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November 24, 1995

Changing Lanes or a Brand-New Highway

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“I hope I didn’t interrupt your nap,” Dev Bannerjee joshed when Dave Bradshaw answered his call.
“Ha-ha. That one’s always funny,” Dave said. “I’ll have you know, in the last twenty-four hours I attended the symphony, went scuba diving, and took a pilot’s lesson.” Dave—Dev’s predecessor as CEO at the food processing company Greenfields—was enjoying an active retirement and Dev knew it.
“But don’t worry,” Dave went on. “I always have time to straighten out you wet-behind-the-ears kids.” Dev had recently turned fifty-five and Dave knew it.
“Well, as long as you offer,” said Dev. The two often held casual business consultations over the phone.
Dev described the company’s current situation to his friend. Sales growth was continuing slow but steady, while cost-cutting measures in the last year had boosted Greenfields’s cash position substantially. The company’s annual planning cycle was starting up again soon, and Dev wanted to put the right options on the table.
“We’ve got a number of possibilities for expansion in our food offerings,” Dev explained. “For example, organics continues to be a growth area. Any one of these food options is well within our competency range and would probably start yielding ROI within an acceptable time frame.”
“But here’s the thing I’ve been toying with,” continued Dev. “What if we took our cash and used it to try something really different, something that’s not food processing at all? Something that’s got more growth potential than the food business?”
“What have you got in mind?” Dave said.
“I know it’s a totally different strategy, but…real estate.”
“Real estate?”
“Real estate.”
“Okay, still listening.”
“We’ve got people all over the rural parts of this country. We know where population centers are growing but where the land costs are still cheap. So what do we do? We buy raw real estate at bargain prices near these growing towns, lease it out for agriculture, then when land prices go up and developers are ready to move in, we sell off in parcels. If we do it right, the eventual markup could be steep.
“What do you think? I know it’s not the usual Greenfields way. Should I even bring it up at the strategy session?”
“Let me see if I’ve got this right,” Dave said. “You’re talking about raw real estate as a new core business, not just some short-term investment for your cash?”
“Right,” Dev said. “The way I’m picturing it to myself is, I’m setting out on a brand-new highway, not just making a lane change.”
The older man was silent for several seconds. Then he said, “You know, Dev, people can change—I’m finding that out in my retirement. Companies can change too. I don’t know if your idea is a good one or it isn’t, but if you want my advice, yeah, put it on the table.”

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