Presented by: CoreNet Mid-Atlantic Chapter 13 September 2012

1. Presented by: CoreNet Mid-Atlantic Chapter 13 September 2012

2. Introductions Moderator: • Janise Nichols, Tenant Logistics Manager, GSA Panelists: • Sheryl Etelson, Strategic Facility Planner, Lockheed Martin • Eric Thorpe, Managing Partner, Terra Novo Partners

3. Corporate Real Estate 2020 CRE 2020 was a year-long project that has brought together hundreds of CRE global thought leaders to analyze the current and future state of our industry. Reports include interviews with and direct hands-on input from more than 280 CRE executives, service providers and economic developers around the world. Research has examined a wide range of external and macro-economic, social, political and other influences, triangulating these drivers against trends affecting the globally networked enterprise and CRE itself.

4. Overview • Enterprise Leadership findings • Partnering with Key Support Functions findings • GSA update • Group discussion • Preparing now for 2020

5. Enterprise Leadership: Becoming more effective leaders in our organizations • CRE as Customer Manager and Sustainability Advocate • CRE + IT + HR = The Leader of 2020 • Workplace Productivity or, the Holy Grail of CRE • CRE Leaders as External and Internal Agents of Change • Continued Evolution of the Corporate Real Estate Executive • CRE Leaders as Brand Managers

6. Source: “Who Lives in the C-Suite? Organizational Structure and the Division of Labor in Top Management,” Guadalupe, Li, Wulf, Working Paper 12-059, Harvard Business School, 2012 Where is CRE? The average number of CEO direct reports doubled over this 20-year period. About 70% of that increase was in functional rather than general managers.

7. By 2020, Senior CRE Leaders Will: • Be competent in the core business and possess a skill set that is diversified and cross-functional. Advocate sustainability. • Champion the integration of leading-edge technology into real estate and workplace operations and into the workplace itself. • Evolve from subject matter specialists focused on execution to integrators, change agents and strategists. • Lead the development of improved corporate solutions that elevate the brand, promote the culture and assure employee engagement. • Champion change in the supply side of the service industry. • Be able to measure the impact of workplace infrastructure on business units and the enterprise. 85% 82% 79% 79% 68% 52% Average = 74%

8. Enterprise Leadership – 2020 Survey Results Senior leaders will champion change in the supply side of the service industry, including more innovative partnerships and the seamless integration of internal and external resources globally.

9. Microsoft – One example of championing change in the service provider industry “Our model is purposeful in saying that we wanted to have a simplified, integrated, one-company-to-partner-with strategic relationship at the same time we acknowledged that there seems to be a devaluing of global reach. After pushing for a greater span of execution with firms in brokerage and in project delivery we came to the conclusion that we were getting less than optimal execution, intellect and knowledge and pricing by going toward geographic span.” Chris Owens, Microsoft

10. Enterprise Leadership – 2020 Survey Results

11. Source: “Productivity Metrics,” CoreNet Global Research, 2011 Do you believe that Real Estate and Facilities have an impact on organizational productivity?

12. Source: “Innovation and the Workplace: Learnings from the SLCR Forum,” Howder, Myer and Thorpe, The Leader, November/December 2012 The Productivity and Innovation Equation “Answering the question of how much impact workplace has on workforce engagement will require a different level of research and analysis than has been completed to date. In the meantime, leading companies continue pushing workplace design as one direct method of increasing productivity and reaching that essential innovation frontier.”

13. Inspiring Partnering Practices in 2020 Report Case Studies CRE at the Frontline of Workplace Change eBay An Early Adopter of the Global Integration Model Procter & Gamble Project-Based Integration, An Industry Proven Mode Red Hat Driving Global Service Provider Integration Microsoft A Collaborative Business Partner in a Shared Services Environment Pacific Gas & Electric Leveraging Program Managers to Drive Functional Integration Shell Oil Integrated Team Launches Agile Workplace Unilever

14. Introducing the “Super Nucleus” (nū'klē-əs, nyū'-) n., pl., -cle·i (-klē-ī'), or -cle·us·es. A central or essential part around which other parts are gathered or grouped; a control center.

15. Formation of a “Super Nucleus” Summary Points • Over 60% of survey respondents support the concept of a super nucleus • Companies are at varying stages in their SN development • CRE’s are comfortable with concept because the collaborative nature of their roles • Existing partnerships provide CRE leadership with a unique opportunity • Greatest challenges include internal politics, integration of different functional areas and overcoming traditional silos “…Today’s model of integration requires companies to address the needs of their work force and workplace in a way that provides the best employee experience and the greatest operational value.” – Sodexo, Workplace Study 2011 15 15

16. Formation of a “Super Nucleus” Summary Points • Collaborating on major projects builds partnerships and lays the groundwork for more formal integration in the future. • For many, the path to a super nucleus will be a gradual — and challenging — process. Graphic Source: Cassidy Turley “This natural progression makes sense.” -Jim Ware, former Harvard Business School Professor “I think the idea is absolutely right…What I find surprising is how slow change has happened.” - Michael Joroff, Senior Lecturer at MIT “We do see a general movement toward this sort of centralized super nucleus…But I think different industries are moving at different speeds and levels of maturity toward that model.” - Francesca Jack, Director of Strategy at DEGW

17. Emergence of New Integrated Workplace Leadership Fact: Almost 75% of survey respondents believe new integrated workplace leadership will emerge by 2020. Will new integrated leadership be required? • Summary Points • Managing and leading an integrated workplace • Bridge functionals • Leverage collaboration • Leadership needed to inspire collaboration • No “one size fits all” • CRE as leader of the Super Nucleus • Precedent? • Tactical to Strategic • CRE across the enterprise 17 17

18. Continued Importance of Service Delivery Survey respondents believe that service delivery will continue to be of critical importance. • Summary Points • Delivery of support function services will be enhanced by the greater collaboration and integration of support group functions • Primary role of the legacy support functions will remain delivery of services. • Service Providers will continue to be leveraged to deliver services more efficiently. 18

19. Emergence of Joint Objectives and Unified Metrics • Summary Points • Measuring the effectiveness of the Super Nucleus presents challenges • Today’s functional targets are the norm • Migration to wider and unified performance targets is expected • Balanced score card approach is an option • Biggest Challenge? Still a work in progress! Graphic Source: Cassidy Turley • Sample Metrics: • Total (Support) Cost per FTE, as a % of Revenues, as a % of Total COGS or OPEX • Organizational Productivity/Efficiency Ratios • Business Readiness (i.e., for M&A) • Employee Attraction/Retention Ratios • Workplace Flexibility • Headcount per seat ratio 19

20. Case Study: The Procter & Gamble Co. An Early Adopter of the Global Integration Model

21. GSA Update • Continue to demonstrate value • Continue to align w/ real estate partners • Service Providers • O + M • Brokers • Unified business functions

22. Group Discussion

23. 1 Source: “Upskilling the Corporate Real Estate Organization,” CoreNet Global Research, 2012 Future Research

24. Preparing NOW for 2020 Our preparations begin and end with leadership: Think broadly -- know the business of your company’s business and speak its language Recruit and develop tomorrow’s CRE leaders Be a strong and effective partner with the business units and other infrastructure groups Identify opportunities by thinking beyond the functional boundaries of CRE

25. APPENDIX Access the entire CRE 2020 library at: http://www2.corenetglobal.org/knowledge_center/

27. Enterprise Leadership:Professional Leaders Interviewed

28. Enterprise Leadership:Team Participants

29. Partnering with Key Support Functions: Research Contributors • Corporations: • Altisource • American Express • AT&T • Australia & New Zealand Bank (ANZ) • Bank of New Zealand (BNZ) • eBay • Hilton • Lockheed Martin • Microsoft • NetApp • Pacific Gas & Electric • Procter & Gamble • Nokia Corp. • Nokia Siemens Networks • Red Hat • Shell • Corporations (cont’d): • Siemens AG • Unilever • Verint • Vodafone NZ • Yahoo • Zurich Financial Services • Service Providers: • Cassidy Turley • CBRE • JLL • Academics: • Georgia Tech • MIT • Consultants: • Accenture • CASP-R Limited • DEGW • Future of Work • iOpener Institute • McCarthy Consulting • Pan Europe HR Network • TIGNUM • CP Analytics • The Occupiers Journal

30. Partnering with Key Support Functions: Project Team Members Contributing Editors: Michael Arikat, Mace North America Limited Dennis Blue, Jackson National Life Insurance Robert (Bob) Bull, FRICS, Air New Zealand Sheryl Etelson, Lockheed Martin Corp. Robert Fitzgerald, RPA, MCR, Nokia Corp. Iain Franklin, MRICS, B.Sc., MSc, Real Estate Consultant Judy Laube, CFM, MCR, AT&T Eckhard von Muenchow, Nokia Siemens Networks Keith Probyn, CCIM, Shell Oil Company Craig Robinson, MBA, Cassidy TurleyJim Scannell, The Travelers Companies, Inc. • CoreNet Global LiaisonDavid Heaton, CoreNet Global

31. Enterprise Leadership – 2020 Survey Results Senior leaders will be competent in the core business and possess a skill set that is diversified, cross-functional and focused on customer relationship and process management. They will advocate sustainability and corporate social responsibility goals.

32. Enterprise Leadership – 2020 Survey Results

33. Enterprise Leadership – 2020 Survey Results

34. Enterprise Leadership – 2020 Survey Results

35. Source: “Upskilling the Corporate Real Estate Organization,” CoreNet Global Research, 2012 Survey Results