Patience, focus key to growth for Equity One CEO
REIT chief tells Kellogg-Miami EMBA students: master change to ‘invigorate’ corporate cultureBy Marianne Armshaw
2/14/2007 - Coral Gables, Fla. - Like herding cats or turning battleships, changing corporate culture can seem both monumentally difficult and maddeningly elusive.
Yet change management remains essential to every company’s survival, says Jeffrey Olson, the 38-year-old president and CEO of Equity One.
“Its not easy to change anything – my wife’s been trying to change me for 13 years,” Olson said during his Feb. 9 lecture and spirited Q&A session with executive MBA students at the Kellogg School of Management’s Miami Program campus in Coral Gables, Fla.
“Done properly, change can invigorate people and companies. Done improperly it can create havoc in organizations,” he said.
Olson, who assumed the chief executive role at Equity One in November, offered a veritable crash course in blazing a new corporate future in just 100 days. Managing change has proved a constant throughout his career. That experience served him well when he took the helm of the real estate investment trust which acquires, renovates develops and manages neighborhood and community shopping centers anchored by leading supermarkets or discount retail store chains, according to an online corporate description.
The company has 179 properties comprising approximately 18.2 million square feet, plus six development parcels and six other properties.
“A lot of people thought Equity One did very well. The stock rose from 11 to 28 and paid a dividend. That sounds fantastic,” he explained. “But if we just kept up with our peer group, the stock would be at 40.”
Convinced that the company had been underperforming, Olson arrived with a vision for turning it around quickly. When pushed to produce a mission statement — that ubiquitous if sometimes dubious corporate fixture — Olson balked.
“I didn’t have the data,” he told the Kellogg students. Refusing to craft a hasty statement, however, “turned out to be one of the smartest things I could do,” said Olson.
Instead, he took 100 days to accomplish three fundamental objectives: He listened to employees, enhanced his management team, and assessed risks and opportunities.
It wasn’t always easy, he admitted. His vision for a leaner, more profitable Equity One included promoting entrepreneurial spirit and forcing the company to abandon its micromanagement tendencies. He cut 20 middle-management positions — about 10 percent of the workforce.
“That was very emotional. There were lots of nights when I stayed awake,” he said.
He formed a best practices team to research how other companies managed operations. In a series of face-to-face meetings with groups and individuals, Olson asked the same questions. “What do you like about the company? What don’t you like? What isn’t working?”
Olson said he looks for passion and commitment in his employees. Convinced that stock ownership promotes those attitudes, he plans to address that issue. “It helps morale so much and keeps employee interest alive, Olson said.
In a telephone interview after his lecture, the new CEO expanded on his remarks.
“We are in the process of allocating stock to a much larger group of employees. Ultimately, that will include every employee in the organization,” he said.
Most of Equity One’s shopping centers are located in Florida, with others scattered throughout the South and Southeast. Another of Olson’s planned changes includes putting the non-Florida properties on the auction block. Equity One will focus on the Sunshine State’s opportunities made possible by vigorous population growth and density, plus the company’s history and connections in the area.
It’s a prospect that clearly excites Olson.
“I love shopping centers. You can do so much with them to increase value,” he said.
The former accountant should know. Olson worked as a REIT analyst on Wall Street. He ascribes the industry’s all-time high value to an aging population seeking generous dividend yields, which REITs deliver.
Olson got a jump learning real estate by playing Monopoly as a boy. The game relates to managing a REIT, he believes. “There is a lot of strategy in Monopoly,” he said. “At the beginning you buy, buy, buy. But the strategy changes in the middle of the game” when consolidation, development and location outweigh the number of properties, Olson explained.
He cited a study proving that the orange properties are the most valuable on the Monopoly board. Building on them returns the best investment yield since they are on the most-trafficked side of the board.
“Shopping centers are all about traffic. You want a lot of people going by your center. So that’s our theme: We invest in those ‘orange properties’ with high traffic,” he said.
With the difficult corporate transition behind him, Olson looks to the future. That, he knows, will bring more change, so his advise is to expect change and learn to manage it.
“Change is a constant. If you don’t change, something else will happen. And someone else will come along and take over,” he said.