The real estate industry has many parts, and one of the most interesting sides of the industry is the one run by non-profits and charities. In Vancouver, where the high cost of living and a housing supply that does not meet demand have made it the least affordable real estate market in North America, housing run by non-profits is all the more important. It is also a type of real estate I never gave a second thought to when I worked in the private sector. Today though, I see how non-profits have become indispensable in delivering homes to thousands of people the private market has left behind. The crazy thing is that people in need of affordable housing range from those with very limited income to professionals that would be considered to be earning a good living by standards elsewhere in the world – or even elsewhere in Canada.
The challenge for non-profits/charities is knowing whether to/how to expand, partner, further penetrate the market or transfer assets to organizations better positioned to meet the challenges of the current market. Building is a long and costly process. On top of that you can add a tax regime that does not clearly recognize the need for affordable housing providers to build-up the cash reserves needed to maintain and replace real estate assets (think redevelopment or roofs and elevator replacements). It’s not like after responsibly breaking even over a number of years you can quickly raise $800,000 + to fix leaking pipes causing unsafe moldy environments for tenants. After all, being “not for profit” does not mean you can be “for loss” when people depend on you for shelter.
Many organizations are looking to rise to the challenge of building more affordable housing – including some community-based organizations that have never operated housing. In order to do this, most are looking to form strategic partnerships. Partnerships in this realm must take into account needs that go beyond building homes. It requires building capacity for effective long-term management of assets and clients under circumstances that are more complex than those faced by the private market. Furthermore, not every partnership is appropriate. Even with powerful partners, many longstanding operators are struggling to maintain the housing stock they have.
Entering into the (no-for-profit) business of building and operating affordable housing in today’s market requires the willingness to look for non-traditional partners. Even though there are promising initiatives from the provincial and federal governments, long-term success will still require taking the time to vet and let go of potential partnerships and funding offers until the right ones are found. Entering the realm of affordable housing requires a commitment to creativity and perseverance. It also requires stepping back and moving away from knee-jerk reactions in order to plan for long-term solutions.
In Vancouver, several organizations are now in the process of delivering affordable units. There is still a huge and growing need. Yet, the situation and top-of-mind interest from the community is setting the stage for non-market housing providers to become a driving force in the delivery of housing solutions.
Blame is often distributed generously when companies don’t obtain the expected return on investment. Most often, the “execution” phase becomes the accused party. As noted in a recent article in the Harvard Business Journal, it is common for businesses to follow the mantra that “a mediocre strategy well executed is better than a great strategy poorly executed.” The article argues that the metaphor is misguided, and that having a good strategy is important. Therefore, a poor strategy won’t cut it even with a spectacular execution.
We agree. Success depends to a great extent on a sound strategy – because even great execution simply follows a blue print. A key element to designing a good strategy is considering the realities and needs of the business from the perspective of the staff that will execute strategy, as well as management’s expectations. Communication across the board is important if you want to start on the right foot.
Having said that, once you have a sound strategy it is not wise to underestimate the importance of the execution phase. Follow-up, guidance and communication will continue to be necessary throughout the execution phase. This way management can determine if processes are flowing effectively and if there are any areas for improvement.
Strategy and execution go hand-in hand. Although it is essential to stick to the strategy’s framework, it is also important to allow it a measure of flexibility. Thus, the strategy can be modified or improved according to the needs of the company’s day to day operations. Companies and – especially- organizations that depend on external funding are subject to ebbs and flows, and do not always operate under ideal circumstances. The strategy must be able to adapt to changes.
In conclusion, strategies should not be abstract concepts designed from the top-down. Their design requires communication with all levels of the company to become truly effective. Execution must be properly monitored to ensure the strategy is implemented correctly. Both phases are important and fulfill specific needs. Both must be approached seriously if your goal is success rather than reaching a state of “good enough”.