This is going to get really philosophical (even for the Real Estate Philosopher) so please stay with me – it is mercifully short, but very important…..
In earlier articles I have argued the value of trying to “own” a smaller niche in order to have the ability to create value within that niche. The value is created by the “power” you obtain within your niche by the confluence of knowledge, intellectual capital, experience, expertise and, of critical importance, relationships with key players in the niche. I have been recently calling these niches “Power Niches” to elucidate the “power” that comes from working in this manner.
Anyway, the “power” in the Power Niche comes from the small-size of the niche and your ability to achieve ownership within it. This makes evident that narrowing the focus is the key to success. However, as I think (philosophize) I have concluded that this is not the whole story and indeed focusing only narrowly can be self-limiting.
My thinking has evolved by adding to the mix that your ability to think of new and creative – even brilliant – ideas within your Power Niche is enhanced if you become exposed to the creative and brilliant ideas that others have thought of in other niches. This creates the optimal mixture of narrow and broad thinking that is critical for the genesis of ideas to create value.
I have noticed this in just The Real Estate Philosopher itself. Indeed, the great thinker Peter Drucker is not really known that much in the real estate industry, or the law industry in which I practice; however, he has given me numerous ideas for my law business and this publication. And other great thinkers I read about outside the industry regularly give me ideas as well. So does reading Fortune, which often profiles the reasons that some companies are great successes – or great failures. Indeed, it is one of the easiest ways to become more knowledgeable and “powerful” within your Power Niche by reading, learning and thinking outside the Power Niche.
This is very true in the legal industry. My close friend for many years, Jay Bernstein, is a real estate capital markets lawyer at the magic circle law firm Clifford Chance. He is known for creative outside-the-box solutions to client problems that have never been solved before. Part of Jay’s (secret?) is that he calls not only on his own brain but also on the brains of colleagues in different disciplines at Clifford Chance. Putting these different areas of expertise together often yields a creative solution that no one within a specific discipline could have found alone.
And I see it myself, in that my eclectic legal career history – that includes bankruptcy, litigation, securitization, corporate M&A, leveraged buyouts, entertainment and movie law, and much more – often enables me to approach legal problems in the real estate world that I would not otherwise be able to solve.
All of this somewhat contradicts my earlier writings that the best way to be successful is to be the top dog in a small niche. I acknowledge this by saying the following to sum up my (somewhat revised) hypothesis:
Optimal value creation – in the real estate world, and in other worlds as well – is achieved by obtaining ownership of a Power Niche (which is a narrow focus), and then augmenting the power of the Power Niche by gaining knowledge of as many disparate different disciplines as possible (which is a broad focus) and applying what you learn into the Power Niche. So “narrow and broad” together is the magic formula.
Ultimately, knowledge of disparate areas permits outside-the-box thinking in the area you are trying to think in.
Could it be proved that I am right here? I don’t know. It “feels” right to me and I keep seeing evidence of it. However, I guess you can’t prove something like this. But it certainly has been working for me.
Bruce Stachenfeld 