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Chief Real Estate Officer ??? May 27, 2009

Posted by Bob Cook in Alternative Workplace Strategies, Profession of Corporate Real Estate.

I think one of the best ways to kick off this new blog is to repost something from my previous Sun Microsystems blog. The post lays out the conceptual framework from which I start:  that real estate strategy really matters.

The CRO??

Date: March 7, 2005

I don’t know if the top corporate real estate executive of any company has taken on the title of “CRO” — Chief Real Estate Officer — but I wouldn’t be surprised if this job title isn’t eventually adopted by many. An article in the February 24th issue of the Economist entitled “A Rise in the C-level” talks about the trend towards establishing new C-level positions in corporations. It used to be that corporations had only CEO’s and CFO’s and the occasional COO. Now there are posts for all manner of CXO’s: Chief Information Officers, Chief Technology Officers, Chief Talent Officers, Chief Purchasing Officers, Chief Privacy Officers, Chief Growth Officers.  Why not CRO?

According to the Economist, “the rising number of C-level appointments indicates a significant change in corporate structure” reflecting the fact that “heads of specialist functional ‘silos’ (finance, human resources, IT, etc) are becoming more and more involved in talking corporate strategy with the chief executive and the board”.

This certainly rings true to me, particularly for the tech world. In a fast-changing world where product lines often do not last more than a few years, the functions that define the corporation’s character – its culture, organization, business practices, geography, and financial structure — seem to me to be the ones that are really strategic. Products will come and go, becoming almost tactical responses to how best to use the corporation’s resources at any particular time; the corporate character is what endures and determines long-term success.

No function defines a corporation’s character more than corporate real estate. Over the last decade, real estate groups in many companies have come to be respected strategic functions. I would like to think the Workplace Resources function at Sun is one of these. We’ve been involved in many strategic issues that go far beyond our traditional “facilities management” role. We’ve played active, sometimes lead, roles in addressing issues such as the company’s geographic configuration, recruitment and retention of employees, and cost structure.

Probably no CEO has gone so far to think that long-term strategy isn’t about products – my admittedly unconventional assertion, above – but many, if not most, now realize that the functions are no longer just services for the business units; they now play important strategic roles. The rise of the CXO’s evidences this. I’ll be watching to see if anyone is annointed “CRO”.

If you are a subscriber to the Economist, you can check out “A Rise in the C-level” at http://www.economist.com. Search “C-level” in the February 24, 2005 issue.


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