Discussions are happening in boardrooms across the real estate industry about digital disruption, technology, innovation and how best to respond to new threats, writes Simon Hughes of LIQUID Real Estate Innovation. Some of the questions that have been asked over the past 12 months are about how to respond to these threats.
How do we respond without impacting short term performance? What are the right investments to make? Should we invest in proptech? Should we create an innovation fund? Should we acquire an innovator? Should we digitalise our business first? How can we be more innovative? How do we mitigate competition? Is this real or just another passing phase?
The answer is always the same: start by unlocking innovation from within your own organisation, whilst addressing the real market and client problems.
The pace of change within the real estate sector is approaching inertia. Fear of failure, or taking the wrong action is too often an excuse for no action. Trying to balance short-term performance requirements in challenging markets, against the need for larger longer-term investments which transform how the organisation operates, is a principal concern for the current boardroom. The answer is actually simpler than you would think. Incremental steps on the innovation journey are better than no steps.
Cutting through the noise
It’s easy to be distracted by the noise and the “bigger picture” of digital disruption, innovative technologies and trying to transform your business to become “digital”.
The organisations that have successfully embarked on this journey have realised that transforming how they deliver current services is relatively easy, and more impactful in the short-term. They understand it’s a crucial first step, before they commit to investing millions to create long term plans which initiate huge change programmes, transforming what an organisation delivers – its products and services.
Similarly, comparisons with Google, Amazon, Netflix and other “showcase” innovation companies are not realistic, and often distract the focus of boardroom thinking. Such organisations are younger and more agile than the majority of those in the real estate sector.
For example, Amazon, which is less than 25 years old, is a great showcase of incremental innovation. After launching as an online bookstore in 1995, it quickly trialled (and in most cases, soon dropped) many new innovations: an auction site to compete with Ebay, new shop categories (which we now see as Amazon’s standard), Amazon Block View in 2004 (dropped before Google created Street View), the Kindle, Amazon Prime, Videos, Web Services and more recently the acquisition of Whole Foods.
Whilst Amazon is a very different business to most of those in property, the policy of creating a culture of continuous, incremental innovation is what so many real estate boardrooms can learn from. In order to become innovative and agile, real estate organisations need to develop an innovative culture, and use that culture to transform the conversations they have with clients.
6 key steps
The LIQUID approach to unlocking innovation comprises 6 steps, delivering short term business improvements, cost savings and efficiencies, whilst building momentum, engaging staff and proving the value of innovation. Crucially, it creates a culture of innovation and transforms the conversations businesses have with their clients.
Transforming how an organisation delivers current services and creating an impact with clients that increases revenues and market share, makes the decision to invest in larger scale transformation of what is delivered much easier. Too many innovation programmes fail because the expectation is that game-changing, transformational new products or solutions will be created in a short timeframe with minimal impact on day to day operations and within the financial constraints of in year performance.
Ensuring everyone is clear on the business objective of an innovation journey is key to its success, and the ability to implement the outcomes it creates. Creating resilience in day-to-day operations, and transforming how the business delivers, whilst not game-changing, is key to creating confidence in the boardroom that your innovation programme can deliver the desired results.
Rather than investing time and money deliberating how to take that giant leap, organisations need to focus on taking fast, incremental steps to unlock innovation from within.
- Simon Hughes is chief strategy officer at LIQUID Real Estate Innovation