From Cowboys to Consultants

Something to consider from the world of commercial real estate, Brokerages Retool Rainmakers:

With office leasing and investment sales volume reaching new lows across the country, big brokerages are retraining idled dealmakers to become service providers rather than cowboys intent on roping the next mega deal. Brokerages have enormous fixed costs and in this challenging economy they are under pressure to provide tailored client services, such as mortgage workout programs.

And:

Betsy Peck, chief administrative officer for brokerage in the Americas with Chicago-based Jones Lang LaSalle, oversees the company’s training programs. “Understanding the multiple levels of service that can be provided beyond the transaction is clearly something that clients are looking for as they look into outsourcing and expanding their reliance on some of our professionals,” says Peck. “We try to anticipate the next client need. You’re not selling a service unless you’re listening to the client.”

Now, as I’ve pointed out before, on the whole, commercial real estate is to residential real estate as investment banking is to used car sales: totally and completely different industries in many respects.  There are indeed services in the CRE world that does not exist (yet) in residential world, such as portfolio management and capital markets work.

However, as residential real estate practitioners begin to talk more and more about professionalism, about need for local expertise, and how such expertise can be turned into money, I think the worlds are getting closer together.

First point to note is that even CRE firms cannot transform cowboys into consultants.  The personality type demanded of a rainmaking deal originator is so different from the personality type demanded of a consultant that “retooling” one to become the other is futile:

Rather than focus on training individual brokers, Lipsey has identified training that works best in team environments. “Let’s say a broker sold a property two years ago and now the mortgage is greater than fair market value. That broker can go back and say, ‘We’ve got some services for a fee that we can provide you until things get better.’ The broker brings the work in and the work is performed by the junior broker and the technician [researcher/analyst], and the bill gets submitted.”

So the cowboy remains a cowboy: he’s just roping different kinds o’ steer.  Rather than trying to sell properties or lease space, the cowboy-rainmaker is still out there beating the bushes for services deals.  The work itself, however, is to be done by the “junior broker” and the “technician”.  Not much retooling here; more of a change in the offerings menu.

The second point to note is that this can, and probably does, work in residential real estate as well.  Highly relevant is this post by Chris Johnson at Bloodhound Blog, especialy this part:

But I said I am a rake.  I cared about my clients–to a point.  To the point that they didn’t trouble me, expect anything, or need sympathy, I really cared.   I’d return phone calls, and the noisy ones could compel me to make a flyer or whatever.  I looked around and the sheer volume of work that other agents were doing astonished me.  I figured–deliberately–that a higher churn was acceptable if I didn’t have to mess around with e-neighborhoods and stuff like that. The path, then, was to burn through people.

Now: at some point, I’ll post how to use a Rake to be part of a team.  Best use of me would have been to join a mega agent and prospect more.  If that had fed a team somewhere, or if I’d built service people…the love of prospecting is a lethal way to sell.

Is this not the ideal rainmaker personality you would want?  Why burden such a pure cowboy mentality with the need to ‘make a flyer or whatever’?  Just have “technicians” do that, especially since some of them take the same attitude towards making flyers, marketing listings, or staging houses that Chris takes to making phone calls, and unleash both parts to do what each likes to do.

Individuals cannot be ‘retooled’ quite so easily, as if they were a piece of machinery.  There are skills, experiences, and personalities that suit one person to a particular kind of work, while making him unsuited for a different type of work.  But firms, teams, and organizations can and should be retooled constantly to adapt to changing market conditions and changing consumer expectations.

-rsh