After eighteen plus years in the real estate development and capital markets, I have seen both massive successes and failures on the part of real estate developers. As a person who has a degree in medieval history and has never lost a passion for historical studies (yes, I am a history nerd), I naturally developed a mindset that seeks to find commonalities that piece together the puzzles of our past. Over the years I’ve spent in the development world, I have regularly applied this method of thinking in order to solve one simple, yet profound question: what are the most important traits that define a successful real estate developer?
In our universe, luck can play a significant role in positive financial windfalls for the average player. Over time, fluctuations in the market play to the favor of many. But I have also found that successful developers influence their business outcomes for the better by employing two key approaches that all of us would be wise to keep in mind. First, learn from the mistakes or negative events you’re sure to face in business. The second is simply this: know what you don’t know, and surround yourself with the best people who do, whether they are from within the firm or are external consultants.
We have all met players who live with a “bull in a china shop” mentality that may bring shorter term successes, but ultimately alienates relationships and leads to an overabundance of ego – really, hubris. This approach may work for some time, but pride and staking one’s reputation on successive deals might well land one in the realm of massive financial failure.
To me, it boils down to metacognition. The term literally means cognition about cognition, or more informally, thinking about thinking. In other words, a deeper state of learning that leads to constant growth and mindfulness. This all may sound a bit out there (or possibly “guru-ish”, for lack of a better word) but I truly have seen this to be the key commonality.
So how does this play out in the day-to-day aspects of running firms and projects?
First, metacognition is instrumental in maintaining an atmosphere of continuous strategic evolution in the inner workings of companies, and promoting cultures where the opinions and well thought out ideas of partners and employees are always seen as potentially valuable. These types of environments tend to, somewhat by default, also enjoy strong employee retention ratios.
Secondarily, being surrounded with best-in-class third party consultants and maintaining long term relationships with them is vital. These players typically tend to be very service oriented. Not yes men, but the types who care less about winning awards than the profitability of the project and the success of the client.
Thirdly, maintaining a culture where mistakes or negative outside influences are not necessarily to be frowned upon as much as learned from is critical.
And lastly, metacognition is at work in approaching the myriad of governmental parties and other stakeholders by first asking questions that can lead to more positive interactions from the start, as opposed to beginning with an air of dominance and force. By subsequently taking the time to digest the outcome of each and then strategically planning into successive meetings, one can solve for issues that may arise more thoughtfully.
All in all, the most successful developers I have seen are humble life learners.
If you play in this arena, I would argue that it is helpful to ask yourself the following questions about your “30,000 foot” approach to development: Is my culture and mindset one that promotes constant evolution in strategy and focus? Do I or we take the time to learn from mistakes and external factors that have caused financial setbacks in the past? Do I retain best-in-class talent, listen to them, and let them run? If your answer to these questions is yes, then you are likely to be more successful than the many that don’t take the time to think about thinking.