It’s not often we can enjoy beautiful sunshine on bank holidays, but I suppose this one was a particularly blessed weekend, so it’s the least we should expect!
I hope you all enjoyed the weather and grabbed some time with the family; chocolate and roast beef.
But now it’s back to it, and I’m picking up where I left off last week, with the first instalment of my market transformation do’s and don’ts series.
Each week, I plan to analyse one ‘do’ and one ‘don’t’, starting today with ‘don’t deny’, and ‘do embrace’.
To analyse both of these, it’s helpful to use Countrywide as a case study because it has, over the years, both embraced and denied digital transformation. What’s unusual is, it embraced first, and then chose to deny.
In 2014, when Alison Platt became CEO of Countrywide, she began to proactively push a digital overhaul of the entire company, keen to embrace digital transformation.
As my good friend Eddie Holmes has written, Countrywide’s strategy under Platt had ‘two main pillars’, pitched under the title of ‘Building Our Future’.
1. Launch an online hybrid competitor of its own (the multichannel approach)
2. Rationalise the existing business by closing branches and consolidating brands
In May 2016, Countrywide launched the pilot of its online hybrid offering, and closed 200 branches and four brands.
The company was boldly trying to evolve, spending many, many millions on the overhaul, including £8.1 million on redundancy payments. But share prices began to fall and shareholders grew concerned at the choices being made by Platt.
On top of this, by attempting to implement both the pilot launch and the branch consolidation simultaneously, we can safely assume there was significant cultural friction between top level employees.
In her time as CEO, Alison Platt oversaw a 90% fall in the company's share price, and two profit warnings in just three months. She ‘resigned’ in January 2018.
Alison Platt failed to take her staff on the transformation journey with her. She set off alone and clearly didn’t have the support of many at all. To say she was unpopular is putting it politely.
The results of her efforts were tragic. Quite, quite terrible. But, Platt was earnestly trying to implement brand new models to a stringently traditional organisation, so I sympathise with her to a degree.
She was trying to embrace change and it didn’t work. As soon as she was gone, Countrywide abandoned the two pillars of Platt’s transformation entirely, before anything had really had the chance to get off the ground.
The organisation flipped entirely from embrace, to deny. No longer was Countrywide to make any attempts to incorporate innovative digital models alongside or in place of the existing practices. It even went so far as to name the reversal process the ‘Back to Basics’ programme.
This decision must have been inspired by madness or delirium, or both. To abandon transformation halfway through because things haven’t panned out perfectly on the first attempt is an almost satirical display of ignorance.
It seems the fear of failure got the better of Countrywide, and rather than dusting itself down and trying again, it quit the race and entered a prolonged period of denial. The arms which were once outstretched were now definitely akimbo.
Even though there is a risk of short-term failure when adopting innovation, to deny digital transformation entirely can only result in failure.
Foxtons makes for another interesting case study. It could be argued that Foxtons was leaning into digital transformation before anyone else, certainly on the high street.
It embraced the digital future as early as the early-2000s with new models based around centralised CRM technology, attractive, cafe-style offices, and so on.
This, however, was twenty years ago and just because it embraced digital transformation back then, it cannot rest on those laurels and fail now to embrace change once again.
As I have written before: “Foxtons was the first residential agency to go through a digital transformation and it was this process which created its competitive advantage but, as is often the case, it was so early, it now needs to transform again or risk huge challenges ahead”.
The internal system that Foxtons uses, for example, is incredibly valuable to the company and has been perfected over twenty years, but it is also an isolated entity, unable to integrate nor be integrated with separate, third-party software systems.
Integration is now a vital part of real estate’s future. In the early-2000s, it was not, so now Foxtons urgently needs to address this flaw.
It also needs to take an internal staffing audit. Are there too many ‘company men’ in high powered positions? Because, although experience and loyalty are important qualities, the firm needs to bring some more technologically-minded people into the C-Suite.
Otherwise, how will it become clear what innovation can be done? It needs a new digital innovation strategy and this can only be written with help from people who bleed digital innovation.
Finally, in order to fully embrace market transformation, Foxtons must rethink its value proposition. A huge part of its revenue comes from lettings, a sector now swarming with innovative and cheap alternatives.
If Foxtons cannot compete on a pricing level - and let’s face it, why should it? - it needs to find an innovative new value proposition to secure future success.
Sleek, whitewashed, cafe-style high street offices aren’t enough to differentiate anymore. I hope, for the sake of my old employer, that its early embracing of transformation does not turn into a stance of denial like we’ve seen at Countrywide.
It is undeniably frustrating sometimes, but embracing transformation is a constant activity, not something which goes on a decade-by-decade review process. Foxtons worked incredibly hard to be ahead of the competition twenty years ago, now it needs to do it again.
Do embrace, don’t deny
It’s a fear of failure and pressure from shareholders which has neutered Countrywide’s digital aspirations.
And, as many of us are wont to do, it has reacted to the pressure by seeking the false security of denial.
If Foxtons mimics this disastrous decision, expecting its previous work at transformation to see it safely through the future, it won’t matter how great its branches look because nobody will be going in.
Tune back in next week for part two of my do’s and don’ts of market transformation series.