A global firm in local markets

Effective knowledge management equates to genuine competitive advantage in the real-estate market. Christof Widmer describes how Jones Lang LaSalle, armed with its knowledge strategy, approaches the challenges of operating a global firm in local markets.

Jones Lang LaSalle is a real-estate services and investment-management firm operating in over 100 markets around the globe. The company provides comprehensive, integrated expertise, including management, implementation and investment-management services on local, regional and global levels to owners, occupiers and investors. LaSalle Investment Management is one of the world’s largest and most diverse real-estate investment-management firms.

In 1999, Jones Lang LaSalle was formed by the merger of Jones Lang Wootton, established in the UK in 1783, and LaSalle Partners, founded in 1968 in the US. The combination of these companies brought together a tremendous amount of expertise, talent and know-how of the property market. From a KM perspective, the challenge was understanding how to pick up the momentum and opportunity of combining both firms’ knowledge bases for best possible business implementation and long-term value retention of its intellectual assets. Did this happen naturally? Yes and no.
For each company, the merger meant that much of the local market presence was re-enforced and extended, services became more diversified or were combined, and employees were brought together under one common name and strategy. The merger was as much about bringing together two major industry players from different origins, as it was about extending well-established local networks around the world, all with their own history, cultures and market conditions.

In the true sense of applied knowledge management, the newly created company was also forced to merge its communication platforms, including several intranets. As one can expect, this brought up many issues, not only on the technical side but also for marketing, branding and communications. While a major decision had to be made between Lotus Notes and Microsoft, the challenge of naming conventions turned out to be bigger and longer lasting than expected. This is where knowledge management became the heart of these change-management processes. We had to decide how to consolidate and agree on technology platforms, and how to brand the new global KM platform. What language convention to agree on and whether content management should be centralised or decentralised. By addressing these and many more questions we discovered how knowledge management is the engine behind the implementation of a large-scale company merger.

This does not, however, imply that knowledge management itself solves all the difficult issues, but it unavoidably, and mostly painfully, brings up unresolved and undetected problems. Of course, these can be ignored and delayed at first, but by the very nature of a corporate KM programme, these issues will come back to haunt you and mercilessly ask for your attention. A good example issues we have with language convention. As there has been no clear or mandatory agreement made on the use of a single and exclusive language within the entire firm, all non-English speaking staff and offices to this day keep communicating and documenting in their own local languages. This is where some of the pain reappears over time, as the simple task of entering document titles or news into the corporate intranet in German, for example, becomes a major chore and creates much cultural friction as the system does not accept umlauts. Content management in Frankfurt has become quite a task.

Property markets

As with many other businesses, real estate faces the growing challenge of being both a local and a global market. Its products are planned, produced and launched in a specific location, while the owner and occupier might reside in quiet different parts of the world. Real-estate products are also unique in that properties are nearly always static. They are also defined by the land development of their location and do not need to be shipped anywhere for sale. Therefore, dealing with properties demands onsite planning, development, use, management and maintenance, no matter how technologies develop to drive the globalisation of business. Even though international investors and foreign occupiers might try to make a building appear to be a global portfolio asset, its everyday use, presence and long-term development is mostly local and very much at the mercy of the onsite realities of its location. We are therefore dependent on the criteria that influence the attractiveness and use of a property.

Winning cities

Jones Lang LaSalle has developed a major research programme that examines these criteria on a regular basis. World Winning Cities was launched in 2002 and is a multi-year quest to identify the essence of contemporary city competitiveness with a view to predicting the potential winning cities of the future. The research focuses on the trends that impact business, economic and socio-cultural landscapes, and builds the data and develops the methodologies needed to be able to predict the world’s next generation of rising urban stars. This product is proof of how necessary and important it is to research and document local specifications while allowing for comparative benchmarking analysis. World Winning Cities represents the overall challenge of actually implementing knowledge management in the real-estate market: accepting the uniqueness of cities, locations and buildings while being challenged to find common or uncommon factors, strengths and weaknesses that allow for forecasts and actual planning.

Market transparencies

In addition to local market realities, information transparency is another factor that determines our knowledge-management activities in the property market. Depending on the actual culture, real-estate market history and general business environment, it can be quite easy, while also very hard, to get to the actual facts of the business, depending on where you are. While the US real-estate market, for example, is known to be highly transparent as market data can be bought from a variety of sources over the internet, there are markets where it is quite difficult to find out what the current vacancy rate of the office market is. These differences in market transparency can be due to a number of reasons. For example, the documentation available may be of poor quality or there may not be any official or government-led information. Businesses may also be run or dominated by monopolies or duopolies. This does not, however, mean that the information is unavailable; it only implies that a less transparent business and market behaviour is favoured and dominates certain industries.

In order to assess the varying levels of market transparency in different regions and allow for comparisons, Jones Lang LaSalle launched a yearly study that produces an actual market transparency index ranking different cities and regions from highly transparent to truly opaque. The factors assessed by these rankings include the availability of independent, public and private indices on market-investment performance, research on market fundamentals and reliable financial statements. Additionally, the business conditions for cross-border investments are examined, such as taxes, penalties and other restrictions that might or might not be in place. Generally speaking, market transparency does increase from East to West, but there are clear exceptions to this rule.

Basic implications for knowledge management

The reality for systematic knowledge-management activities is therefore a consequence of the relevant market transparency. In other words, the more transparent a market already is, the more basic, documented information exists that is easily available. This is where knowledge management offers added value through analysis, predictions and business recommendations. In cities or countries where basic real-estate information is held securely in the hands of the government or a selection of market players, it pays to build new networks, databases and research alliances as it is the only way to overcome the opaque environment.

It is also interesting how market transparency affects the behaviour of the individual people involved. CoStar Group is a provider of commercial real-estate information and has made it its mission to track market data and trends in such detail that property firms find it most effective to simply buy their database. As the quality of these products is well established, acting secretive about pure-market data in the US is senseless and a waste of time. Another example exists in some German cities where there is continuous industry debate on where a sub-market begins and ends. Frankfurt North, which is part of Frankfurt’s city districts, can be considered a sub-market whether it is accepted by official statistics or not. While it is acknowledged that there needs to be official agreement here, the process is slow. As it stands, it seems obvious that more markets will become better documented and defined.
It therefore makes sense to work on data consolidation, while focusing on individual client needs and innovative solutions.

Radar

Jones Lang LaSalle uses an internal market database called Radar to document and consolidate basic market data and enable cross-country comparisons. This web-based data pool allows for de-centralised data entry, which is independent from place or time. Radar is the central contact point for all employees to access market data via the intranet and also produces standard Powerpoint presentations. Radar includes micro- as well as macro-economic data, which is combined with real-estate specifics such as office, retail and warehouse rents and yields, as well as basic data on demand and supply.

In the true sense of good practice, internal as well as external sources are accumulated, scanned and used selectively for routine data sourcing and documentation. End-users can then log onto the database and customise the output they wish to receive. Again, the degree of transparency defines the difficulty of this task and the value of its output.

Delphi – the company portal

Branded as the place for knowledge, Delphi is the global corporate intranet. It was launched after the merger of Jones Lang Wootton and LaSalle Partners in 1999, and mirrors the combined knowledge base. Since its launch, Delphi has faced many challenges, which include:

System alignment and the integration of two different companies;
The consolidation of a variety of data and information tools;
Design implementation and content alignment of the newly created firm and brand;
The development, definition and implementation of standard roles and responsibilities;
Integration of internal communication.

A lot of effort went into the launch of the different versions of the system, and the creation of content and web-interface functionalities. While this is still true today, the main challenge for Jones Lang LaSalle’s knowledge-management programme remains the systematic and focused identification of knowledge gaps: the implementation and consistent progress of dedicated activities. The key to success here is to regularly managing the content of department and country homepages in a decentralised way. The need to search for knowledge gaps mostly involves filling in the blanks where high quality management has not been consistent, for example, maintaining a consistent and up-to-date ‘who’s who’ database that does not include the names of people no longer at the firm; assuring that marketing material is easily available and produced in the right format; and, first and foremost, to assure we know and share the latest facts about our current clients and their demands.

Strategic solutions for clients

One key factor of implementing knowledge management successfully at a global firm is its alignment with the business strategy. As Jones Lang LaSalle is defined by a diverse set of solutions that are offered to its clients, the success of local client-service management depends on efficient, systematic business support. This includes research, technology, innovation and global capabilities. Each of these quality services are of little use or help if not sufficiently interconnected. Knowledge management is the link between these services to make them work.

Our technology includes a website in each of the countries where we are represented, as well as client extranets and the corporate intranet. Research, however, is conducted by a staff of around 130 people worldwide, and the type of research varies according to the market transparency and client needs.

Innovation and global capabilities include programmes and products such as World Winning Cities or collaboration between Jones Lang LaSalle and professional institutes or research centres.

Knowledge cycle – daily business

Overall, it is possible to detect a natural and unavoidable routine of knowledge transfer that flows along the workflow processes. In this knowledge cycle, it is important to identify the pitfalls and define systematic solutions for improvements. The main steps and challenges are:

Acquiring knowledge: The cycle starts when information and knowledge are exchanged between staff and between the firm’s external contact points. This includes the consumption of the daily press and individual conversations between colleagues, with clients and personal contacts. Discussions with personal contacts are highly underestimated as many of the opinions that we rely on to make crucial business decisions are influenced by people we trust outside of the immediate professional environment;

Capturing knowledge: This is the first step towards success and the one where knowledge management can make all the difference. But how do we capture what we have experienced, have just discovered, heard by accident or read? In other words, once acquired, are the pieces of information truly captured or just summarised in a personal opinion?

Knowledge sharing: This is the centrepiece of knowledge management. Are staff members happy to share knowledge or is it a duty? Does their behaviour support knowledge sharing and helping colleagues? Rewards systems, communication agreements and e-mail rules, for example, are part of the KM agenda. Personal attitude is also important and should be a consideration at basic recruiting stages;

Learning: Long-term success depends on the company and individual learning from mistakes. This also involves admitting, or being able and allowed to admit, to mistakes and telling success stories;
Applying knowledge: This is where a business profits or loses out. These earlier steps will not lead to visible success if not directly applied and put to work. For example, even if many of these steps are put into practice and become routine, they will still fail if the actual implementation within the business is prevented through personal fear, politics, unnecessary bureaucratic rules or a lack of co-operation between managers;

Feedback: Feedback is one of the most misunderstood steps. Most organisations do not see it as truly necessary and is usually only sought or given sporadically. Feedback should be a standard procedure, not only verbally and within team meetings, but also through systematic debriefings and documentation. It is not enough to describe a successful deal and assume recognition as the lead salesperson. Sharing the lessons learnt and preventing others from making similar mistakes must become a natural procedure.

Personal lessons learnt

Being in charge of a knowledge-management programme demands that you constantly ask questions, adjust the focus of the organisation’s main activities and live what you preach. This brings out some basic human challenges that prove how exciting and difficult it is to practice knowledge management on a daily basis. One lesson I have learnt is that a KM programme must hold a certain position and be acknowledged by management. To date this has been a challenge for us. I report to a local German board, while also reporting directly to European senior management in London. Although KM’s position at Jones Lang LaSalle has responsibility and certain traditional hierarchical powers, there is no actual KM department. All our programme members are part of other cost centres, including IT and a variety of business units. This creates the ongoing challenge of having to re-define KM as a function, which means constantly justifying its mission and existence. This is an unnecessary process, as the long-term need for a systematic knowledge management programme has already been demonstrated.
Much of my ongoing role will be to bridge the gap between pure IT-application solutions and re-developments, and the minds of the business. This is a huge task with many challenges, but as we have already found, if we don’t address them now they will continue to reappear on the agenda in the future. In summary, knowledge-management initiatives at Jones Lang LaSalle have recognised that:

The knowledge-management agenda is set by market realities and market transparency;
Global leadership demands access to local expertise, which requires a systematic knowledge-management programme;
Sharing knowledge is a cultural issue and not solved by an IT platform;
Client-relationship management means knowledge management;
Knowledge management is not a system.

Christof Widmer is head of knowledge management Europe at Jones Lang LaSalle. He can be contacted at christof.widmer@eu.joneslanglasalle.com