December 13, 2004
Kincaid Discusses the Importance and Challenges of Managing Change
by David Somers, MBA '05

With a portfolio that includes more than 120 million square feet of space, Equity Office Properties Trust is the nation’s largest publicly held building owner and manager. It was the first real estate company to be included on the S&P 500 and has been named a “Most Admired Company” by Fortune magazine. But speaking at the McCombs School of Business on Nov. 30 as part of the Executive Speaker Series, President and CEO Richard Kincaid said that the company has been successful precisely because it has not been unduly impressed by these achievements.

A few years ago, explained Kincaid, he recognized the need for significant operational changes to secure the company’s position. Equity Office’s buildings were “managed as islands” with no common infrastructure to realize economies of scale.

“We had to start by puncturing the myths that we were the best company in the industry and face the fact that we had diseconomies of scale, not economies of scale,” he said.

To face that fact, Kincaid spearheaded a set of operational changes to centralize the company’s core functions. Today, Equity Office manages its business as a portfolio and has consolidated its 169 offices to 48 regional offices. As a result of these cost-cutting measures, Equity Office can increasingly differentiate itself to clients by offering lower occupancy costs.

“Our goal has been to provide a discernible value proposition in this fragmented business,” said Kincaid, “and we are well on our way to doing that.”

The benefits of streamlining their operations, said Kincaid, have transcended cost savings. Equity Office now enjoys more collaboration among employees and the increased sharing of best practices. The result is a better working environment, in which employees have a more tangible sense of the value of their contributions.

Historically, said Kincaid, successful companies have been driven by a passionate group of employees that buy into a company’s vision and are motivated by elements beyond just their paychecks.

“We are, in effect, a services business, and we’re only as good as our employees,” said Kincaid, “and our employees are only as good as management.”

To that end, Equity Office has placed increased emphasis on management development. Kincaid advised future managers in attendance that even naturals must be aware of certain managerial imperatives: to build better teams, actively help with employee development, empower direct reports, and become comfortable with the fact that one person will not always have all the answers.

Many executives, he said, underestimate the importance of employee satisfaction: “Companies want people who make things happen, but they want people who can execute without leaving bodies in the wake. People must feel good about their contributions and how the work was done to achieve the overall objectives.”

Moving forward, Kincaid said, Equity Office aims to solidify its place in the industry by maintaining a focus on customer retention through lower occupancy costs and unparalleled service to its clients. Austin-area businesspeople will be able to judge Equity Office's success for themselves; just last month, the company announced that it bought Austin's 178,777-square-foot Westech 360 complex.

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