If technology is the answer, what is the question? This is something the real estate industry has started to ask, and is in danger of asking itself many more times over the next 10-15 years, writes Simon Hughes of Liquid Real Estate Innovation.
Cedric Price, the Cambridge Scholar and one of the most influential British architects of the 20th century, asked this question during his years of leading architectural thinking. The question, though a cliché, is still one that we need to ask ourselves on a regular basis to ensure we are not getting caught up in the whirlwind of rapidly advancing technology, and investing unnecessarily in technology products and digital solutions that do not address the needs of our clients or consumers.
Advances in technology are one of the key drivers of the significant change that is happening across property. The disruption being caused by new products, new market entrants, proptech, new data, and new digital strategies is a real positive.
This is forcing a traditional sector to think and act differently, accept new market entrants, and look for innovative solutions to mitigate risk from new technologies which are in the process of replacing existing services. This need to think and act differently are some of the key ingredients required to achieve successful innovation.
What makes something innovative?
Innovating is the process of translating an idea or invention into a product or service that creates value for clients or consumers.
The act of innovating does not implicitly require technology or the influence of digital transformation.
For an innovation to be viable the idea should be replicable at an economical cost and must satisfy a specific market or client/consumer need. With the evolution of technology and digital disruption it is inevitable that in order for innovations to be economical and satisfy future consumer needs most will incorporate technology in its solution, but technology should be the enabler not the driver of innovation.
In order to digitalise a business and deliver true digital transformation, organisations need to think freely, with no control or limitations imposed on them due to current available technology.
Friends or foes?
Well, unsurprisingly the answer is not straightforward. Based on the argument above, they should be friends; technology enabling innovation to be relevant in both current and future markets, ensuring innovation is able to deliver economically on client or consumer needs. But the reality is very different. Without a shift in mindset – embracing innovative, agile thinking as well as investing in technology and digital strategies – technology and innovation are in danger of becoming foes, blaming each other for failed investments, lack of progression in chosen markets, and failed digital strategies.
There are some key steps to ensure successful investment in technologies that enable an organisation to deliver innovative solutions.
- Understand the market, client or consumer need that a new solution will be addressing – is the need real or perceived?
- Create a culture of innovation within your organisation enabling employees time and space to be creative, and share new ideas, no matter how “off the wall”
- Be fast and agile – just because an idea requires a new way of thinking or a new team doesn’t make it wrong
- Develop ideas in phases -create prototypes and proof of concepts, before investment in minimum viable products
- Use a technology ecosystem to help develop minimum viable products rather than retrofitting prefabricated technologies to suit the market need and your current business model.
Just because it is not clear how an idea will be developed does not mean it should be written off. This is where technology has a huge role to play. New technologies are making ideas more achievable, and the growing ecosystem of proptech technology partners in the real estate market can helping to unlock new ideas quickly and efficiently.
The biggest risk to the sector is that large scale investments into technologies or digital strategies – without the foundations of an innovative and agile culture – will lead to a lot of failed investments. This will create a view that technology doesn’t deliver the returns, and that innovation is just an expensive “phase” that the sector is going through.
There are echoes of the dot com era, when organisations invested blindly into technology in order to stay ahead of the competition. The need to “be digital” and invest in technology needs to be underpinned with a clear innovation strategy in order for the returns to be achieved.
Innovation and technology should become intrinsically linked, more than friends, synchronised within a complete business strategy.
Organisations need to have realistic expectations as to what can be achieved through investing in Innovation and Technology programmes independently, and recognise that bringing them together as part of a wider business strategy is crucial to achieve the returns on investment and gains in market share.
- Simon Hughes is chief strategy officer at Liquid Real Estate Innovation