It's Trends not Fads that matter

July 2015

Do you remember when everyone used to go on about ‘cyberspace’ and the ’information superhighway’? These terms sound daft today don’t they? Well, within a few years you will react in the same way to ‘Big Data’, the ‘Digital Economy’ and ‘Digital Marketing’. Why? Because they are just faddish names masking an underlying trend. The ‘Big’ and ‘Digital’ are superfluous; as standalone entities these things don’t, or won’t, exist. In business there is only data and marketing, and we all work within the same economy.

By conjuring up a parallel world the property industry is falling into a trap. Every week we hear about the rise of TMT occupiers, MediaTech and the particular office requirements of the tech industry. How these companies have special needs, how they can only be found in particular areas of the city, and how these locations are in various ways ’special’. We even have a new breed of agent to deal with them, where suits are banished and awesome and disrupt have to be inserted into every other sentence.

Unfortunately all this talk is missing the point. This not a new market at all; it IS the market. This small sector (real tech companies don’t employ many people) is but the shouty end of a fundamental trend that is seeing every company become end to end digital. We are told that this new sector requires interesting, well designed and engaging space. That they want space that is suited for collaborative activities, but with quiet zones, and touch down areas, and meeting rooms, and lounges, and perhaps stand up sit down desks. They need great connectivity, decent kitchens and somewhere to park bicycles. The bottom line: they want a decent place to work that isn’t grey. Well, show me someone who doesn’t.

These people deal with ‘Big data’ it is said. Normally by people who have no idea what is meant by this. The important trend is that companies are starting to pay a lot more attention to making decisions, throughout their operations, based on data rather than hunch or gut feel. But this is nothing special; all companies will follow the Google mantra ‘In God we trust, everyone else bring data’.

And the same applies with ‘Digital Marketing’; it is just a subset of marketing, not a standalone function. The trend is that marketing embraces more digital channels, and pays more attention to data analysis, but this is the case for everyone. Everyone knows that print, if not dead, is a dead end. The Economist has lost 46% of their print advertising income since 2012; their response has been to become ever more digital. And so it will be across all business.

The trap to avoid is following the fad and treating tech companies as somehow different. Or non tech companies as ‘old school’. Every company is a tech company. Or soon will be.

Antony

This appeared in Estates Gazette 11th July 2015

Essential tech for real estate: Online courses

July 2015

We all know the property industry has an ongoing love affair with print. Endless brochures, property details, research reports and miscellany are lavishly printed on glossy, heavy paper.

All very well, and paper does have a part to play, but the reality is that digital is the starting point for most people today. If you want to know something, read something or buy something then a screen is the place you start. Increasingly this is a mobile screen, be it a tablet or a smartphone.

Unfortunately a large percentage of data outputted by the industry is either still in print, in pdf’s formatted for print, or on websites that aren’t mobile formatted. One of the biggest surveying firms in the world is still a closed book to mobile users, being unusable on a small screen.

So things have to change. And to help this happen there are two online courses I recommend as many staff as possible are encouraged to take. The first is Squared online (paid), run by Google and formed of five modules that guide you through the digital landscape and theory and practice of digital marketing. Made up of online lessons, background reading and collaborative projects it would suit any property marketer.

The other course, the Digital Business Academy (free), is run by Tech City UK in collaboration with University College London. It is designed for people who want to start their own online business but many of the lessons would benefit almost anyone looking to develop their digital skills.

Antony

This appeared in Estates Gazette 11th July 2015

Real estate developers, investors and technology; staying competitive in a changing world

June 2015

“Only when the tide goes out do you discover who’s been swimming naked” as Warren Buffett memorably put it in 2001. Well, in the property world we’ll need to wait another year or two to find out, as the next downturn can’t be that far off. This is the property market after all, and boom markets always turn to bust. For now though everyone looks brilliant, as particularly the London market just keeps on rising at many times the rate of inflation or growth. Beneath it all though, big change is underway and the fundamentals of what it means to be a developer, especially a large one, are changing with it. From a tech perspective here are four areas (amongst others) that the successful companies need to consider.

First off, the four tech megatrends (Mobile, Cloud, Connectivity and Internet of Things) mean that all companies need to rethink their digital infrastructure. What worked five/ten years ago just doesn’t work well enough today. Back then life was simple; just buy everything Microsoft were selling. But whereas five years ago Microsoft had over 90% of the market for all internet connected devices, today they have about 20%. And that is dropping. ‘Mobile is eating the world’ (as the VC’s at Andreessen Horowitz say) and Microsoft have missed the boat. Years late to the party Windows Phone is barely more relevant than Blackberry in the new world owned by Apple’s iOS and Google’s Android. In tech ‘Every dog has its day’ is an ineluctable truth. You cannot pick a long term winner, because none will ever exist.

However, the beauty of buying Microsoft (for which of course you paid a high price) was that everything connected to everything else. And that is something you still need. What you don’t need though are systems that only talk to each other, that ‘don’t play nicely’, as they say, with everyone else. Which explains why so many of today’s rising tech companies opt for a digital infrastructure where different products and systems from multiple vendors (or increasingly the Open Source community) can all be set up so they can exchange data with any other product or system. Largely through API’s, in the jargon. The key now is being able to mix and match technologies, so that you use the ones that best suit a purpose and not getting hung up on requiring one monolithic structure. So if you want to use Microsoft Excel, and Google Docs, and an iPhone app, with some data in SqlServer and some in MySql then just do it. Just ensure everyone can talk to everyone else.

Secondly, if you are looking to innovate, and who isn’t, then you need to place your innovators on the edge of your company structure. If you think that you will create new products, with new business models, and new value propositions by bundling everyone together in the IT department then please think again. No disrespect to IT departments but in the standard corporate setup they are on the ‘cost’ side of the equation, and not thought of as ‘assets’. As such the vibe, the mood music, the operational imperative is all wrong for engendering innovation. This will change in time, as IT itself starts to be rethought as not a corporate silo but rather a function that is embedded in each and every area of the company. IT departments will cease to exist; rather the availability of technological skills will be embedded within every member of staff and in operations across the board. Amazon already works like this, they do not have an IT department.

As well as being separate from IT, your tech innovators need to have access to anyone within your company but must not form part of the organisational structure. They need to be entwined but standalone. If not then their thinking will fall too much into line with the existing ‘company way’, they won’t be exposed to enough third party influences and influencers, and the natural politics that no company can avoid will act like a break or vice on new ideas.

Thirdly, you do have plans for Smart Working don’t you? Rearranging how you think about desks, and working hours, and putting in the hours, and where your people work, and how they are judged, and focussing on results not presence. Etc, etc. Being end to end digital, and rethinking why you do what you do, and considering whether there isn’t a better way. It is commonplace to dismiss the civil service as bureaucrats, but in the UK at least large areas of government are a long way down the Smart Working road and have transformed how they work, where they work, the costs of how they operate and the property requirements that all this entails. Their journey can tell us in the private sector a lot about how work and the workplace will change. With the London market being so perky not much of this is being thought about too hard, but you can be sure that when the next downturn hits this process will catch fire, not least of all because, done properly, you can cut a lot of property costs whilst increasing productivity and keeping your best staff happy.

And finally, in property we are set to rethink who the customer is. Contrast the old school developer/investor, who considers the customer the person who they send an invoice to four times a year with how WeWork (who sub let space but have a $5 billion valuation) approach their market. To them property is subordinate to engendering community amongst their occupiers (who are treated as individual customers). They have created a new way of working, through very careful branding and an intense focus on user experience. At the personal level. People are queuing up to pay a mighty premium for a space to work.

As co-working, Smart Working and other non traditional ways of occupying space take hold, as they will, the compact between a landlord and those who use their spaces fundamentally changes. We are entering a world where ‘Office as a Service’ will become the norm for many. What percentage is hard to guess, but I’d not be surprised for it to be 30+% within a few years, if not more. People will not be chained to a single desk five days a week; they will use this or that space, in this or that location, on a random basis. And will gravitate to those ‘brands’ that they come to trust as providers of the best service that suits their requirements. It is estimated that 40% of the workforce will be contingent by 2020 (freelancers, contractors or part time); where are these people going to work? All over the place is the answer, and ‘Office as a Service’ is what they will require.

These two trends will grow in tandem. And to a large extent they will become the new customer of the big developer/investors. And in so doing the mindset of the industry will change. The real estate industry will no longer be in the real estate business; it will become, as I’ve written before, part of the imagination business, offering up great space, with user experiences that encapsulate their brands, on demand, and supported by great services.

So these four areas cover a lot of ground but are at the heart, I believe, of what a great and successful development/investment company will become. Different from today, and most definitely challenging, but so full of promise, opportunity and growth for those that really embrace the zeitgeist.

Now, who’s not wearing their swimming costume?

Antony

3 questions 6 answers

June 2015

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

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.

Antony

Essential tech for real estate: Books

June 2015

No tech will ever kill books. The paperless office is at last coming to pass, mainly because of the prevalence of tablets and online data, but with even Mark Zuckerberg running a book club, those wonderful physical objects are here to stay.

And there are some great books to help you speak digital. For me Nicholas Negroponte’s 1996 Being digital was a clarion call, and last years Zero to One by Paypal founder Peter Thiel is great on what it means to think big in a digital world.

Thomas Davenport’s Predictive Analytics is very good in explaining why this is a fast growing technology, with great potential in Property, as is The Signal and the Noise by Nate Silver.

Hooked by Nir Eyal explains how to make products that are addictive and The Hard Thing About Hard Things by Ben Horowitz is a cracking tale of managing a digital company.

Business Model Generation by Alexander Osterwalder will help you appraise whether your business is well positioned in the marketplace and Exponential Organizations by Salim Ismail & others will give you endless ideas about how that position may change.

Smart Cities by Anthony Townsend & Triumph of the City by Edward Glaeser are both good on this huge and important topic.

And if you only read one book in this list make it The Second Machine Age by MIT’s Erik Brynjolfsson and Andrew McAfee. If that doesn’t get you fired up about becoming digital nothing will.

Antony

This first appeared in Estates Gazette on the 13th June 2015