- A decade ago, Stephen Gould CA was asked to reimagine Mirvac’s strategy from a clean slate.
- He reshaped the property developer’s portfolio to focus on urban areas with high population density and growth.
- He says building a new culture in the business was fundamental to the strategy’s success.
By John Burfitt
“Everything seems to be going right for Mirvac today, but it took a lot of work to get on track to where we are,” says Mirvac’s Stephen Gould CA. A decade ago, the company’s future seemed in jeopardy. “Back then, I did question whether Mirvac would make it out of the storm and I wasn’t alone – one analyst report was titled ‘Mirvacuate!’”
Gould is Mirvac’s group general manager – strategy, business intelligence and analytics. He joined in 2005 as manager, financial projects, at a time when the company’s leadership was transitioning from co-founder Robert Hamilton to Greg Paramor, following its acquisition of the James Fielding Group. That further complicated Mirvac’s already highly diversified structure. Then came the global financial crisis (GFC).
“When the tide went out, Mirvac was left stranded with many assets it didn’t really understand,” Gould recalls. “As a result, we took some big writedowns.”
At the peak of the GFC storm in March 2009, Mirvac’s market capitalisation had fallen to a low of about A$1 billion – destroying billions of dollars in value. Twelve years later, its capitalisation is A$12.6 billion.
It was early 2013 when Mirvac’s then newly appointed chief executive, Susan Lloyd-Hurwitz, handed Gould one of the greatest challenges and opportunities of his career, asking him to help “reimagine” what strategy should look like starting from a clean slate.
“The task of transitioning Mirvac from being an underdog to an out-performer was daunting, but it had to be done and I was fortunate to be given the opportunity to start with a blank sheet of paper and lead the creation of a new strategy,” he says.
“The task of transitioning Mirvac from being an underdog to an out-performer was daunting.”
Gould reports to chief financial officer Shane Gannon and also works closely with other senior executives – including Lloyd-Hurwitz and chief investment officer Brett Draffen. There are 16 people in the strategy, business intelligence and analytics team Gould leads, including financial, data and business analysts and system developers.
He praises the vision Lloyd-Hurwitz – a 30-year veteran of the property industry – showed in evaluating the big picture and thinking long-term.
Today, while Mirvac is still a diversified business, it has a streamlined portfolio focused on Australian office, retail, industrial and residential property.
Interrogating the data
Picture:Stephen Gould CA .
Gould, 46, began his career at PricewaterhouseCoopers’ (now PwC) Perth office while still a student at Curtin University – where he earned a commerce degree, specialising in accounting and business law. He stayed with PwC for about 12 years, working across transaction services, business recovery services, insolvency and audit groups in the Perth, Sydney and London offices. This provided the foundations for success in his current role.
“The skills I developed at PwC have provided me with a solid grounding – understanding the right questions to ask, how to approach a problem, how to stay calm and focused in a high-pressure environment and how to lead and motivate teams – they are critical skills that I still use every single day,” says Gould.
In 2013, at the start of Mirvac’s strategy rethink, Gould and his team developed ‘value driver trees’ to evaluate the viability of all the company’s activities.
“We trawled through 10 years of data relating to historical projects to paint a picture of projects that performed well, to understand what made them successful,” he explains. “Similarly, we also looked at the projects that didn’t perform to expectations, providing a clear understanding of the drivers of value and competitive advantage.
“We pulled everything apart and then put it back together again, which allowed us to be very clear on what we would do in the future and, importantly, what we wouldn’t do.”
Mirvac’s retail portfolio was reshaped, with the sale of a number of non-core retail properties that did not align to the new strategy. That allowed the business to focus on urban areas with high population density and growth and above-average household wealth.
In its office business, Mirvac saw that its integrated development capabilities meant developing buildings from the ground up provided far greater value than buying new buildings developed by others. By 2022, about 80% of Mirvac’s office portfolio will have been either created or substantially repositioned by Mirvac, resulting in a young and modern portfolio, generating strong cash flows.
Flexing through the cycles
Picture: Mirvac's EY Centre at 200 George Street, Sydney.
Despite Mirvac’s tightly targeted new approach, success took time. In 2015, two years after the overhaul began, the revised strategy was still gaining traction but Mirvac’s share price hadn’t responded.
“So we went back to do more work with the team and the board, and the conclusion was, ‘This is the right strategy – let’s just give it more time’,” Gould recalls. “And we were right to have conviction.”
Today, he says, “Our strategy is well understood by the market. We focus on what drives value in each of the areas in which we operate.”
There was also a renewed focus on a tactic Gould refers to as “flexing through the cycle” – understanding where the company’s assets sit within the property cycle and managing them accordingly. For example, Mirvac restocked its residential portfolio during 2011-15 when pricing was attractive, and then closed the chequebook when prices became frothy.
“We then just accelerated the building of apartments and releasing of house and land packages into a strong market. That was when we had a two-lever approach – one with buying and one with production – but you’ve got to have a firm grasp on the cycle to be able to play those levers,” he says.
“If we feel like the cycle’s turning and we’re heading into a tough period, then you need to have low gearing and financial flexibility.”
Mirvac now does. Which is why its management didn’t panic when the residential market changed direction in 2018 as Sydney and Melbourne property values began to fall.
“It’s about reading the cycle and using this current environment to our advantage,” says Gould.
In May 2019, the company completed a A$750 million capital raising, to support the delivery of the next generation of projects.
Owning a better workplace culture
Renewing the business strategy was only part of the overhaul. The business also developed a new culture, which Gould says was fundamental to the successful implementation of the new strategy.
He is a fan of management theory guru Peter Drucker’s famous phrase, “culture eats strategy for breakfast”.
“We could have developed the best strategy in 2013, but without the right cultural settings, executing that strategy would have been difficult,” he says. “Staff engagement was very low and the environment was toxic.”
The company embraced some challenging conversations about what needed to change. Among the issues highlighted were white-anting, cliques, a silo mentality and far too many solo performers. Perhaps most worryingly, people were afraid to speak up, Gould recalls.
“That was terrible because we make important decisions every day, and if people aren’t speaking up, how do we know we’re making the right decisions? The business has since put a lot of effort into this.”
In 2013, Mirvac’s employee engagement score was about 30%. Fast-forward to 2019 and Mirvac’s most recent engagement score is 90% for the second consecutive year, which is 3 percentage points above the global high-performing norm and 10 percentage points above the Australian national norm as measured by Willis Towers Watson.
“At the core of the culture we have now are the principles of: flexibility; openness; empowerment; transparency; never being afraid of speaking up and challenging; learning not blaming; and diversity,” Gould says.
Know your business inside out
Mirvac management’s embrace of workplace flexibility has been important for building trust with employees.
“We focus on outputs rather than time spent at the desk, so if any of my team need space away from the office environment, they have my full trust and support,” Gould says. “And if I need to leave the office to pick my kids up from school or coach my son’s AFL team, I can do these things knowing I have the full support of my employer.”
One factor Gould says was key to Mirvac’s successful turnaround was that management fully owned the changes.
“We did it ourselves, which means we truly owned what we created,” he says. “You should resist the urge to outsource the development of your own strategies and instead leverage the expertise within, because no-one knows the business better than the people in it.”
These days, Gould describes Mirvac as an organisation that is “laser-focused, has a clear strategy and is one of the best-performing REITs listed on the ASX”.
“You’ve got to know your business, as well as the market, inside out and make the tough calls early on,” he says. “If you leave it too late, you might not have many options later on. It’s a matter of taking action with a clear eye on where you’re going. And then be patient.”
Leadership tips from Stephen Gould CA
Mirvac group general manager – strategy, business intelligence and analytics, Stephen Gould CA, shares his leadership tips.
- Lead by example, demonstrating the behaviour you want from the team. Every day.
- Listen. Give people in your team the chance to speak up. Value feedback.
- Be transparent about what you value.
- Embrace diversity, education and the processes of change.
- Trust in your team and empower their choices.
- Be clear about what success looks like.
- Be patient. Changing a culture takes time.
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