Why Does Location Matter?

“Location, Location, Location” is a well known saying that started as a punch line and has become a cliché.  But like many such sayings, it endures because there is an underlying truth.

 We live in a physical world.  The ability of overcoming distance has practical limits determined by technology. This has shaped our communities from older cities with narrow streets and rowhouses where most people walked and businesses used carts, to sprawling commuter suburbs powered by automobiles and trucks, to ex-urban settings made possible by knowledge work over the internet/cell phones.  There is a time and cost imposed in moving from one location to another.

So location matters because of the need for connections between locations.  Increasingly these connections can be “virtual,” but the need for physical connections remains in varying degrees. Location is:

  • Where the customers are.
  • Where the work or service is performed.
  • Where the work place and equipment are.
  • Where the products and materials are.
  • Where the employees (and prospective employees) are.
  • Where the knowledge and skills are.
  • Where the meetings are.
  • Where the costs are (or are not).

How does location matter to your business?

Now we are into everyone’s favorite high school subject – geography! (I suspect this may not be true, but let’s pretend for a minute.) It is widely claimed that 85% of business information has a geographic component to it. I cannot say whether the 85% is accurate but do believe that the % is high enough that it should be of interest to executives. So what possible value does this 85% offer?

Understanding “Where” Business Activities Occur – The first and most basic value of business geographics is to understand spatial patterns in the data. 

  • Where are the trouble calls?
  • Where are the sales?
  • Where are my people?
  • Where are our stores?

Going to the next step involved looking into the trends around where (Where is growth occurring? Do we have less trouble calls for properties next to a freeway?)

Identifying Business Advantages of Location – The real value of business geographics is to understand where location provides a strategic or tactical business advantage.  In the case of property locations, some traditional examples include:

  • Which jurisdictions impose high tariffs on your operations? (macro-level)
  • Which distribution centers provide the lowest travel cost? (regional-level)
  • Which properties in a 5-mile radius have the lowest purchase and development cost? (site level)

You get the idea.

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About “Location Strategies”

What are Location Strategies?  This seems like a fitting question to start this blog.  I expect that some topics will stray a bit, but these two words define the central theme, so let’s start with that

Location…

… is all about place.  In particular, the focus here will be about the physical business work place (vs. living and leisure places). We spend a great deal of our waking hours at work of some type, and while the form and nature of the traditional work place is certainly changing, having a place to work is not.  Work space (buildings) still is a major expense item for most companies.

Location…

…is also about the space-time continuum. (I was going to say geography, but that sounds boring to most people.)  Very little work really happens at a single place, so location is also about the relationship between places.  Work flow is just that – a sequence of activities that create something of value to someone else, somewhere else.  Whether the work entails making a widget, creating digital information, or providing a service doesn’t really matter.  All these efforts require not just a place to do it, but connections between the place(s) the work is done, the source of the work inputs (materials, information, skills, energy) and the destination of the work output (customer in the broadest sense).

Strategies…

…is all about using deliberate, rational approaches to realize your objectives.  No judgment is made which management philosophy is the right one.  When you get right to the heart of whichever philosophy you subscribe to, it is probably about getting the best value for the effort.  The differences seem to be more about what you define and measure as value and what is included as effort. (My observation is that the differences seem to me to be more terminology and technique than purpose.) More relevant in many situations is the nature of the constraints on how long you have to develop the strategy and how good is the information you use to do so.

Strategies…

…inherently require objectives.  The most common objectives for most businesses have to do with the quality of their product or service, their ability to satisfy their stakeholders, their profitability (efficiency, longevity), and their social/environmental impact (community benefits, environmental sustainability).  Sometimes the strategy can optimize one of these objectives.  More often some are conflicting requiring a strategy that balances competing requirements. 

Location Strategies then becomes…

…the application of methodical approaches to determine the combinations of appropriate physical work place environments that best meet your objectives, given the resources available. 

 Good, now we have that settled.

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