Innovation is not something people typically associate with the property industry – but innovate it must.
Our industry is at the beginning of a huge transformational change that will likely render many jobs or at least tasks obsolete, and introduce a whole range of new skills to the sector. In this rapidly evolving landscape, innovation is undoubtedly the key to survival but what exactly does innovation mean? It’s one of those terms that can mean everything and nothing.
To help wrap our heads around this, I’ve come up with three ‘tiers’ to innovation in the property sector.
The first, and most fundamental of all, is Business model innovation. This involves the C-suite asking some pretty fundamental questions of the business. Think Blockbuster and Netflix, Kodak and Instagram. Is your business model ultimately still valid? What is happening to the market and your place within it? Are your business models and growth prospects relevant in the market place anymore?
We’re already seeing some outdated business models coming under threat. The concept of ‘Space as a Service’ for example, has brought with it a whole new vertical to our industry, with WeWork leading the charge. This raises some big questions for building owners – who are seeing a new entrant in the marketplace extract considerable value from their assets.
My second ‘tier’ is Service (or Process) innovation. This is all about innovating the way you deliver (or procure services) within existing business models, and what processes you employ to generate value from an asset. In the digital economy, many of the previously analogue services will be digitised – meaning the way you run your business, engage with clients, and deliver value – will need to change.
As identified in the recent report by Remit Consulting, the nature of a property professional’s roles will change considerably. The deals will be processed online; valuations and appraisals done using AI technology; due diligence will be carried out using real time data feeds from M&E equipment. The whole value chain will digitise to a varying degree.
Data will be a new currency for our industry. Property advisors must become data centric – and use traditional and non-traditional data sets to enhance their advice to clients.
My third and final tier is Building innovation. This involves incorporating new and innovative technologies (or design solutions) into a building – usually intended to improve operational and cost efficiency and/or occupational satisfaction. It includes such things as virtual and augmented reality, IoT sensors, renewable energy and offsite prefabrication.
For property owners and developers there is a real challenge here. The speed of technological change means that a pioneering technology today could be outdated in just a couple of years. I often get asked by developers how to ‘future-proof’ a building. The honest answer is that it is impossible to know for sure. Things will happen that we can’t foresee. But if you focus on making the building as flexible and efficient as possible, thus accommodating changes in style, culture and technology, then I believe your asset will better maintain its value. Oh, and make sure you have great Internet connection!
By splitting the focus into these three ‘tiers’ a company can more quickly identify real outcomes to focus on, and assemble the best people to involve in the process of innovation.
I have no doubt that some established businesses won’t be around in 10 or 15 years from now. But those that will be, are the ones that act now.
It is time for the industry to innovate.
This blog was written by Alex Edds, JLL’s Director of Innovation and is based on a longer article first published on LinkedIn https://www.linkedin.com/pulse/property-industry-its-time-innovate-alex-edds