CASE STUDY:

EASTDIL SECURED

PREFACE

In the Task Force’s case, liaisons like “Mike D” and the individuals our organization had placed in MNC-I’s headquarters were used to connect different external bureaucracies to our own. But the principle can also be applied to connecting various parts of a global enterprise. As you’ll see, Eastdil Secure—as informed by the experiences of employee Walker Gorham, a former Ranger in the Task Force—created similar relationship networks among its geographic and product specialty teams. By instituting and leveraging an O&I-like forum, Eastdil Secured created a space where the organic exchange of information across boundaries was possible, and its liaison network became the nervous system of the organization.

As you read how Eastdil Secured leveraged liaisons to drive interconnectivity, consider the way in which these individuals were selected and used to magnify aspects of this organization’s original culture and strategy—as its strategic leadership had long desired—and were also trained as future firm leaders.

Moreover, take note of how liaisons were used in conjunction with other practices discussed so far in this book, such as an inclusive communication forum, for the better contextualization of data and information across an organization’s structure.

Finally, you’ll note how Eastdil Secured’s liaisons were able to disseminate “best practices” among themselves through their own social network and thus continuously improve their original function.

THE SETUP

“Now I know why you love these guys,” Holly, my wife, said, as we mingled with the group of Eastdil Secured senior leaders. “They’re like SEALs, but in really nice suits.” She laughed, took a sip of her wine and stared across the skyline of downtown Washington, D.C. We were guests at a cocktail reception hosted by the leadership of their firm; she’d heard me talk about the members of the Eastdil Secured team on countless occasions, so I was thankful that she was finally able to meet some of them. And she was right; this was a highly focused and disciplined team, hardwired to win, but with a familial tightness when they were together in a social setting. It’s a special organization; her description was accurate.

According to those on its inside, Eastdil Secured had always possessed a uniquely flat, elite, and collaborative culture—qualities that remain rare in its industry of real estate investment banking. These guiding principles had been held communal across its myriad product and region-specific teams ever since the company was founded by Ben Lambert in 1967. When Lambert first started Eastdil Secured, he intended for it to be distinctly and dramatically unique from competitors in the field.

Miles Theodore, a younger retail specialist with Eastdil Secured in Atlanta, had felt this distinction ever since he joined from another financial services firm. “We’d never used the term ‘networked organization’ in the past . . . but we have always prided ourselves on being more flat, more prone to collaboration and more unified, so to speak, than other people in the real estate capital market space.” In contrast, he says, “others come at the field with a brokerage mentality, and kind of sharp elbows.”

If Theodore had to clarify what he meant by “sharp elbows,” how would he phrase it? Jealous cultures of “These are my cookies” mind-sets between functional teams or leaders, he answers succinctly. “Limited information sharing and collaboration by peers.”

Theodore’s views are reflective of a wider consensus in the firm, that a top-down strategic emphasis on tight ties among teams had always been the norm in Eastdil Secured. Sue-Lin Heng, a London-based officer for the company’s hotel group, recalls that “relationships between offices have always been quite close,” as they’ve always been emphasized by the firm’s senior leadership.

Stephen Van Dusen, a managing director (MD), points to the “shared compensation structure and combined bonus pool” that the firm has always maintained as a tangible example of this. Van Dusen refers to this effect as financially incentivized “collaborative motivation,” consistent with the values Eastdil Secured’s leadership have long looked to prioritize. “Whereas,” Van Dusen goes on to explain, “the industry standard is an ‘eat what you kill mentality’—reinforced by a commission-based system.” Not exactly good ground for trusting, collaborative relationships between high performers.

In short, Eastdil Secured’s long-standing equivalent of an aligning narrative emanated from the founding principles established by Lambert and resulted in a shared dedication to client success, a flat structure, and the generous sharing of data across it.

Yet in the years immediately before and then after the global financial crisis of 2008, the traditionally North America–focused firm saw its external environment change dramatically. Once the smoke had cleared from the chaos, opportunities for international expansion were plentiful for players that were still standing—especially nontraditional markets like Asia, Europe, and the Middle East.

Concerted efforts by many helped the company avoid being drawn into an uncontrolled “boom” cycle by this newly target-rich environment, thus avoiding the deterioration of Eastdil Secured’s long-standing collaborative emphasis on the prioritization of client experience. In Van Dusen’s words, the periods that bookended the crisis were a “magical time to be in the industry,” with new, tempting opportunities seemingly growing from all corners. Yet Eastdil Secured stayed a careful course, not wanting to be carried away from the collaborative culture that had served it well.

But over the next few years, Eastdil Secured’s offices around the world swelled with new teams staffed by new hires, as emerging opportunities in fresh fields like debt markets had proven too tempting to not explore. Sourced from outside the firm, this talent represented a potential departure from the long-standing interteam-oriented culture of the company, on an office by office level.

Collins Ege, an MD for the company in Washington, D.C., remembers this period as a bit of a blur, where “it was all new people we were dealing with, and all new personalities” within a “twenty-four- to thirty-six-month period.” The result was the danger of an emerging culture clash, but at these tactical levels, decision makers like Ege “spent a lot of time trying to figure out how this would all work together.”

The complexity of Eastdil Secured’s dramatically changed environment—both internally and externally—couldn’t be avoided, no matter how careful and strategically aligned the company’s leadership may have been.

It was only a matter of time before this changed the long-standing culture of the firm.

THE PROBLEM

In 2013 a large in-depth poll was conducted of Eastdil Secured’s major clients, asking for their critical feedback regarding their experiences working with the firm. It was titled the “Kingsley Survey,” and its results held some inconvenient truths for the organization’s leadership.

To put it simply, the company’s clientele all responded with surprisingly, alarmingly consistent feedback. They had each independently identified a problem that Eastdil Secured’s strategic leadership couldn’t perceive, given that it existed at the lower tiers of the firm.

What the Kingsley Survey revealed was that, by 2013, clients had felt that the company had reached an operational “ceiling”—small errors and pitfalls in service were occurring at a greater frequency in their experiences with Eastdil Secured, despite continued high overall performance. Worst of all, there was a growing sense among clients that Eastdil Secured’s culture seemed to be getting “indistinguishable” from that of its competitors.

That last part stung—apparently, the cultural uniqueness of the company wasn’t at its historical strength, and it was now at risk of impacting the operational side of the firm.

But how exactly was this happening? One officer in Eastdil Secured found a good explanation for the impact this cultural hang-up was having in an unexpected place—a military memoir he’d picked up recently.

This was My Share of the Task—McChrystal’s memoir. In it he elaborates on the multistep process by which operator and intelligence analyst teams in the Task Force would traditionally target and eliminate insurgent cells.

Labeled “Find, Fix, Finish, Exploit and Analyze”—for the steps in the procedural chain, abbreviated to “F3EA”—this cycle summarizes how a counterterror mission would be carried out by operators (“Find, Fix, Finish”) and how intelligence subsequently reaped from that operation would inform the next one (“Exploit and Analyze”). It was visually represented as follows in the book:

Randy Evans was a longtime senior officer of Eastdil Secured, and as a result he reported directly to the company’s governing Executive Committee. By mid-2014—his mind fresh from the sobering results of the Kingsley Survey—he read My Share of the Task and was struck by how the process outlined above could be applied to the difficulties his organization was experiencing.

Applying the F3EA formula to the cultural and operational state of Eastdil Secured, he observed that his company was great when it came to its version of “Find, Fix, Finish”—quickly executing on varied market opportunities whenever they managed to be flagged to the right team at the right time.

But, like the Task Force in its bureaucratic heyday, Evans felt that Eastdil Secured fell short in the “Exploit and Analyze” parts of its internal process at the junior levels of the organization—in other words, dredging up, distilling, and distributing critical information to the right team remained constrained by a lack of networking among parallel teams that might have relevant market intelligence to share with one another.

Internal data, collected retroactively, confirmed Evans’s suspicion that not only was information being “bottlenecked at the operational-level spots on the organization’s solid-line” hierarchy, but very few people in the organization felt incentivized to “proactively” share relevant intelligence from their market with other teams.

Evans, with the results of this data and the outcomes of the Kingsley Survey in the back of his mind, was inspired by reading about the reinvention of the F3EA process. As it happened, he knew somebody who might be able to help him further understand how to apply the Task Force’s experience to Eastdil Secured’s problem set—someone with an inside line on what had happened inside the Task Force’s reformation.

A slightly younger team member in the company, Walker Gorham had been a captain in the U.S. Army Rangers before joining Eastdil Secured. During his service, he’d deployed to Iraq, had led ground forces in some of the harshest conditions of the war, and thus had borne firsthand witness to the Task Force’s reformation from a bureaucratic organization.

After finishing My Share of the Task, Evans sought out Gorham and was direct with him: “Was this all for real?” he asked.

Gorham didn’t have to think hard about his answer. “Yes.” Then he paused, maybe reading Evans’s mind, hesitating. “But this would be tough for us to do.” Gorham had been present in Iraq and Afghanistan and recognized the tremendous senior-level commitment to change that would be required for Eastdil Secured to really embrace this initiative—and he wasn’t entirely sure it was possible in the private sector.

But Evans was confident the company needed this. He’d heard what he needed to from Gorham: this was for real, and it might work.

THE SOLUTION

Like our other featured case studies in this book, Eastdil Secured pursued a mix of different practices when trying to reform itself into a team of teams. These included improvements on the strategic alignment of its different silos and the reinvention of their Market Intelligence Call (MIC, pronounced “Mike”). But a critical centerpiece that brought these other two practices together was the company’s use of a liaison network, which featured heavily in both complementing the content of MICs and better unifying Eastdil Secured’s teams. We will focus in this writing on how its liaison network was established and how it was used in conjunction with these other practices.

The first step Evans took—as he should have—was to make the case for and gain permission from his solid-line superiors in the firm on his ideas on how Eastdil Secured’s culture might be reestablished: Eastdil Secured’s Executive Committee composed of Roy March, Lambert, and Michael Van Koynenburg (“VK”)—the company’s strategic triumvirate.

Roy March had been the CEO of Eastdil Secured since the merger between the company’s previous component halves—Eastdil Realty, a New York–based real estate capital markets firm, and Secured Capital, a similarly focused West Coast–centric firm—had joined in 2005 to become greater than the sum of their parts. As a member of the firm’s Executive Committee, March was directly reported to by Evans.

At Evans’s scheduled performance review in 2014, March remembers hearing Evans’s pitch for a way to become a more effective information franchise, a need highlighted by the Kingsley Survey.

Laughing, March recollects this initial exchange as being “a little unusual.”

Why? “Well, I think he actually brought in an excerpt from My Share of the Task . . . during his review. Most people in those situations come in and try to talk about their accomplishments for the year. When they don’t . . . well, it was actually productive, and heartening.”

Mike Van Koynenburg was also active in the day-to-day strategic leadership of the company on the Executive Committee, as the former chief of secured capital. Evans’s pitch stuck out to him as well, distinguishing itself from “the usual chest pounding” that VK had gotten used to hearing at meetings like these from subordinates over the years: “He decided instead to talk about having read My Share of the Task.”

Evans’s approach was unusual, but it worked, and the Executive Committee was tentatively on board—they saw the logic in his thinking. But they all wanted to hear Gorham’s concerns out first, before going any further. They needed to know: What would this take to work?

As March recalls, “His comments were essentially I think it could—but everybody in this firm is an operator, so you are going to have to be committed to the behavioral change needed to make this work.” Gorham wanted to make sure that the firm’s leaders were taking what was being suggested seriously and were considering the implications of it heavily.

March got the message. “He candidly didn’t think we should start it unless we were fully committed to finishing it, because it would be disruptive but also disrespectful for what could actually be accomplished, if we weren’t really committed to it at the most senior levels of the firm.” But he and VK were now believers, and they were willing to provide the commitment that Gorham deemed necessary. Soon enough, Gorham and Evans had their formal mandate for change.

The next step was to create buy-in among the solid-line leadership of different product teams that could be counted on—for this the Executive Committee turned to Van Dusen and Ege, among others, who were established managing directors from parallel functional silos in Eastdil Secured.

Unlike the hesitation that was seen in the case of Jim Hardy’s peer divisions at Under Armour, or Matt Singleton’s attempts to prompt OMES’s directors to participate in their O&I, Eastdil’s solid-line leadership bought in enthusiastically to Gorham’s and Evans’s overtures. Fortunately, they too had noticed the impact of the informational bottlenecks among their silos.

With this buy-in, Eastdil Secured went about taking tangible steps to interconnect its teams.

This began with heavily investing in the creation of multiple video teleconferencing (VTC) forums, all set on a specific cadence—these ranged from the biweekly, company-spanning, mass-attended Market Intelligence Call to smaller-scale forums that certain product groups would undertake on a more frequent operating rhythm (exemplified by the office asset class group’s dramatically dubbed “SWAT” call). The MIC in particular ensured that scattered teams now could be familiarized with one another, establish better lines of communication, and be better exposed firsthand to the strategy of Eastdil Secured’s strategic leadership.

As discussed earlier, technology is certainly of some utility in creating dotted-line relationships among teams—it certainly was in Eastdil Secured’s case, and proved to be necessary for their change. Van Dusen, as the designated controller for some MIC forums, saw firsthand how these technological “mechanisms” eventually “allowed [for] . . . familiarity between . . . the people on our team in Atlanta, in New York, in Boston, and so on.”

VK somewhat agrees, characterizing these forums as critical for expanding the range of Eastdil Secured’s strategic thinking: “Installing the [MIC] system was a game changer for getting buy-in from our lower levels. The senior guys had always got lots of exposure from the top leadership of this firm, but the VTC in the MIC allowed some of our younger people to be engaged more directly, [get] more involved, and allowed them to be showcased earlier.”

But with familiarity and connection initially made possible through this interconnecting technology, how might this opportunity for collaboration be best exploited by participants? If the desired outcome was for strategically minded, organic information sharing to happen freely among teams, without the intervention of senior leadership, then that desire had to be demonstrated.

VK continues, “What I think impacted us the most was discovering that the technology in and of itself was not what was necessary to create the change.” Instead, the solution would lie in changing “the behavioral aspects” of the broader organization.

March agrees, touching on an expectation that seemed to exist among Eastdil Secured’s ranks: “Most of our people were waiting for some big technological breakthrough at the firm level, that would ultimately infuse a sharing of information” across the teams. But gradually, they realized a technological silver bullet to solve the firm’s challenges just didn’t exist—it had to be complemented by an elite human element.

So Gorham and Evans decided to use specially selected liaisons from across the company’s functional teams to populate the content of MICs and be physically emplaced within different product groups in the company. The first “tranche” of liaisons was handpicked by March and VK, with the input of the various product group leaders, such as Ege and Van Dusen, who had to decide what qualities to select for in these individuals.

Ege had a clear picture in his head of what type of thinkers, and individuals, Eastdil Secured needed as liaisons: “Sometimes we get a little bit too nerdy in this office—we’re a very quant-centric business, by definition.” What Ege thought was missing among this habit of “nerdy” thinking was a widespread consideration of the “so what?” to contextualize and make relevant and actionable the traditional number crunching that had driven the firm’s earlier attempts at promoting tactical information exchange.

This type of thinking would then be broadcast through the various forums and technological investments that Eastdil Secured had made in this effort. Ege: “We needed someone to answer these kinds of questions for us: What do these rental rates mean? How does this exit-pricing trend influence the projected total return for a separate project? How can one team’s experiences in a market inform another one down the road, in another region? We had to get into these granular ideas of how you use the data, and then apply it to market opportunities.”

Ege’s framing was the idea that a qualitative connecting of the dots among different teams was needed and would be prompted, through social learning, by the initial demonstration of this behavior by liaisons. Liaisons would be selected based on their perceived capacity to think strategically and qualitatively about market data, with the intention that they’d promote similar behavior across all of Eastdil Secured’s teams, as boundary spanners.

Eastdil Secured’s creation of a defined liaison role—an individual formally designated to build informal relationships—and their tapping of trusted individuals to fill this first tranche ensured a sound approach to creating these relationships.

Theodore and Heng would both end up being among this first tranche of liaisons, and experience would prove a powerful teacher regarding their ability to analyze data that they perceived in one market and publicly apply it to another during discussions on the MIC forums.

Naturally, there was a learning curve associated with this. Theodore’s initial experiences as a liaison leading presentations on the MIC and interoffice forums were trying: he found “being the arbiter of all retail data,” to put it mildly, very “enlightening.” For the first time, he and other participants could clearly “see the way other teams were operating their day-to-day business and the way they were using data, and interpreting it, and recording it.”

Mistakes were also common. Theodore says: “There were one or two MICs where I just wasn’t ready to present . . . but it only took one time being on camera and flustered in front of two hundred of my colleagues to appreciate the value of preparation.” Liaisons soon learned to exchange best practices among themselves, as they became progressively better at filling the role Gorham and Evans had first envisioned them occupying.

Per Theodore: “It’s funny, because if you looked at the sixth or eighth MIC presentation by some of us, you’d see a lot of similarities in the way content was presented, and the formatting of different slides from each team.” Noting what format of presentations and discussions worked best within the context of MIC forums allowed this new network across Eastdil Secured’s functional groups to develop methods by which to best disseminate market intelligence across teams.

What helped Theodore and other liaisons during this learning period was the use of “dress rehearsal calls” for forums and honest off-line dialogue with other liaisons in their own clustered network. As he puts it, “amongst the liaisons, we were our own little sort of team of teams.”

This also applied when it was time for a new tranche to take over—Theodore remembers engaging heavily with “Shannon and Kerry—the newly appointed liaisons on the retail team” ahead of the handoff to them and advising them on everything from how to collect data to how to interpret it, while providing them with some of the resources he had used to come up with ideas to present.

The normal length of a tranche deployment for Eastdil Secured liaisons was set at nine months, although there have subsequently been exceptions to that rule—as of late 2016, a third tranche has taken up the mantle, yet Heng still remains—a veteran but infrequent hand in the liaison program, happy to pitch in on the occasional presentation on a MIC forum, but a less frequent contributor than the newer arrivals.

THE OUTCOMES

On a recent visit I paid to Eastdil Secured’s central D.C. office, I asked Ege what he thought were the critical takeaways from his company’s experiences in reforming its bureaucracy: “What were really the key few difference-making aspects of what the company had done, when distilled to bare elements? What had made it all come together so far?”

Looking around, the office he shared with a good few dozen other employees didn’t seem out of the ordinary to the untrained eye. We were surrounded by glass cubicles ringed by a perimeter of corner offices, while live market graphs and TV screens showing Bloomberg tiled the office’s pillars and walls—a typical setup for a financial services firm.

Ege took his time thinking through what I had asked, and his response to my question was twofold: “The number one thing that was taught was that we (our teams) didn’t need to see the senior people speaking on our forums. We wanted these liaisons to take on this level of accountability and leadership. They were playing a meaningful role in the firm that ultimately would be some sort of legacy planning.”

By empowering the firm’s various tranches of liaisons to consider their teams’ market data on a strategic, qualitative plane of thought, and applying that perspective across different teams, the company was sowing future leadership of the company as shared consciousness was being developed. It was these types of individuals, employees that could think on strategic qualitative planes, who were best positioned to benefit from more exposure on MIC forums.

“Second,” Ege went on, “we’re retraining our habits—once we’ve ingrained this type of communication, this information sharing, these networks as not just tasks but habits, then it becomes unstoppable.”

He pulled up a slide on a laptop perched on his standing desk—part of a PowerPoint presentation that had been featured in a recent SWAT forum with Eastdil’s Office group. On one side it showed the front page of Charles Duhigg’s 2012 best seller The Power of Habit. On the other it showed a formal definition of “habit,” likely taken from the book: “an acquired behavior pattern, regularly followed until it becomes involuntary.”

Ege looked over at me. “That’s what we’ve learned to hit with our liaisons—the whole concept of doing, demonstrating, and reinforcing something done right, so often that it becomes subliminal and timeless.” This development of a “habit” has facilitated the scaling of Eastdil Secured’s original culture.

Heng sees the efforts of Eastdil Secured to become a “team of teams” as a building-upon of the culture that existed in the company beforehand. “Eastdil’s always been a type of team of teams—historically flat, with easy access to leadership, but what things like the MIC call and liaisons did was provide a structure to extend and expand that around the company.”

She is right—using these practices in conjunction with one another, their mutual effect can be complemented and augmented. Noting that the original strategic culture of the firm—one focused on easy information sharing and closeness among leaders—has been expanded through the use of liaisons and forums reinforces a central point of these practices.

Still, enough time and practice have passed that constructive critiques of Eastdil’s approach to connecting its teams through this “structure” have emerged from a variety of sources—while a greater number of the company’s teams now are working together and sharing intelligence, certain liaisons and officers have started to recognize just how much work it is to maintain the momentum that has been built.

The general theme of this constructive feedback is that the current cadences of market calls and the work required of liaisons to identify these qualitative trends across quantitative data are highly demanding. Unlike pure number crunching for a single team, strategic-level qualitative analysis of market trends is uniquely time-consuming and stressful for the liaisons.

Says Theodore: “The challenge of one person trying to come up with fresh content and independent research every other week—that was hard.” During the first tranche of liaisons, every product group had one liaison in charge of presenting for that team every other week—this has since changed, with up to four liaisons now being nominated by each product group. But Heng and Van Dusen also acknowledge that the cadence and manual preparation of the data may need some adjusting.

Leaving Ege’s office, I asked him for an example of what the “acquired habit” he thought had been created in Eastdil might look like.

In response, he pointed over to a glass-windowed conference room right next to his office—I peered in and saw a smattering of men and women gathered around a central oval table, talking with one another while one drew up notes on a whiteboard. “Those are representatives from our local multifamily team, our office team, the hotel team, and the retail one, plus all of their liaisons, all volunteering to brainstorm the redevelopment of a hotel site here in the city.

“I was just in there before you came in—they’re talking through best practices used by other teams in the past, how the lead team should approach this, using all of the intellect and power of everyone in that room . . . but if you had been here a year ago, the only people in there would be the lead team.”

What Ege was describing was what I had seen so long ago, back in the Task Force—networks interacting organically among functional silos, free from excess reliance on senior bureaucratic leadership to facilitate information flow.

Speaking with other figures in the firm, a more dramatic example emerged of how Eastdil’s liaison networks, combined with MIC forums, had helped the firm adapt to external conditions or new danger in its external environment: the firm’s response to Britain’s referendum to exit the European Union, an event that created what March referred to as “perfect storm conditions” in international financial markets and confusion among clients.

As previously noted, in the lead-up to June 2016, scientific polling indicated that Britons would decisively vote to remain a part of the European Union. But to the shock of pollsters, politicians, and economists, voters elected to leave. Markets crashed, currencies showed dramatic fluctuation, and clients were left confused and uncertain of the safety or future of their investments.

March categorizes this event as just one of a broader tapestry of market-shifting developments that year, saying that “you could probably title 2016 as a year of surprises—the oil price collapse, simultaneous with the sell-off of the Chinese stock market had equally dramatic effect. . . . Brexit and our own [U.S.] election all had incalculable outcomes that forced us to move quickly.” These global disruptions made investors nervous, and they wanted answers quickly about how Eastdil Secured was approaching the turbulence.

The temptation for many organizations in this type of environment would be to speculate, but that was not the case for Eastdil Secured—per March: “The liaison network and MIC allowed us to move immediately and be the ‘steady hand on the tiller’ for our industry.”

The outcome of having a liaison network in the midst of multiple crises was “shared intelligence, not speculation.” Much like the Task Force’s approach at the peak of its operation, a disciplined approach to information sharing, decision making, and cross-boundary connectivity during normal times allowed them to weather these storms with calm and discipline. As disruption emerged around the globe, a traditional organization would have scrambled to connect teams and patch together solutions in the moment. But Eastdil had built this muscle preemptively, so global synchronization was not a new behavior for it. Hearing directly from senior leadership did not mean it was time to panic, just business as usual. Sharing insights and trusting the views of your teammates around the world was an established behavior, not unfamiliar territory. Where many organizations might have been caught in a frantic mode of putting out seemingly endless fires, Eastdil maintained a long-term and steady view on the market, a perspective not lost on its clients.

Sounds like a pretty good habit to maintain.