On Pinnacle: Interview W/ Stefan Swanepoel and Jeremy Conaway

Recently, I found out that the Pinnacle Group Project — something I had heard rumors about for a few months — had officially launched. What the hell is Pinnacle? From the website (the URL is “thechangechampions.com” by the way):

A two year intensive course of study for Association Leadership and Management.

This program includes:

• Eight (8) modules.
• Attendance by two people (AE and President or incoming President) for each module.
• Six (6) on site sessions for elected leaders and eight (8) for appointed management (travel and accommodation will be for Associations own account but meetings are dovetailed with existing NAR meetings).
• Sixteen (16) Coaching Call / Webinars.
• All courseware, templates and materials.
• Special access to a password protected Association portal.

Okay… so what exactly is this thing teaching? From the website once again:

There is an almost universal understanding that that our industry and our associations are now entering into a new era. The industry appears to have begun its recovery from six long years of difficult business conditions. While no one is suggesting a meteoric rise; there is reason to believe that over the next two years surviving brokers and agents who have made the right business decisions and who follow the right strategic course, will be successful in enhancing productivity and increasing profitability. At the same time a new generation of consumers, agents, technologies and business models are reshaping the broker and agents of tomorrow. What is evident is that that both the agent and brokerage communities, as part of their reinvention process, will be reconsidering and deciding what organizations will be seen as contributing to their future and which will be seen as expendable and unnecessary.

It is safe to say that the future of the REALTOR® association, at all levels, will depend upon the association being seen as relevant and part of the solution. The primary objective of the Pinnacle Project is to do everything possible to ensure that participating associations become even more viable and a relevant part of the solution. The core of this effort will consist of building and strengthening a number of skill sets and competencies that have been incorporated into The Pinnacle Program.

As we all work to find “our right course” there will be some whose thoughts, opinions and ideas will take them in different directions in search of a winning solution. The one absolute here is the lesson that the global business experience has taught every enterprise in America. We must increase our productivity, we must enhance our value propositions, we must do everything possible to present solutions to our member’s challenges, and most importantly, we can benefit from working together.

Basically, the Pinnacle Program represents a mix of training and consulting for REALTOR(r) Association executives and elected leaders to do strategy, tactics, and learn how to do stuff. I got into a little discussion with Stefan Swanepoel — who is one of the three principals, along with other industry veterans, Jeremy Conaway and Jim Sherry — on Facebook, and he and Jeremy graciously agreed to an email interview for YOU, the faithful (or not quite so faithful) readers of this blog. 🙂

The interview — interspersed with my personal thoughts — follows.

Interview With A Vampire Swanepoel and Conaway

Question 1. What was the origin of the Pinnacle Program?

Swanepoel: The idea of creating a movement of extraordinary REALTOR® Associations was the brainchild or “game changer” of NAR CEO Dale Stinton. The key objective of is to move state and local REALTOR® Associations to the level of performance and relevancy that will be required to succeed in the new industry environment. It was felt that the most effective and efficient way to implement a dynamic program in the fast paced, changing environment would be best suited as an independent project, outside the Association family itself, but supported through a NAR sponsorship.

Through a number of conversations three veteran industry consultants, Jeremy Conaway, Jim Sherry and myself, were identified to be the core drivers, creators and instructors of the initiative. And this subsequently led to formation of The Pinnacle Group, and The Pinnacle Program.

I guess the only thought I have here is that if this is the game changer from Dale Stinton, the CEO of NAR, this has got to be a high priority item for NAR. I like that Pinnacle is implemented as an independent project, but if it’s supported through a NAR sponsorship, I’m wondering why Associations have to pay for it at all.

Couldn’t NAR simply have paid Stefan, Jim, and Jeremy let’s say $1M each to do this program at no charge for every single Association that wanted to do it? Would $3M a year really have been not enough money to get them to do this? And if the Pinnacle Program is important enough for Dale Stinton to sponsor personally, wouldn’t it make sense to remove every barrier to participation for local Associations?

BTW, if this post gets NAR to step up with a few million bucks… Stefan, feel free to send along a nice bottle of wine or two. 🙂

Question 2. What is THE problem you guys are looking to solve?

Conaway: Our industry at the transaction, market and industry levels is moving forward at an ever increasing rate of speed. The local and state association could and must be a part of the industry’s solution moving forward but at the present time it is, unfortunately, just as likely to be part of its problem. The Pinnacle Project seeks to provide local and state REALTOR® associations with one last opportunity to be a productive and relevant part of the new real estate industry environment.

Swanepoel: Innovation and change is difficult and stressful for most people. For companies, especially large ones, it’s becomes more complex and more expensive. For associations and other non-profit organizations the progress becomes exponentially more multifaceted and complicated. To seek solutions and “best practices” requires ongoing, active, focused commitment and a sharing by the those that want to make a difference and re-reinventing their own future. The Pinnacle Program is simply about being the best brain trust and resource for Association leadership, period.

One of the things not outright stated in this answer is the actual short answer itself. The Pinnacle Project seeks to restore “value and relevance” to the REALTOR Association. That leads to the question below.

But I pause to point out that the problem these guys are looking to solve is that the contemporary REALTOR Association is no longer all that valuable or relevant to the individual real estate practitioner. That’s not my opinion; that’s Dale Stinton’s opinion, because otherwise this program does not exist, nevermind being the “game changer” from Dale himself.

Question 3. What is the evidence that Associations are losing relevance and value?

Conaway: The evidence is overwhelming. A tremendous amount of research was undertaken in 2011. Much of its findings were published in the 2012 Edition of the Swanepoel Trends Report.

In 2010, in a totally separate effort, the Canadian Real Estate Association conducted similar research and reached the very same conclusion. In April of this year organized real estate in Canada passed a comprehensive plan designed to create REALTOR® associations that can be relevant and effective in its new market environment.

But perhaps the best source of the evidence you seek can be found in the hearts and minds of REALTORS® who are voting with their checkbooks and feet in places such as Atlanta and Seattle where close to half of practicing REALTORS® have elected out of their Association. In meeting rooms and venues across the country both leaders and AE’s understand that something is very wrong. The evidence is conclusive that it time for REALTOR® Associations to turn things around before the floodgates break. [Emphasis added.]

Note the bold section above, and hold that thought, because….

Question 4. Does MLS also come into play with certain Associations? Do you believe that MLS’s are also under threat?

Swanepoel: MLS’s received a big wake up call with the arrival of the Internet almost 20 years ago. With innovation and changes, the MLS survived actually very well the past two decades but still finds itself continuously precariously dependent on various key decisions that are constantly being taken. When an industry experiences a fundamental shift, as real estate is now, the rules change, new players are born and all the existing pieces, including REALTOR® Associations and MLS, are up for grabs. Survival is a challenge and remains 50 – 50 at the moment. The outcome will depend on numerous different steps taken, or not taken, in the foreseeable future.

So a couple of things here.

First, Stefan believes that the MLS is looking at a 50/50 chance of surviving. Surviving what? Unclear at the moment, but I think from the answer, we can infer that the MLS would need to “survive” the Internet and its progeny. I’m sure many of you would use a different word than “Internet” in the sentence above.

Second, there’s going to be a fair amount of tension here, and I can’t wait to hear what the coursework at Pinnacle covers. Because you know what’s interesting about Atlanta and Seattle, the markets that Jeremy cites as examples of Association irrelevance? They operate with a broker-owned MLS.

Question 5. So if I’m an AE who is facing that challenge, what will I learn by going through the Pinnacle Program?

Conaway: An interesting dynamic with respect to the Pinnacle Project is coming from AE’s and elected leaders who are nearing retirement and, perhaps understandably, are not excited about reinventing themselves or the organizations they have served for decades.

With the highest level of respect for the work they have done throughout their careers, my advice to AE’s would be to be more aware of their legacy. Perhaps the ultimate ethical duty of any officer, elected or staff, is to ensure that upon their departure their organization is prepared to face the challenges of the new era in which it must perform. Put in simpler terms, pretend that the last five years of your career is really the first five years of your association’s future.

I do like Jeremy’s thoughts here about “legacy”. Boiled down to the essence, I think the message is, “If you’re too tired and too old to cope with the challenge your Association is facing, think about stepping aside for someone who can.” Jeremy would never put it that way, of course, but I would, and I have. It makes no sense to try to make sure you have the very best cabin on the Titanic.

Question 6. What is your vision of the “ideal Association”?

Conaway: The other side of our industry, the business sector, is desperately seeking visions and solutions to the profit and productivity challenges being presented by today’s rapidly transitioning marketplace. At the same time today’s consumer, real estate agent and brokerage has reached an “age of enlightenment” and are demanding a new value proposition from their REALTOR® association.

The “ideal Association” must first become knowledgeable regarding this struggle and the fact that the association does not exist at the center of the stage but rather as a support player for those who are conducting the business. The ideal association must spend its every waking hour passionately working to first understand and then support its marketplace, its members and its industry not as it was in 1985 but as it will be in 2015.

Swanepoel: Ideal is usually tied to perfection, and there will never be a perfect Association. I prefer the word relevant. I know it’s more subjective and it means different things to different Associations. But, if we can get REALTOR® Associations to push aside tired mindsets, dated programs and petty politics’ and focus on offering relevant and timely programs Associations will have taken a huge step forward.

The only thing I would question here is that “today’s consumer… has reached an ‘age of enlightenment’ and [is] demanding a new value proposition from the REALTOR(r) Association.”  Sorry, I don’t think the consumer has any idea that the REALTOR(r) Association even exists, nevermind demanding a new value proposition from it. That’s not a knock on the REALTOR(r) Association since the consumer doesn’t much give a damn about the National Restaurant Association or the U.S. Chamber of Commerce either.

I also wonder what Jeremy means by “this struggle” above. It seems related to “age of enlightenment” and “profit and productivity challenges” in the first paragraph, but… I wonder what the struggle is.

Question 7. Why do you believe it’s not too late for the Association? And if it isn’t too late, how much time do you think the Association has before becoming totally irrelevant?

Conaway: First of all, if we thought it was too late we wouldn’t have undertaken the Pinnacle Project. However the amount of time remaining for the traditional REALTOR® association is finite, probably 36 to 48 months. It takes about 36 months to turn an Association’s leadership dynamic and operational culture around. With enlightened leadership and continuity of purpose it has and can be accomplished in as little as 24 months. Given the unique nature of the Associations that have enrolled in the Pinnacle Program to date we believe the 24-month time frame is a reality.

The Pinnacle Project will bring together, in a high level limited environment, targeted information, tactical tools, knowledge and minds available from both within and outside the industry. The program will be rigorous, its standards demanding and its completion challenging. Some Associations that start the program may not choose to complete the program. Those who have the courage, tenacity and innovative spirit to complete the program will form the nucleus of a new generation of state and local Associations that will assume an essential role in the American real estate industry moving forward.

Swanepoel: Adding to Jeremy’s response, “too late” is a defeatist mindset as there is always something you can still do. The focus I think is rather what Associations need to do as soon as possible to be more viable in the future? For example, is the existing REALTOR® three tier economic model sustainable. And I think the answer is, it hasn’t been for some time.

When things are no longer viable, the stage is set for disruption. Disruption drives change, and change transforms industries and redefines the dominant players. That is what is happening right now, and within a few years we will see significant realignment of who in the real estate industry is a serious player and who has become irrelevant.

First, if you’re an AE or an elected Association leader, the fact that Jeremy Conaway thinks you have four years at most to turn things around or face questions of survival (see above) should scare you. The fact that Stefan Swanepoel, one of the most optimistic and positive guys in the industry, thinks you’ve got a “few years” before we get to see who is a serious player and who is irrelevant should give you pause.

Second, you should know that I think both Jeremy and Stefan are overly optimistic by half. You don’t have a few years. You don’t have 48 months. You have a couple of years at most, not to start implementing, but to finish implementing. If you just get started with reforms and turning value issues around in 2014, you have no shot of staying relevant.

In fact, this is my main “critique” (if it is one at all) of the Pinnacle Project: it assumes that things will be okay for the next four or five years, so Association Executives have time to learn all these new skills and come up with new strategies over a two year period, and start implementing them in time. I disagree. I think Pinnacle should be more of an immediate, here-and-now, do-this-yesterday type of program that emphasizes consulting and action plans first, and training for the longterm second.

Seems to me that the only way that Stefan, Jeremy and I differ is in the degree of urgency.

Question 8. What do you think of the lawsuit going on at GLVAR? Will your course deal with that kind of an issue?

Conaway: In the overall history of the industry the GLVAR lawsuit will be but a distraction. But in the short term it is providing a valuable and terrifying wake up call. Imagine coming home each night and finding a new filing, legal document or invoice for legal fees in your mailbox, and all because you volunteered and perhaps didn’t pay close enough attention. Unfortunately the association culture or parts thereof described in the GVLAR complaint can be found in way too many traditional associations.

The focus here should not be on the lawsuit but rather on the growing dissenter movement. Every organization has members who are dissatisfied; it is part of the association culture. But when an industry is moving at high speed like ours, and its association support system is refusing to move at all, friction is going to occur. Non-responsive traditional associations must be prepared for a wide range of dissent activities. Disruptive elections, demands for forensic audits, dues actions and dropping memberships are all to be expected. In today’s world such matters greatly amplified by the weapons of social media and the supportive environment that surrounds it.

Swanepoel: Life is not a static experience. Shifts occur continuously and sometimes-single events recalibrate the roadmap of tomorrow. We have a few industry reshaping events shifting the future of organized real estate and this is clearly one of them. It’s not the end of the world, but another wake up call for Associations to revisiting their entire organizational structure, value proposition and relevancy. We will with the Pinnacle Program, strive to create a current, living and dynamic program for REALTOR® Associations, focusing “best practices” and the most relevant and important issues of the day.

I’m encouraged by Stefan’s response that the Pinnacle Program would look to create something to deal with best practices of the most relevant issues of the day. Because at the top of that list, I would put “Corporate Governance.”

And I find that I disagree with Jeremy in that the focus should be on the dissenter movement. Dissenter movements won’t result in multi-million dollar judgments against the Association and its Directors. It might be frightening to get an invoice for legal fees in your mailbox; it’ll be something else to get a court order to pay $2 million in damages. Oh yeah, that’s you personally, by the way, not the Association, which has its own court order to deal with.

By all means, make sure your members are happy, but as I’ve laid out in my post on GLVAR, if the class action plaintiff’s bar ever really gets excited about revenue opportunities in suing real estate associations, it’s probably game over for all but a handful of them. Just remember that those guys — the class action attorneys — are the same ones who brought down Big Tobacco and spent decades in asbestos litigation and ask yourself if you’d rather focus on dissenters.

Do what you can for dissenters, but focus on corporate governance and make absolutely sure that you can show evidence of careful consideration and robust discussion of every single vote you’ve ever cast. Either that, or up your E&O liability insurance by alot. A personal umbrella policy might not be a bad idea while you’re at it.

Do It, If You’re Not Ready for the Radical

On the whole, I find that I like the Pinnacle Project. Is it what I would have created? No. But I doubt that anything I would have created would have interested more than a handful of paranoid/visionary (depending on your point of view) people in the Association world. And some of what they’re offering is a whole lot better than a sharp stick in the eye.

The most important thing that Pinnacle Project does, I think, is to raise awareness of the problem itself. I’m great at imagining things that industry insiders simply can’t imagine, but not being Stefan, Jeremy, and Jim, I’m more likely to be… ah… radical in my approach. If you’re not prepared for radical solutions, then might I recommend you spend some time talking to the guys at Pinnacle Project to see if there’s a more evolutionary approach you could take?

Many thanks to Jeremy Conaway and Stefan Swanepoel for spending time with us on this important issue.

-rsh