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by Katie Hogan '22
Sandeep Mathrani, CEO of WeWork, recently sat down with David Sherman ’82, Co-Director of the Paul Milstein Center for Real Estate, during Columbia Business School’s annual Real Estate Symposium, and spoke about “How Culture Eats Strategy for Breakfast.” Sandeep spoke about approaching and managing his multiple successful turnarounds. He laughed, “You get an opportunity to be a CEO, to turn around a business […] you take it.”
He warned of bloated overhead structures, demotivated workforces, poor capital structures, silos, and lack of culture. Where does one start with goals to streamline, create a flat organization, establish a capital structure with no walls of debt, and cut low-quality assets that drain companies? After two successful turnarounds, at GGP and WeWork, Sandeep’s biggest take away continues to be about culture and talent.
He spoke to four building blocks on which to focus a turnaround: streamlining a company, making sure the capital structure is put in place correctly, getting rid of low-quality assets that drain the company, and culture. While these are all important factors to future success – Sandeep specifically called out actions of cutting SG&A and spinning out a company of lower-quality assets – he settled on a major cultural shift as the most critical component.
Sandeep has found success through the motto, “If I prioritize keeping my people happy, they will be committed to helping make this company profitable.” When approaching the turnaround at WeWork, he asked: How do you change culture? What is the DNA of the company? Who do the employees serve? He flattened the organizational structure and looked to wise words from Larry Sen to build an organization that focuses on a culture of doing the right thing.
One of the first steps in making the cultural changes stick was to identify 5 core values. After that, WeWork figured out who exactly it is that each value served. All employees generally know that the company has a goal of making money and being profitable, but few are familiar with the financial details. It is much easier for people to connect to a mission, and so this is what Sandeep brought to the forefront.
Over the course of 18 months, WeWork employees were taught these core values and how to practice them in their daily work. This focus on deep cultural education and consistency embedded these values into employee’s everyday routine and created a deeper connection between employees and the organization. Sandeep noted, “you deconstruct yourself with a bad habit, but can reconstruct yourself with good habits.” This cultural shift was a restructuring of the organization’s foundation.
Turnarounds are successful when employees are bonded to the company – they share a love for the company, and they want to see it win and succeed. He notes, speaking of the WeWork employees, “an amount of energy and passion I have never seen in any other organization.” Of the WeWork product and brand, Sandeep was incredibly positive.
For those looking to follow in Sandeep’s footsteps, he gave words of advice – avoid obsolescence and first focus on people, and then assets. Over the years, Sandeep has learned many lessons, but continues to revisit two: “When you cut, cut deep,” in reference to when considering shedding assets, don’t be afraid to rid more. He also notes you cannot control the press, but you can change the narrative by focusing on what you do control: the business.
Katie Hogan '22 is a second year at Columbia Business School and Co-President of the Real Estate Association. She is an investments intern at Welltower and will be joining the full time following graduation in Spring 2022.