Commercial strategy must be designed to pull through any catastrophe
Sometimes, no matter how much you plan and prepare and study, events happen that are completely unrelated to your business, but which nonetheless have the potential for a huge impact on your business, your market and your customers. In fact, not sometimes
As I write this article the business-news channels are getting hysterical about the potential exit of Greece from the euro and the run on Greek banks and potential destabilisation of the global financial system. And as the distance between companies and customers has shrunk, so has the world. A small country half a world away has the potential to affect us in Thailand.
When we did our IPO roadshow I was asked at an investors’ lunch how Ananda would survive a "catastrophe". I asked in return what they defined as a catastrophe, as Ananda had already survived the global financial crisis, two coups, the burning of Bangkok and a national flood. Almost the only thing we haven’t had to deal with is an asteroid strike.
How we got through those events is how we’ll deal with Greece or whatever else the world happens to throw at us, through a mixture of strategy and designed resilience – resilience we maintain through controlling debt, holding a lot of cash and other liquidity, and maintaining discipline on fixed costs.
I originally based the business strategy of Ananda on my experience with the Asian financial crisis in 1998. I wanted a business strategy that was defensive, that could survive another crisis as bad as that one had been. I focused on mass-transit-station locations because I saw them as the least likely to suffer a significant drop in demand if there were a crisis and the most likely to recover quickly. This was based on my analysis of the historical performance of real estate worldwide in response to property cycles and also, most important, economic crises.
I saw that prime locations’ prices and demand fell the least in a crisis and recovered the fastest.
Obviously, most of the prime land in central Bangkok at the time was locked up and/or developed, so what could a young and up-and-coming developer do to get the same advantages as centuries-old incumbents? Luckily for me, something new was happening in Bangkok that was changing the definition of "prime" – the building of the mass-transit system.
I’ve explained in previous articles why this was a historic game changer in Bangkok real estate, so I won’t repeat it.
The key point is that global or local events are not a reason to change our strategy or operations, because our business strategy is not one that relies on the property cycle, or a good economic climate, or easy credit.
It is one that survives even if everything goes wrong, because we’ve identified fundamental consumer demand and deliver a value-for-money customer solution.
Our strategy is based on the two legs of identifying fundamental demand that is not based on property cycles and continually innovating to improve the value of our solutions.
To reflect this, we don’t call ourselves a property developer – we’re not just throwing down concrete – but an "urban living solutions" company. We’re in the business of easing the pain and suffering of urban living. We do this through detailed understanding of our customers and what causes them suffering and then a constant culture of innovation to find ways to ease that suffering.
I’ll have more to announce on our latest innovations in urban living solutions in my next column.
