Opportunity knocks, but usually, developer refuses to answer

In a profession known for looking at every deal, T. Wall Properties ignores most opportunities.

Nevertheless, Terrence Wall's decision to narrowly define his business helped build a successful property-development organization ready to expand outside the Midwest.

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"What business are you in?" is one of four core strategy questions that define an organization's business model, and Wall's answer evolved over time. Before 1997, T. Wall Properties owned multifamily residential, retail and office properties. Wall's proactive strategic thinking honed T. Wall Properties' business definition.

First, Wall studied the drivers of property return: competitive intensity, property management requirements and tenant profiles. He then elected to focus on building and holding office properties because they offered the greatest potential return and the largest unmet market need.

As a result, the company sold its multifamily properties in 1997-98. The last stand-alone retail property was sold earlier this year. Restaurants and stores in office complexes are now leased to owner-operators.

"If you focus on a narrow niche, you become an expert and therefore get more opportunities," Wall said. "Our strategic plan outlines where we want to be and how we'll get there. It gives us a reason and a policy to ignore lots of opportunities. We don't get distracted. We save ourselves for the big opportunities � something no one else can do."

What is important about Wall's decision is not that he focused on a niche. The road to success sometimes requires broadening your business definition. (Imagine a dry cleaner that also polished your shoes, reattached buttons and repaired loose hems.) T. Wall Properties' success resulted from Wall thinking about business definition from multiple perspectives.

For example, Wall's reflections on the deeper purpose of offices led him to conclude: "We are in the business of creating spaces where people can creatively connect with one another." This business definition is reflected in office complexes that genuinely enhance people's interactions.

Wall even applies this business definition to his philanthropy, donating the theater stage area in the new UW American Family Children's Hospital.

Wall also redefined a second business: attracting capital. Most developers syndicate individual buildings to groups of investors. With different owners of different properties, it can be hard to achieve synergy among multiple properties.

Wall made investors owners of his holding company instead of individual buildings. "Instead of being in the syndicating business, I am in the business of building value for our 135 partners," he said.

Investors get a diversified, active investment whose value moves with the total value of T. Wall Properties' holdings.

The change helps the firm focus on what it does best by hiring vendors to perform noncore activities. For example, building maintenance is outsourced to Johnson Controls; T. Wall Properties, meanwhile, can concentrate on its competencies in property acquisition, deal structure and detailed concept designs.

Another advantage of the new definition, Wall said, "is that these partners are an incredible referral source for new opportunities and customers. They want T. Wall Properties to succeed as much as I do."

The definition of your business should never be left to history, industry practices, personal preferences or even serendipity. Think strategically. What business are you in?