Post-9/11: Tenants leery of landmark office buildings

Did the 9/11 terrorist attacks in New York and Washington hurt the real-estate market around landmark office buildings? The answer is “yes,” because of the drastically higher perceived risk of large-scale terrorist attacks in central business districts, according to research by economist Alberto Abadie and real-estate analyst Sofia Dermisi. (National Bureau of Economic Research [NBER] Working Paper No.12678.)

They studied office vacancy rates in Chicago, at and near three landmark buildings: the Sears Tower, the Aon Center and the Hancock Center. The result: “After 9/11 office properties in the three main Chicago landmark buildings and the surrounding areas experienced more severe increases in vacancy rates than office properties not located in the vicinities of landmark buildings.”

Distributed work: HSBC gets it

The “Future of Work” blog showcases a recent article in the London Times Online about HSBC‘s plans to move at least 50% of its 8,000 London HQ staffers out of the central office and into a home-based or mobile work environment within seven years. HSBC’s chief executive, Michael Geoghegan, described his goal:

I’ve challenged us within seven years to have 50 percent of that [Canary Wharf] building empty, to sublet to someone else. I don’t think we’re a really progressive, perceptive company if 8,000 people have to get up every day at an unearthly hour and go back again. Technology should change our thought process.

The business case for distributed work: Lower real-estate costs, less-frazzled employees (from not commuting), easier disaster recovery — not to mention positive environmental effects.

Intelligence Briefs

An eclectic collection of discoveries:

Non-profit organizations could be hard-hit by talent shortages exacerbated by the large cohort of baby boomers soon entering the retirement years. — The Conference Board

De Beers — which has dominated the wholesale diamond industry for decades and has three ultra-exclusive retail shops in New York City, Las Vegas and Beverly Hills — has started selling jewelry online, at its Web site debeers.com. — Internet Retailer

Myth-buster: Most call centers serving U.S. consumers are actually in the U.S. — not outsourced abroad. — Cornell University

CEOs often pursue acquistions — regardless of risk — because they know their salaries will increase substantially, leaving shareholders to take the financial hit. University of Washington / The Journal of Finance

Twenty ways to use LinkedIn productively. — Web Worker Daily

Bain: Unlocking ‘hidden assets’ is key to avoiding business extinction

A 10-year study by Bain & Co. finds that 75% of Fortune 500 companies “face the threat of extinction within a decade” unless they tap their “hidden assets … to redefine themselves.” What sort of hidden assets? Bain’s “Unstoppable Growth Study” study says:

  • hidden customer assets: customer segments and data that can prompt new products and businesses
  • hidden growth platforms: platforms that can be expanded or created for new product lines and business units
  • hidden capabilities: technologies, processes and expertise that can lead to a breakthrough product or service

“These hidden assets were central to 90% of the cases where companies successfully redefined their core businesses and their growth formulas. The assets were not themselves hidden, but their full potential had not been recognized by management,” Bain says.

Typical strategies that usually don’t work:

  • leaping to new hot markets
  • pursuing “big bang” transforming mergers
  • launching broad-based innovation programs

So where does the dreaded threat of “extinction” come from? The following megatrends:

  • Faster movement of information
  • Speed of capital formation
  • Emergence of China and India, and their disruptive impact
  • Reduced capital intensity among the most profitable new industries
  • Increasingly rapid movement of executives among companies
  • The rise and impact of private equity firms
  • Speed of overall technology cycles

Success stories — companies that stepped back from the brink by unlocking their hidden assets — include Apple (think: iPod) and Marvel Entertainment (think: “Spiderman” blockbuster movies). “Companies that seek growth solutions based on hidden assets are four to six times more likely to survive,” the study says.

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About the study:
Tracked the 500 largest U.S. public companies from 1995 through 2004 and assessed their financial performance and rate of change. More extensive 10-year before-and-after profiles were then developed for 50% of the remaining companies that didn’t go bankrupt or get acquired during that period. Also surveyed 240 global executives and developed case studies on 25 successful business redefinitions.

Related:
The book: Unstoppable: Finding Hidden Assets to Renew the Core and Fuel Profitable Growth, by Chris Zook (Harvard Business School Press, 2007).

‘Alpha-earning moms’ and stay-at-home dads may change household purchasing habits

If current demographic shifts continue, within a generation women may be the primary breadwinners in half of America’s households, notes Social Technologies LLC futurist John Cashman. These “alpha-earning moms” — along with the increasing number of stay-at-home dads — are growing market segments that will merit business attention, Cashman says.

  • Household duties will continue to realign. More men will carry primary responsibility for purchasing food, clothing, and other household items.
  • Men will be more involved in childcare and in purchasing products and services for their children.
  • As they explore these new gender roles, men’s preferences will be expressed in the types of products they buy. These could include more gadgetry and high-tech appliances for the home.

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Related: “Stay-at-Home Dads Forge New Identities, Roles,” The Washington Post, 17 June 2007