3 questions 6 answers

June 2015

“I pull in resolution and begin
To doubt th’ equivocation of the fiend
That lies like truth.”

I’m not given to equivocation, preferring to nail my colours to the mast, in the certainty that a wrong decision is better than none. But today I am having a Macbeth moment. Certain questions relating to property, where we work and the work we’ll do are troubling me. Each can be answered in differing ways and how we do so makes all the difference. The answer that is correct today may well be wrong in the, much more important, long term. And if you (we, society in general) get these wrong, there will be a price to pay. And as Daniel Kahneman has shown, the pain of losing far outweighs the pleasure of winning.

To what do I refer? Well, these:

40%+ of the workforce being contingent is a good thing?
It is now widely believed that by 2020 40% or so of the workforce, will either be self employed, or contractors or part time. Is this a good or bad thing? Well, it entirely depends how things pan out, and how society adjusts. On the one hand this could be because, in essence, companies are saying ‘screw you’ to their workforce and taking advantage of circumstances to offload staff, put them on zero hours contracts or in some other way abrogate their current responsibilities. We’ll pay you just for your time, as and when we need it. Benefits? Sort that our yourself. Alternatively it could be companies coming to realise that big is not beautiful, that size suffocates and it would be much better to encourage people to set up on their own, beef up and enhance their skills, and then sell those skills, at a price that compensates for these differing circumstances, to as many clients as they can. In doing so, each person can become the master of their own destiny, have a real and meaningful sense of fulfilment, and manage their own life/work blend (balance is the wrong way to look at this); all the while providing the hiring companies with better quality, more insightful work.

If the answer is no we will end up with a barbell economy where one end earns all the money, those in the middle get squeezed, and those on the other end get royally screwed. If the answer is yes then the whole of society will gain as the big boys get what they want, there are but a few shuffling along in the middle, and the large number of contingent workers on the other end lead better rewarded, more fulfilling lives.

My answer? I think yes is an attainable answer that we should all strive for, but no is what most will end up with. For the highly skilled and educated this world will work; the societal imperative will be making it work for all.

The robots are coming, will we all find new jobs to do?
I’m not sure all that many people realise just how fast, and how powerfully, the robots are coming. It has been said so many times before, and not a lot has changed, that the consensus seems to be that not a lot will change all that fast. This though is a dangerous delusion. There are a whole series of technologies that are at the base of the uptick in the hockey stick graph that marks out exponential change, and so change is about to become very rapid indeed. Robots and computers will stop replacing just the dull, dreary low skilled jobs and rapidly move up the value chain. And in doing so replace a lot of people. Millions upon millions across the western world.

Now we are used to this. It has been ever thus. Agriculture used to be the occupation of 98% of the population; and we survived and prospered as that declined to but a few percent. But this time really might be different. Just ten years ago if you had asked the worlds best computer scientists could we build a self driving car they would have said no. Just too complicated, too many confounding variables. Yet here we are in 2015, with the Google self driving car having clocked up more than a million miles on the Californian highways.

So maybe history suggest the answer is yes but then, as Henry Ford said, ‘History is bunk’.

My answer? Yes we will find new jobs, in abundance, as technology enables billions of people to join the global economy, but there will be a lag. And this lag will see unemployment spiral. So society as a whole needs to realise what is going on and take remedial action. Now. This is a good start.

Is it culture and leadership that leads to change, or technology?
This is a bit like the ‘do we have free will?’ argument. One would like to agree but is it really tenable? Is it really the case that wise, strong and decisive leadership moves society on and determines how we behave? Or is it really that new technologies become available, which give us new capabilities, and in so doing crafts the way that we change? Is it up to us to decide how we work, where we will do it and what exactly we do? If it is, then deciding how the use of property and spaces will change is more a case of monitoring and responding to human pronouncements than thinking much about technology. Are we the masters of all we survey?

My answer? I think I am in the minority here but I strongly believe keeping track of technology will tell you a lot more about how property and space will develop than listening to what people say they want to happen. Just one example: look at how the rise of the smartphone has fundamentally altered human behaviour in just the seven years since the iPhone was launched. Now factor in cloud computing, ubiquitous connectivity, 3D printing, machine learning and the Internet of Things. It is these that will shape the built environment in the next ten years; culture and leadership will follow and adapt as required.

So we have three questions. For each one there are two plausible answers. The problem is that how you answer leads to an entirely differing set of requirements for the commercial real estate industry. Imagine that a 40%+ contingent workforce leads to a very high/very low pay barbell economy, where the robots have taken over middle class jobs, and the majority have worried more about culture than technology. How will the space requirements (both commercial and residential) vary from a world where an enlightened approach to reformatting employment, an embrace of robots in a controlled manner, and an intense focus on keeping up with technological developments has become the norm?

Map out in your mind the quantity, form and location of property types required under these two scenarios. Different aren’t they? The problem is if you end up owning and building the solution to scenario A, and scenario B transpires. Alternatively you make the correct assumptions and plan accordingly. Zero – meet hero.

Hence my Macbeth moment.