stake, the full potential is a modern-day version of the Old World gone New.

Until now, the acronym 'EMEA' was an arcane term - industry lingo. It was previously known only to the corporate units who assigned it to the titles of their international executives. But today, the relevance - if not awareness and meaning - of 'Europe, Middle East and Africa' is registering on the macro-economic scale. It resonates beyond those regions and also includes India, Asia and Russia.

EMEA is a map for another new world being defined by regions and cities once as arcane as the term itself.

"Slovakia is the new Detroit, the market is already there," said Robert Bonwell to illustrate the point of emergence of an "unprecedented logistics corridor built off of retail and industrial demand" in Eastern Europe.

Bonwell, CEO of European Corporate Solutions for Jones Lang LaSalle, moderated the "Making It Happen in Emerging Markets" panel held here 18 September as part of the CoreNet Global European Summit.

"Budapest is an R&D hub. The Danube Valley is a technology center, and BPO companies are in Romania with IT service centers - not just call center," he added. "It's not about low cost, it's about strong local economies."

Proximity to fast-growth centers, qualified labor forces, robust technology infrastructures and other surprisingly competitive location factors are making them "far more than emerging markets," according to Bonwell, whose experience includes stints as head of real estate for major corporate occupiers such as Electrolux.

Citing JLL's "Transparency Index" that takes an investment view on global markets and measures the difficulty of doing business in them, Bonwell related a "clear change for the better" for locations throughout Eastern Europe, Russia and even North Africa. "Tunisia in an EMEA context is a key market," he offered.

Companies expanding in or eyeing these markets are learning more about how to manage better within them as much as the locations themselves have prepared themselves to attract and retain them. Bonwell juxtaposed the challenges of entering fast growth markets against the solutions to thrive in them, pinpointing cycle times and ownership at the respective opposite ends of that spectrum.

Occupiers and their partners in corporate services know to often expect the unexpected. Yet to better manage expectations - and results - they are "learning a lot about project delivery" in their initiatives to ramp up business infrastructure and the workplace, advised Tim Tourville, Director of Real Estate for Motorola EMEA/India.

Centralized management is blending with work performed locally on the ground increasingly throughout these locations, Tourville outlined. "Who are you teaming up with locally to actually get it (market operations and penetration) going," he asked. "We spend a significant amount of time on this."

Tourville mentioned that of Motorola's 350 locations globally, there are "a lot of unique areas we're trying to determine how we will operate within" so that for a lot companies including Motorola, it all comes down to process, or "how it's done locally meshing with corporate best practices." Since the company started its foray into developing markets more than 25 years ago, it's "been a huge evolution" to this point, according to Tourville.

Sun Microsystems is also taking fast-growth markets seriously. It holds 2.6-million active square feet of space in EMEA, explained Europe-based Larry Matarazzi, Sun's Director of Workplace Resources globally.

Matarazzi reported that Sun is in Russia and the Czech Republic "predominantly for sales and services (support)" but that it's increasing its engineering presence in both. The company's largest cluster of engineers outside Silicon Valley resides in these regions. "We're seeing an acceleration of this through (available) talent and on the market side.

Cultural and business hurdles remain, he reminded a packed room of more than 150 industry executives. "It's difficult to give 'bad news' quickly," he offered as an example of how Russia's history has shaped its people's preference for putting off debate or decisions over issues. "You have to have eyes and ears on the ground. It requires a lot more hands-on time."

Access to power is sometimes an issue, Matarazzi related. The solution: "The corporation pays for a power line; some countries don't have the money to provide infrastructure," he said of an example illustrating a key point made earlier in the day by political economist Dr. Noreena Hertz that global enterprises are supplanting the roles of governments around the world.

Ultimately, Sun is learning to "have plenty of back up," and as Matarazzi added, "the offset (to many challenges) is a great labor pool."

Royal Dutch Shell's 65,000 properties are located in 140 countries, as Mike Napier reported, so it's no secret that the oil company's extensive interests include multiple emerging markets. Napier, Shell's Head of Real Estate globally, shared some of the challenges his team faces in support of various business units engaged in exploration, production, refining, supply, and renewable energy sources. One dilemma is that Shell itself sometimes drives up local property prices in under-developed and emerging areas from the gravitational pull of its $240-billion annual revenue stream.

He listed other issues challenging even an oil giant's expansion plans: security; business principles; labor markets; property markets; and the sustainability of business advantages.

Microsoft maintains more than 20-million square feet of space worldwide, and its 14% growth in headcount within its EMEA is an indicator of its emerging markets focus - an emphasis begun in the early 1990's, according to Nick O'Donnell of Microsoft.

For example, the technology giant is growing operations in Russia, Prague, Budapest and Bucharest. "We're seeing 60% growth in Russia - big, big growth," O'Donnell said.

Still, "finding the right place for employees is a challenge, and finding the right real estate services and solutions is equally challenging." Issues like delivery of resources and the speed of economic growth make it hard to find a single service firm that is either prepared or willing to provide portfolio services on a pan-European. On-demand space providers and landlords tell O'Donnell, "We want to go there (new markets) but we're not ready yet," he related.

Shell's Napier agreed, saying that the real estate team sometimes has to perform work itself. He offered the example of an office building in Russia where the local developer told Shell that the structure had been built out. When Shell's team arrived on the scene, it found an unfinished framed building instead. Shell had to oversee the balance of the project's completion itself.

Ideally, then, it's best "to access local service providers through global providers," Napier has learned. It's important "to understand due diligence" that needs to be based on "consistency among suppliers and markets."

Sun's Matarazzi added to the point, saying that "we have one set of tools and processes across all regions, and even with six service providers, we're operating against a very thin corporate real estate model."

"There's not a single serviced provider who can support us across Europe but rather can do it on a country-by-country basis," Microsoft's O'Donnell asserted. "One (service provider) brand name doesn't do it everywhere."

Nonetheless, Microsoft will find a way so long as one key criteria exist: "Wherever there's a market with more than one-million people, we will be there."

IA's R.J. Brennan's presentation took on a futuristic appearance reflecting the economic and environmental benefits of micro-sized technologies and materials.

'Smart' products are here and now.

Patrick Morrissey, Managing Director, CB Richard Ellis, opened as moderator for this fascinating session by assuring us that Nanotechnology is not science fiction, it is here, and usable today. Through the session we not only saw products that use Nanotechnology for building construction, but how best to plan for their use in future projects.

Nanotechnology is part of an ongoing discussion amongst the members of CoreNet Global: first introduced at Toronto, and continued lively discussion at Madrid.

Nanotechnology is the smallest human made object, constructed atom by atom. It is more flexible, strong, sustainable and precise than materials that are made from more traditional means. While its theoretical origins date back to 1913, it is now experiencing a "ramp-up" period where innovations in nanotechnology are being funded and applied.

David M. Sykes, Managing Director, Remington Partners LLC argued that now is a unique opportunity to get involved with nanotechnology. Ten billion in global investments, twelve billion in private investments, countries and industry striving for most innovative and profitable applications and the pressures of climate change are all compelling the next generation of nanotechnology applications.

However, we will not see the applications we need unless we start asking architects, designers, facility managers and our entire community to start looking at nanotechnology as something that can be used today. He provided compelling examples of how steel, glass, drywall, filtration, energy, insulation and concrete become more cost effective, sustainable and versatile through nanotechnology applications in actual projects. I was most intrigued by the use in fabric, which becomes stain-proof, colorfast and dirt-proof.

IA Interior Architects' R.J. Brennan provided a "how-to" approach projects using nanotechnology. Using their process, IA SmartSpace, he identified ways to find the most important areas in a project that could benefit from nanotechnology. He also suggested looking outside of the project itself for government and tax incentives for use of nanotechnology.

One application we saw, from Donald Beck of Cabot Corporation, was Aerogels (the brand from Cabot Corporation is Nanogel). Applied in skylights, exterior glazing, pipeline, apparel and medical devices it is some of the best acoustical and thermal materials available and is highly transparent. Feeling the product, it was impressive to see how close the product was to sand in its raw form, and translucent in its large applied form.

At the Carquefou Sports Center the application allowed a complete solar control solution, with daylight streaming in, but decreasing heat and light gain. It also kept to the architects overall vision of a smooth and streamlined building.

While new to many, nanotechnology is quickly gaining momentum in creating the 'smart' products and buildings of today and tomorrow.

The Monday General Session audience gave high ratings to Barry Varcoe's presentation of the RBS Culture of Innovation. Here, Varcoe outlines in detail the six key components to a new operating model that has increased employee satisfaction and embedded process improvements throughout strategic support functions.

For centuries, this city of seven hills offered kings and visionaries multiple views.

In similar fashion, the Royal Bank of Scotland's (RBS) real estate and workplace-driven "Culture of Innovation" spans across the broad range of strategic perspectives comprising corporate asset management today: integrated infrastructure, change management, performance measurement and process management.

"Innovation is our currency," Barry Varcoe told the audience of nearly 300 corporate real estate and workplace executives gathered here.

Varcoe, who serves as the Director, Group Property, at RBS, shared his vision for "embedding innovation" at Europe's third-largest financial institution in an 18 September keynote presentation to the CoreNet Global European Summit.

That vision, and its multifaceted implementation, earned Varcoe and his team the 2005 H. Bruce Russell Global Innovator's Award.

"It's not a one-hit wonder, it's a sustainable model," explained Varcoe.

He outlined four central components of the innovation model: alignment to business units and operations; continuous and systematic; a driver of cultural change; and a portfolio of ongoing projects.

Varcoe also emphasized the importance of setting and managing expectations to bring more efficiency to the workspace and work styles of the bank's 125,000 employees who occupy 2.2-million square meters. The company-wide initiative, launched four years ago, centers on RBS' 630 real estate staff.

"We have a group-wide mandate for what we do," Varcoe commented. "It brings a strong economy of scale."

That scale surrounds the extensive back-office operations, or "engine room," of the bank, and is based within its Manufacturing Division which includes processing centers and other important support services.

RBS received the 2005 H. Bruce Russell Global Innovator's Award for Varcoe's leadership in bringing a 'bedrock' new culture to the world's 8th-largest bank. Varcoe is Director, Group Property, RBS.

"It's a common platform for all we do," Varcoe added. "It is the backbone for our customer interface," whether in-person or on-line.

It all started with two important if not visionary steps. First, mapping of hundreds of processes surrounding work and support services was initiated. At the same time, workplace and real estate team members who grasped the mapping and were passionate about it were identified and singled out as project leaders.

This concurrent detailing of how work was being performed and the selection of internal players to help instill buy-in for future change proved to be a "bedrock" as solid as the walls of Lisbon's ancient castles.

Varcoe explained how they began with several basic processes that could be readily mapped and enhanced, and then went on from there to rebuild scores of others processes across the bank's entire operating platform.

He promoted the concept of functional consistency in preparation for innovating the way that support services were working.

• Cost reductions
• Integrated workplace solutions
• Sustainability of the bank's workforce

• Value innovation
• Innovative culture
• Integrated innovation
• Workplace innovation

The whole idea was to surround what Varcoe called "sequential themes" around these areas of innovation. Those themes incorporate human capital, process and management capital, and customer/supplier capital.

Of process improvement, Varcoe shared his view that "innovation is 99% perspiration and one-percent inspiration. The one percent doesn't come until the 99% is done."

So it took the better part of three years to map 219 core processes, Varcoe reported. His penchant for adding new ideas or approaches came into play. Varcoe tapped into a local university to help with the early, important formative phase of embedding more innovation. "We've had 11 'workouts' in during the last six months," he related.

The keen understanding of and adherence to the processes "enable the business to operate more reliably," he said. If something goes wrong, it's not as big a deal to fix it, either. "Keep the show on the road," is the sort of mantra he spelled out when it comes to fixing something that's broken or not working. It's easier to repair when the various pieces of what's gone wrong are already clearly understood and transparent to the rest of the processes relating to it, he mentioned.

"Efficiency and effectiveness are cousins," Varcoe theorized. "If you do it efficiently, from a customer's view, that's effective, too. They go hand-in-hand."

Varcoe didn't disclose an exact dollar figure reflecting the actual savings that have resulted to date from the process side of the model, but being well known for his ability to meld operating metrics with performance measurement, it's a safe bet that the value back to the bank is considerable - certainly from a cost-savings standpoint, if not in other ways such as improved margins, higher internal and external customer ratings, etc.

What Varcoe did focus on, however, was time. "I worry more about time than money. We saved money, but time is more important" in the sense that the better one can do things over a shorter span, the more value is added.

Varcoe essentially took what was a "very devolved, very local" model with "little central intelligence" and re-leveraged it against the bank's large real estate portfolio. He used the analogy of "local action with global thinking" to relate the idea that established, consistent processes will guarantee continuity and accuracy when applied at the business unit or local levels.

This form of standardization was also applied to other key areas of Varcoe's plan. Workplace is one of them. Integration with HR, IT and outside suppliers helped anchor this side of the initiative to create "new ways of working."

"It's like the James Bond (film series) franchise," he analogized. "The faces change (from movie to movie) but the formula works regardless."

Tools such as a new space utilization tracker providing an audit trail have been deployed within the innovations mix at RBS. "We improved portfolio productivity by 30% by generating more income per square meter," he pointed out in offering a key operating ratio. "We're determined to roll it (workplace and portfolio integration) out across the (entire) company. It's fit for purpose more so than space sizing."

What Varcoe termed as "supplier engagement" is another notable facet of his innovation scheme. For Varcoe, the relationship with outside vendors and partners demands the same type of alignment he is seeking with the bank's real estate team and all employees in the so-called Manufacturing Division.

One area where the supplier alignment is playing out is through the RFP process, where the degree of information transparency has improved so that vendors can move up a chain of simple "low cost plus" compensation models to mid-range "fixed prices and rates," and ultimately to "business performance and risk-reward" based compensation.

"It's supply chain transformation," Varcoe remarked, taking the view of supply chain as an innovation instead of a commodity. Some of the innovations in this context include an interesting reverse auctioning model, but "you can't reverse auction innovation," he cautioned. But you can save money, he added. The reverse auctioning approach is based on five different "grades" of service across a "flexible matrix" so that various levels of quality and cost are realized "suit the needs of the day." One example of its success: the bank received online bids from nearly 2,400 architects in less than 15 hours upon letting a recent bid, then saw a 36% savings on that letting, Varcoe recalled.

Another supply chain management element is the bank's "Supplier Innovation Roundtable." It's a knowledge exchange platform that brings suppliers together with real estate to add more efficiency and value to procurement. The whole idea surrounding Varcoe's approach to supply chain is to get as close as possible to a zero defects operating environment. Saying that most industry executives are satisfied with a 90% accuracy rate, RBS wants to move beyond that to an even higher level. "It's the same as if were being told at a restaurant that you have a one in 10 chance of being food poisoned, would you go to eat at that restaurant? I doubt it very much."

This type of passion for attaining near-perfection spills over to other parts of the banks operations. For that matter, it's likely there are very few, if any, pieces of how RBS delivers its services that are going unaddressed by Varcoe. Yet another is the "front of house, or public side of the business."

Here, Varcoe adapted another idea, taking a somewhat unusual comparison of theater and hotel businesses into consideration. "It's a re-engineering of the way that the market delivers service," he claimed. He associated it with a goal of constantly developing and introducing "first-to-market" products. In the same way that Varcoe's plan repeatedly rolls out an "innovation of the month," first to market continuously stimulates both customers and employees.

Another way to repeatedly inject positive motivation are the employee teams that manage change and improvement, making for a "more cohesive" front-of-the-house component.

The bank's UK-based corporate headquarters itself is an innovation and motivation driver. Varcoe oversaw the development of a city within a city so that the bank is a self-contained community that features a wide range of amenities and personal services. The "neighborhood street" concept anchoring the central office appeals to workers, and it's enhanced by a so-called "street manager" who coordinates its operations.

An employee at the HQ told Varcoe that "working here saves me a half-day on the weekend." That was music to Varcoe's ears. "It's about us as individuals," he said with some measure of gratification. "It's not what we do, but how we do it. It's about making the ordinary extraordinary."

Quoting Abraham Lincoln, Varcoe said, "Whatever you are, be a good one."

This penchant for tying the human experience to process management and integrated solutions is perhaps the most significant intangible that separates a technical approach from a meaningful job, and thus higher productivity levels for a company. "Recognize the human nature of work and technology," Varcoe urged. In explaining his philosophy, he revealed the creative side of what the "Culture of Innovation" ultimately stands for.

As Varcoe summarized: "Make each day your masterpiece."

For more information on the CoreNet Global H. Bruce Russell Global Innovator's Award, click here.

How can corporate real estate (CRE) affect business performance?

Measuring the value of workplace design is linked less to cost efficiency and more to productivity, according to panel member Despina Katsikakis of DEGW. Joining her in the 21 Century Workplace dialogue were Andrew Pender of Philips Electronics (right) and panel moderator Simon O'Reilly of Cushman & Wakefield.

Cushman & Wakefield's Partner of Client Solutions Simon O'Reilly framed the discussion of this panel with this question during the recent CoreNet Global European Summit. O'Reilly moderated a dialogue centered on the growing role that CRE plays in support of business objectives and business units.

According to panelist Despina Katsikakis, CRE should be effective, not just efficient. The workplace is a key enabler of it.

"Buildings are not just commodities, they're instruments," she said.

• Communicate ideas and values
• Practice convergence
• Leverage the value of people
• Know the impact of technology
• Remember the importance of place
• Give everyone an opportunity to have 'a say' in place

"The problem," she relates, "is that we're still designing for people sitting in one station," whereas the space is actually being used 30-40% of the time.

"The old model is out," Katsikakis asserted. "Now, it's more fluid (involving) entities outside the building itself."

The "fluid" piece refers to flexibility, which has multiple definintions starting with the ability to anticipate and react to change based on knowing different options. Sudden changes in markets or economies dictate flexibility, including the 'churn' factor of workplace reconfiguration.

The idea of 'outside the building' is Katsiskakis' way of referring to the new rapid emergence of the dispersed work model. Aside from mobility, space utilization is a key enabler.

"Dispersal of work is a global shift and is the ultimate driver of future buildings," she explained, adding that office solutions are moving away from fixed and toward variable costs.

Efficiency is then a cost measurement and effectiveness is a people or productivity measure. "Dollars per square foot have become dollars per person," she said of a new key performance indicator (KPI). It comes down to "measuring the value of design," which has become a sort of mantra for Katsikakis.

Defining the business value of workplace, then, is a matter of first measuring efficiency, or cost; then gauging effectiveness through talent and productivity; and then understanding what Katsikakis calls "expression," or the brand that epitomizes a workplace environment and culture, but ultimately communicates a company's values.

"Move away from a branded box to a box of brands," she continued.

Katiskakis has insight on the wider environment and how companies that are successfully integrating workplace with user experience are the ones where people want to work. Examples include Telefonica in Spain and the Royal Bank of Scotland and Chiswick Park in the U.K. These and a growing number of other companies are "shifting from individual desks to experiential spaces," and "linking to urban environments" with public parks, main streets, neighborhoods and even concepts like treehouses.

The corporate occupiers in the audience expressed a willingness to pay a premium (5% or higher) for workplace enhancements.

"Shell is willing to pay a premium in some locations like headquarters," commented Mike Napier of the oil company. JCI's John Suyker called it a "quest for affordability."

Andy Pender, part of global electronics giant Philips' CRE team, measures cost per location in the company's still-new workplace innovations initiative. Philips is 150 years old, Pender - who also served on the panel and is Director of Facilities Management at Philips - pointed out. This makes for late adoption in areas like workplace, he offered. "It's a tough nut to crack," he added. Regardless, Philips is forging into new workplace practices, and has formally defined a set of standards for the design of space calling for a minimum of 80% open space in the facilities where new approaches are being tried with a multiple service provider model. "Accelerating space efficiency is the next step," Pender shared. "We need to learn from others."