It's not about Disruption - it's much more important than that

March 2015

Eighteen years after Clay Christensen wrote The Innovator’s Dilemma, and launched the concept of ‘Disruption’ on the business world, we at last have main agenda sessions at MIPIM on the subject. But, you know what, whilst disruption is indeed a hot topic, it is not where the real estate world should be focussing. There is a bigger picture to embrace.

If you want real disruption in real estate then you need to be working on taking out the whole world of agency, automating transactions, circumventing existing real estate banking and essentially making the ecosystem that meets annually at MIPIM redundant. Is that what you want? Can you see it happening?

Thought not. Yes it may happen in areas (Pop Up stores spring to mind) but unless we, as an industry, completely fail to grasp the real value of technology, to us and our customers, it is unlikely.

For there is a much wider goal we should be aiming at. And that is turning Real Estate into a truly, end to end, digital industry, where by combining highly skilled humans with the pervasiveness and capabilities of modern technology we create value by improving the lot of everyone we touch. Whether colleagues, clients, partners or suppliers, we all do more, with less, more efficiently and more productively. For each other. And by doing so we make the world a better place. And profit by doing so. It was Benjamin Franklin who said “Do Well by Doing Good” – well 250 years later the idea still resonates doesn’t it? And in a world connected by technology you’ll ignore this at your peril. If only for the sake of business, doing good is a sensible strategy.

You may have heard about the Oxford Martin report suggesting that 47% of jobs will disappear in the next 20 years at the hands of technology. The march of the robots. Well, I’d say hurrah to that. As we let computers do what they are good at, as we have to, they will free us from the mundanity of much work that we currently have to do, and free us to do what we, as humans, are good at. And that is being creative, using our imagination, having empathy and intuition.

The bigger picture is how to embrace the opportunities afforded by modern technologies to make your business x10 better than it is now. It is about how to do much more with much less, how to have wider, deeper, more timely data, provide a better service to customers, remove friction in every interaction, collaborate better, have a wider pool of talent on tap, engage and be engaged better than you currently are.

We in the real estate industry have the responsibility to create great places, where people love to be and that make them happy and productive. It is this industry that sits at the heart of the great global urbanisation that is occurring. If we simply focus on using all the tools at our command to create great places then we will have succeeded. If we don’t then we really do deserve to be disrupted.

Antony

This was first published in the Estates Gazette MIPIM 2015 Guide

Property people make one of two mistakes when it comes to tech

March 2015

Property people make one of two mistakes when it comes to tech: they either take it too seriously or not seriously enough.

Those who take it too seriously proclaim their tech is operating in a multi trillion dollar market that is ripe for disruption and that the time is nigh. Obviously the whole Agency and relationships model is old hat, they say, and it is only a matter of time before their software disintermediates the whole shebang through pure, comprehensive data and algorithmically powered transactions. The irony that they are attempting to become the new middlemen is widely lost.

They are likely to be disappointed, at least in the next five years or so. A real estate transaction is not like booking a room, or hailing a taxi; it is multi dimensional, involves multiple parties with diverse data requirements, and is, for most participants an infrequent activity. As such they often require exactly what humans are good at, namely imagination, creativity, empathy and intuition.

However, computers have different skills to humans and this is why the other type of property person is wrong to not take tech seriously enough.

Tech may not take us humans out of the transaction but it sure is going to disrupt the way we work and how we occupy real estate.

First off, property is as much about money as anything else and the finance industry IS being disrupted. Everywhere we will see algorithms displacing humans, matching human wants and needs, and removing the layers of rentier intermediaries. Crowdfunding and Peer to Peer lending will explode.

Secondly Big Data, whilst massively overhyped and always susceptible to the old adage that correlation is not causation will have major impacts in retail (through shopper preference analysis), industrial (through the increasing sophistication of warehousing) and offices (through extensive use of sensors to aid management and promote more efficient occupancy).

Thirdly, Pop Up stores may have started as a way to fill empty shops but their ability to spice up a retail location will ensure they become an ongoing feature in and out of town. This simple purpose transaction can and is one to be end to end digitised. Whether a computer or a human is better at deciding which Pop Up store is right for your brand will be an interesting area to watch. With enough data this is algorithmic nirvana. But is enough data available?

Fourthly, co-working centres are certain to increase in popularity, if only because the prevalence of self employment (voluntary or involuntary) means people need someone to go. And they tend to be much more human spaces than most offices. And as work/life becomes increasingly entangled people respond to places that feel more like home. Someone needs to make them more widely available though, as commuting hours a day just to meet like minded souls is an evolutionary half way house.

Fifthly, and this is the real disruption, a combination of ubiquitous high speed broadband, mobile devices, billions of cheap sensors and cloud computing will change the work that we do and in doing so the type of space we require. Anything that can be digitised will be and computers will deal with anything that can be algorithmically processed. Much that we do, for example, with MS Office can/will be automated. Spreadsheets, presentations, report writing; they will mostly be automated or handled via SaaS applications in the Cloud. As businesses become ever more digital they will realise swathes of processes or repeated tasks can be done away with. And then the interesting question really does become ‘what is the point of the office?’.

So, in conclusion, tech really is disrupting real estate; just not in the way most of the ‘disruptors’ are claiming.

Look at Microsoft to see how the world has changed

January 2015

In March 2009 Microsoft had a 96% market share of personal computing device sales. By March 2014 that had dropped to 23%. So a 73% drop in market share in 5 years.

In an industry so focused on Microsoft it is probable that most property people have not seen the bigger picture here; which is that a company widely considered to be the head honcho has, despite still making a ton of money, largely become a bit player in the new tech world.

And that matters. Why? Because many of the standard business processes of the property industry are stuck in a mindset that is no longer making the most of what is possible. Nowhere is this more apparent than in the mountains of reports that the industry churns out, for internal and external consumption.

Much of the criticism one hears relating to iPads and tablets in general is that ‘I need a proper computer for that’, but the ‘that’ normally refers to a spreadsheet or a lengthy, convoluted word doc or presentation. This though is to mistake the way we work now for the way we can and will work.

Take that spreadsheet; carefully crafted using a data set captured at a fixed point in time and fed back to the creator by another part of the business. The output is then, most likely, inserted as a series of tables in that monthly report.

All of which is outdated. First, the data should be available in real time to whomever needs it, secondly the Excel should be replaced by a cloud based SaaS application, and thirdly the report should be online and constantly updated as this real time data changes. The result of which would be better reports produced in a fraction of the time. And often created just the once. Thereafter they update themselves.

This sort of process has the potential to create the 10x improvement in productivity we discussed last month.

It also explains why Microsoft (though forever king of the desktop) is moving, with vigour, into cloud based services available on any device. Office for iOS would not have happened in 2009; now it is an imperative.

These new business processes just reinforce the way ‘mobile is eating the world’. Mobile devices also contain sensors, and these let you understand the world around us (the core of the property industry) and every new sensor represents a new business opportunity.

This is the year of sensors and connected devices, and the physical world has top billing in this environment. We just need to reappraise how we work, where real value can be created and how our toolkit needs to change to make the most of the stunning opportunities out there.

Or it might be one of us that loses 73% market share in five years.

Essential tech for real estate: Drones

January 2015

Drones will become ubiquitous in real estate. And that process will start this year.

For what you would have paid ¢100,000 in 2007 you’ll now pay about ¢700. That is a 142 times improvement in value in just 6 years. And, amazing though it may sound, this advancement is speeding up. Currently most drones need to be controlled through line of sight and the pilot needs to ensure they do not crash in to anything. However, the semiconductor industry is riding to the rescue with billions of dollars of research. Intel for example was showing off RealSense at CES 2015, a technology that enables drones to sense the space around them and avoid obstacles. Qualcomm meanwhile is building similar real-time vision directly into their Snapdragon chip. Such autonomous control opens up a sea of opportunity, not least because flying a squadron of drones, all working in concert, would then be possible. Google ‘TED Flying lampshades’ to get the picture.

With their ability to capture high definition, geo-referenced digital aerial images, stills, video, or even thermal images, Drones can gather unprecedented amounts of data in record time. Whether for professional or marketing purposes they enable you to do more in less time and at a lower cost. In fact Drones are an exponential technology, as discussed opposite. They will enable new applications that are 10 x what is the norm today. What you needed a helicopter for last year you can do with a drone this year. And if that doesn’t excite you, you’re not thinking hard enough.

2015: The Year of How and Why?

January 2015

The after burners are on. Hear them roar. And then focus you mind on two words; How and Why? Because in 2015 we are going to see a few megatrends really kick in, and whether you sink or swim will be a function of how well you see what is coming and your ability to ride the wave of change.

In 1997 Craig Venter was 7 years in to the 15 years thought to be required to sequence the first genome. However, only 1% had been sequenced. Many said he should give up. But the amount sequenced was growing by 100% a year. So in fact he was almost half way there. In fact he reached 100% just 4 years later.

And with technology this is par for the course. Today about 8 billion objects are connected to the Internet. By 2020 it’ll be 50 billion, and a decade later a trillion. 3D printing is 400 times better value than 7 years ago. Robots 25 times in 5 years. Drones 142 times in 6 years. 3D LIDAR sensors (the ones at the heart of the self driving car) 250 times in 5 years.

And all of these technologies are tools for the real estate industry to use. In designing, building and running property. Couple them with ever faster broadband, mobile devices, cloud computing and storage and a huge question presents itself. How are these developments going to affect my business, and why are we working in the way that we do now?

How can I use these tools to reimagine our business model? Why are we operating in the same way as we did ten years ago?

And most pertinently, how are we going to ensure we are not the next Kodak, Nokia, Blackberry, Blockbuster? Why can’t we be an ‘exponential organisation’ and what would we need to do to be one? Tangerine, a new Canadian Bank, handles 7 x the number of customers per employee as the average bank. How did they do that? Why can’t we?

There is such a propitious confluence of tools, technologies and capabilities at the moment that 2015 has to be the year to stop thinking linearly. Instead of ‘let’s be 10% more efficient’ think ‘how can we be 10 x as efficient’. You will not lose your market position to someone 10% better than you; it’ll be someone 10 x better. It’ll be someone who can do much more with much less, who has wider, deeper, more timely data, who provides a better service to customers, who removes friction, who collaborates better, who has a wider pool of talent on tap, who engages and is engaged better than you. In essence it’ll be someone with a digital company, not a digital strategy.

And that person, that company, could be you and yours: if you ask How and Why?