Being Digital - A primer for commercial real estate. Part 3.

December 2013

It may seem counter intuitive but IT is dead. The incarnation that so many people have to interact with, the IT Department, is about to catch a nasty bug. Within five years they will be few and far between.

How can that possibly be? This is the IT age isn’t it?

Well… no. This is the Digital Age. And ‘Being Digital’ is not about IT.

Traditionally IT has been seen as a cost to a business. We need this ‘stuff’ to operate and, try as we may, it just seems to get more and more expensive. For larger companies the tyranny of vendors has meant that, in order to receive even tolerable value, being locked in to 3,5, 10 year (or even more) contracts has become the norm. The poor embattled CIO desperately tries to become a real member of the ‘C’ Suite but is rebuffed with instructions to just ‘reduce those costs’. So those inflexible, lengthy contracts are entered into, despite it being clear that they are damaging to a business. Innovation killers in the extreme. Any change is now a cost, and any cost is resisted. So you end up with dull, process driven companies that succeed for a while simply through market indifference, but given time become out of touch, out of date zombies awaiting takeover or slow decline. Is it any wonder the short lifespan of larger companies.

Those days are coming to an end, because Being Digital fundamentally changes the IT landscape. How?

1. As more and more software is moved to the cloud, where updating, monitoring, networking and maintenance is taken care of by the supplier, the whole paraphernalia of an IT department becomes redundant. Unlike being stuck with either out of date software (go on, check how out of date yours is) or long term contracts where you have to do exactly what your supplier says, or incur the cost penalty, in the Cloud you simply buy what you need, as and when you need it.

2. And because of the cost savings, and the freeing up of staff, and the flexibility of provision, everyone in a business can be provided with ‘fit for purpose’ software. The CIO becomes an enabler, not a naysayer.

BUT …. and this is where the IT department, as is, dies, the CIO role disappears during this transformation. It is no longer appropriate for each department in a business to manage their affairs based on what IT offers. Being Digital means every department thinks about their requirements in a fully rounded, holistic manner. What do we need offline, and how does that impact on our online activities? Who do we interact with, and how can we do that offline and online in a manner where dealing with us is not determined by the method our customers choose? Retailers are charging down this route with their ‘omni-channel’ strategies but, in practice, all business units should be thinking in this way.

And once you realise Being Digital means a sea change in internal and external communication, and that collaboration is de rigeur you realise that each department needs to think about their digital requirements on a day to day basis you need help from a CHIEF DIGITAL OFFICER, rather than a traditional CIO. This person needs to understand ‘product’ as much as tech and guide each department as to what is available and achievable. And wherever possible, dismiss anything that takes a lengthy period to implement.

Changing a companies mindset from treating IT as a cost to totally co-opting tech as a digital enabler is the way to go. Whether you like it or not. But you will like it as this new structure will enable you to do more for less, and innovate like never before. The bottom line is that Being Digital is not about IT.

It’s way sexier than that:)

Antony

Being Digital - A primer for commercial real estate. Part 2.

December 2013

So, we are now nodes on a network (see Part 1), connected to just about anything and everything we might want to be connected to. How on earth do we cope with the deluge; of noise, of interruptions, of information? How is this mass connectivity better than what we had in the analogue world. At least we could control that.

Well truth be told you couldn’t could you? Just think how many times the phrase ‘Information Overload’ popped into conversation. Being Digital will put an end to this.

There really is no such thing as information overload. The problem is filter failure; the inability to filter out all the extraneous noise and return just the information you need, in the context of what you are doing and when and where you are doing it. It isn’t less information, knowledge, wisdom you need access to is it? Ideally you want access to ‘everything’. You just need what you need when you need it. Is that too much to ask?

Well, in the analogue world yes. Every time you print a brochure, or roll out research material, or publish a reference guide or white paper then you are throwing that information at a dead end. In print it may be nice to read once but thereafter it has no utility at all. If you can’t search it, if you cannot access it wherever you are, if you cannot cross reference one piece against another then what precisely is its value. Very little is the answer. A one off data dump, soon to be forgotten.

Unfortunately, much of the real estate industry remains in this analogue world. Print, print, print. Glossy, heavy paper reports, brochures and sundry are de rigeur. And don’t they look nice on the shelf. Gathering dust or leaping to the bottom of a briefcase. And best of all are the lengthy printed expositions of how desperately keen xyz company is to ‘save the planet’. This is a madness that has no value and has to stop.

Being Digital means giving up those old analogue ways and digitising everything. And if it is not worth digitising then bin it. CBRE reputedly binned 900,000 documents during the process of moving in to their new Los Angeles, deeply digital, HQ (http://lat.ms/1ePboVD).

You cannot have great filters unless you have digital material to work with. But if you do digitise your world it is remarkable what will become possible. Leaving aside what you should be able to develop using your own data (if it is digital you should be able to ask for anything), the likes of Google are developing extraordinarily powerful contextual search capabilities that are aimed at predicting what information you need just ahead of when you might ask for it. For example, by examining the diary on your smartphone they can warn you to cut short one meeting, as the traffic is bad on the way to your next one and if you do not leave now you’ll be late. In CBRE’s HQ they have a curved wall running Google Earth over which they lay all their available space data. In Burberry the sales assistants can see what a customer has purchased before and call up new season suggestions based on that data.

Ubiquitous connectivity, combined with unlimited data availability and CONTEXTUAL awareness is a recipe for extraordinary outcomes. Information overload gives way to prescient wisdom. Maybe a bit outlandish within the real estate world but someone will get it right. And I wouldn’t want to have to compete with them.

Antony

Being Digital - A primer for commercial real estate. Part 1.

December 2013

Eighteen years ago Nicholas Negroponte, who founded WIRED and the Media Lab at MIT wrote Being Digital, the seminal work on what happens when we move from a world primarily of Atoms to one predominantly of Bits. A truly prophetic book, I saw him give a lecture on the subject in 1995…. and was hooked. This was a grand vista being laid out, a digital world of innovation, exploration and imagination.

Well, since then I’ve been waiting for ‘IT’ to happen. And waited, and waited. Green shoots would appear, then be dashed by the inadequacies of this or that hardware, software or digital infrastructure.

The wait though is over: we now have all the tools that are required for ‘Being Digital’ to become a reality. And with these tools the big disruption can begin, for there should be no doubt that a great divide will open up between those who embrace the digital world wholeheartedly and those who merely accommodate it.

So what does ‘Being Digital’ mean, and what implications does it have for commercial real estate?

1. It’s not about you anymore
In the analogue world we’ve become used to dealing with people on a one by one basis, and consuming information likewise. Single channels connect us with others or with information. We interact and learn on a singular basis. But in the digital world we still deal with individuals, but on a networked basis. Multiple channels of connectivity and data dissemination mean we communicate and collaborate with multiple parties, in multiple locations, all the time. As a result we have access to a wider pool of knowledge, greater access to skills and most likely a more nuanced, multi-faceted view of the world. As Bill Joy said:

‘Whoever you are, the smartest people don’t work for you’

In the digital world the smartest people don’t need to work for you for you to work with them. In the analogue world you’d most likely never know they existed.

Being Digital means one moves away from Hub and Spoke thinking, where you sit at the centre and get fed information, item by item, to collaborative thinking, where you are a node on a network, with everything connected to everything else and where the whole is greater than the sum of its parts.

A scary thought just being a node on a network. How do you possibly see the wood for the trees? Well, that is where software comes in. As we will cover in Part 2.

Antony

PS This point about Being Digital is generic to everyone and every business. However for the commercial real estate world specifically, it will mean a relentless move towards transparency. Developers, agents, suppliers and occupiers will all have access to the same information. Combined with the trend towards greater sustainability in the built environment it will de rigeur for everything to be monitored, in real time, and for the vast majority of that information to be widely shared and shareable.

4 Tech Megatrends for Commercial Real Estate

Yesterday I had the pleasure of presenting to the REALCOMM CIO Forum in London.

My talk covered what I consider to be the 4 Tech Megateends that will impact on the commercial real estate industry.

In reality these same megatends will effect everyone, and the impact on commercial real estate is really but a reflection of how we are all going to change the way we ‘work, rest and play’.

Property and Retail: high st, retail park or shopping centre - tech is your No 1 enemy... Or potential best friend

August 2013

Having been involved in the tech section of the Grimsey Review, I’ve followed responses to it’s launch assiduously. Unleashed by Bill himself in the House of Commons, media coverage has been extensive and then this last week we had the BCSC in London which prompted much comment.

I’m going to ignore the bitchfest with Mary Portas as it is a meaningless sideshow. Without Mary P the State of the High St would not be such a hot topic, but it needed the extra gravitas and commercial analysis that Bill G has brought. Praise to both of them.

Commentary has focused on the problems of the here and now: Business Rates, Parking costs, Ownership issues, Use Classes, CPO’s etc. It seems to me everyone involved in the retail or property industries largely knows what needs to be done in these areas. The challenge is that those not in these industries, especially Government, either do not ‘get it’ or don’t really care, friendly supportive words notwithstanding.

Cracking that problem will be hard. Failure though will have nasty consequences (slow death is not pretty) but maybe, like with city centre riots, no-one cares until they occur and we’ll have to wait till then for action to be taken.*

But all that aside I am interested in where tech fits into all this. The Grimsey Review has an extensive section on this subject and the full tech report is downloadable here. I get a mention in the credits so obviously it is a must read full of truth and fascination.

The BIG point though is this: In tech terms ‘you ain’t seen nothing yet’ and what’s coming will, to paraphrase Nietzche ‘either kill you or make you strong’.

The launch of 4g, widespread wifi, powerful and getting more so smartphones are enabling the development of such immersive, entertaining, personalised and great to use online services that today’s offerings will shortly look somewhat primitive. Couple incredible ease of use with same day delivery (see Shuttl, Argos & Amazon and others) and e-commerce becomes ever more attractive to shoppers (and retailers?) .

Compete with that!

Many are of course. Witness reports yesterday of John Lewis spending £85 million on e-commerce tech and infrastructure in the last half year. This is the sort of real commitment that the best in class retailers are showing. The consequences of which are covered in an earlier post.

So what does this mean for Developers and the wider Property industry?

The bottom line is that the property industry provides the Operating System, the Platform, for their tenants to build on. This used to be simple. Four walls and a roof was just about all that was required. But that was in the Analogue World. We are now deep into the Digital World and the provision of virtual services is as, if not more, important than bricks and mortar. The software needs an upgrade and the computer a reboot.

Think about a Shopping Centre or High St. In each case we have a collection of retailers, restauranteurs or providers of other services. Who does, or should , have the best overview of all these occupiers and the visitors coming to see them? The property owner of course. This is less so in most High St’s which are under multiple ownerships but that is something that has to be tackled one way or another. The prize of owning the overview is too valuable to ignore.

Now, the key to a successful retail area will be how well data from that overview is fed into the Property owners Operating System and leveraged to provide a Platform on which all occupiers can build services. Real time offers, customised product showcases, personalised services, VIP invitations to specific events, click and collect facilities, home delivery. And so on. The property owner working in collaboration with their retailers to enable the provision of spectacular service to their customers. All the benefits of e-shopping on top of a great day out.

The point is utilising technology to create an experience that is preferable to virtual shopping, however brilliantly efficient that is. Business rates and all other practical issues aside, the bottom line is ALL physical retail is doomed, in the medium term, if they cannot find a way to beat online. And the only way to do that will be to co-opt tech as an ally…. not an enemy.

The decline of the High St is by no means set in stone. Nor the success of Shopping Centres. Everyone (by and large) is playing by the old rules from the analogue age. Few have really committed to digital. Just look out online for anyone from the property owner world. Almost no one is active. And without actively engaging you’re going to have a hard time getting it right when the time comes that you have to commit to a digital future.

So, funnily enough, I think it is property people who are going to decide the fate of who wins in the retail world. Medium to long term it is not about whether the ‘place to be’ is within a Shopping Centre or on the High St. It’ll be about who can create the best user experience. And that experience will deeply meld the digital and physical worlds.

Who’s going to ‘bin the Blackberry’ and create the retail experiences that the ‘modern’ world craves?

Antony

* Maybe change might be in the air. The Sunday Times this morning launched a campaign for reform of business rates. Rather shameless piggy backing on the Grimsey Review but welcome nevertheless.

August 2013