I am sure you are familiar with the Lily Pond parable. Of how the Lily starts out really tiny but doubles in size every day. So for a long time not a lot seems to happen, the pond looks no different day after day, but then, as if by magic, the whole pond is covered. And the pond looks entirely different. Suddenly the world has changed.
Well that’s how it is in the world of technology. Moore’s Law, the observation that, over the history of computing hardware, the number of transistors in a dense integrated circuit has doubled approximately every two years, has held for 50 years. And so today we have 1990’s supercomputers in our pockets. The latest iPhone is more than 50 times faster than the original, which came out in 2007. So by the end of 2016, with the iPhone 7, we are likely to have seen a x100 improvement in 10 years.
Similar is happening with bandwidth, storage, WiFi availability, the cost of sensors and Cloud computing. Across the technology industry, improvements are happening at exponential rates. Faster begets faster still.
Well that is very nice for the technology industry I hear you say, but what has it got to do with us in real estate? Our world isn’t changing much; people still go to the shops, work in offices, sit at desks, use PC’s and have meetings. Our industry is much as it was 10 years ago. Before anyone had that supercomputer in their pocket. And anyway, all this change is overhyped, it hardly compares to the 50 years that saw the arrival of electricity, running water, street lighting, the combustion engine and air flight. A bigger screen on my phone. Well whoopee.
Except. This is linear thinking. It’s looking at the world through the lens of GDP growth, a mere few % (if you’re lucky) a year. Which is indeed reality, but it masks the fact that the makeup of economies morphs dramatically even when, in size, they do not change that much. Despite years of hangover from the meltdown of 2008, the global economy is being reconfigured fundamentally. And that is what is impacting on the real estate industry. The Lily Pond is perhaps a third covered; just a few iterations and it will be covered.
So, in 2016 what should you be looking out for in terms of technologies that will be impactful?
First and foremost is not even a technology, but critical to everything that comes after, and that is digital thinking. The mindset that looks at everything around us, and everything we do, and thinks ‘are there technologies that could be brought to bear on this that would make it easier, faster, cheaper, more enjoyable?’. For us as humans. Yes, as Kennedy said, we should do hard things ‘because they are hard’, but there is no need to make anything harder than it needs to be. Humans and machines have different skills, but there are precious few areas where human + machine is not capable of doing more than human, or machine, alone.
Secondly, Virtual Reality is set to hit prime time in 2016, most noticeably with the release of the first Oculus Rift (owned by Facebook) headset. We work in an industry that for much of the time is virtual, in that until we build something it doesn’t exist. We need however, to enthuse and persuade our customers in advance of having anything to show them. Hence the fortunes spent on brochures, videos and CGI’s, most of which are pretty weak simulacrums of what we have to sell. VR has the potential to utterly transform property marketing, by providing immersive, engaging environments that accurately reflect reality, before it exists. 2016 is the year to take this seriously.
Thirdly, if you have not already done so (naming no names), 2016 is the year you must sort out how your online efforts look and perform on mobile devices. So much real estate content is unusable on a smartphone, despite that being for many people their ‘first screen’. UK mobile data traffic almost doubled in the last year. Five years ago 90% of all devices connected to the internet ran Microsoft software, today less than 20% do: to be PC centric in 2016 will damage your business.
Fourthly, you cannot provide too much bandwidth, for your employees or your customers. Ofcom, just before Christmas realised statistics showing how dramatically usage increases online as broadband speeds move above 40mb. Connectivity is the great enabler, the more you have of it the more you can do. And vice versa. The likes of WiredScore are now rating buildings based on their connectivity; below a certain point real estate is redundant.
Fifth, with high connectivity and mobile devices, you open up the opportunity to offer people real time and contextual services. So information or analysis that takes into account temporal and spatial criteria. Truly, what you need to know exactly where and when you need to know it. This is ‘the digital layer’ that sits atop the built environment. The extra data that can help to enrich the experience of a place. So, what is here, what was here, what is going to be here, are my friends nearby, what can I do now, what do I need to know to make the most of ‘the Space around us’? Placemaking was a hot topic in 2015; in 2016 there will be a greater recognition that technology needs to be co-opted to make great places. This is especially true of retail where the whole notion of shopping is moving towards being an experience rather than a narrow distribution channel. The difference between the best and the rest, in retail, is set to widen dramatically and no-one will get to the top without being very technologically savvy.
Sixth, we need, as an industry, to embrace what is possible if we can capture more data from the places and spaces we build, occupy or manage. And that means embracing the Internet of Things, that will enable us to add a myriad of sensors to record, analyse and share information that can be combined to provide insight into how we can optimise our world for the people in it. And then predict (to an extent) what needs to be done in the immediate future to make sure our spaces flex and adapt to perform (in the widest sense) as well as they possibly can. As a by product of making our places work better for humans, we will be more efficient and save money, but it is the desire to be better that will yield the results, not a simple desire to save money.
Seventh, and as a consequence of all the above, 2016 is the year to learn about, and apply, the extraordinary range of machine learning tools that are now available. Essentially these are programs that you feed with large amounts of ‘training’ data, and a set of criteria and variables that are reflected in that data. From there the programs can start to deduce that X = Y, and IF this THEN that happens. Etc, etc. Real estate is awash with data, but still we largely work on hunch, experience and intuition; how much better could we be if we added those human skills on top of far more, more granular and more up to date data? The likes of Amazon lead the way here, even to the point where they are using predictive shipping to get goods closer to people they think are going to order them. Likewise, the burgeoning data driven same day delivery industry will nullify the practise of click and collect as a differentiator for physical stores. Real estate needs data to fight back.
Lastly, 2016 is the year to think about moving beyond having a digital strategy, to being a digital company. That is, a company where every action, process, product and touchpoint, with colleagues, suppliers, partners and customers, is underpinned by an embedded ‘digital first’ attitude, where everything talks to everything else, and where anything that can be automated is automated. Where the whole company works in an agile, iterative way, where teams form and disband as projects start, get worked on, and then finish.
McKinsey recently issued a report saying that “45 percent of work activities could be automated using already demonstrated technology”. Many, in real estate and beyond, recoil in horror at such pronouncements but they should not. It’s not as if we’ve achieved perfection in the built environment. There is so much that could be improved. Dramatically. Recently I heard innovation described as ‘the breaking of constraints’; well, in 2016 the real estate industry should look to leverage technology to break the constraints preventing us building a better world.