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By James Dearsley

Co-Founder, Unissu


TODAY'S OTHER NEWS

PropTech Today: Weak leadership threatens innovation

After you. No, after you. That is often how innovation seems amongst the real estate elite.

And this week I see it in the statistics too and it saddens me. Where has all the innovation gone? Where have the ‘crazy ones’ gone who are willing to lead and not just follow the others?

Weak leadership will form the basis of not only a failed company but a failed industry.

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A report this week by Clifford Chance and Concrete VC has highlighted this to me yet again.

I must say firstly, it is a well-balanced report and despite it being about the commercial sector, the conclusions and the results have solid grounds to be discussed here. Not least because the 41% of C-suites taking part in the survey cited “wanting to see others do it first” as a major barrier to adoption.

“Many organisations do not want to be early adopters, instead adopting a fast follower strategy, with C-Suite respondents citing that they want to see others try technologies first as their overall largest concern” the report summarises at one point.

I am dumbfounded by this sort of a statement. Firstly, it shouts of weakness. Secondly, it speaks also of stupidity and a complete naivety in business.

What on earth are you going to learn from businesses doing it first? Are they going to shout how wonderful a particular solution is? Are they going to tell you what they did right or wrong in the onboarding process? Are they going to admit they got it wrong or had to write off a load of bad investments?

No, no, no and no.

Last year, we launched a PropTech procurement solution to help the property industry find solutions they needed. Quite often they weren’t aware of the problems they had so often it was led by areas they wanted to improve e.g. “I need an improved property management function”.

We would go out to market and find solutions from the 8,000+ we analyse around the world and serve them back with solutions for them to trial. It has done well and we have helped many companies both large and small.

The thing is we, as a firm, decided we needed to keep it anonymous (and free) in order to get buy-in from the industry as otherwise we knew it wouldn’t work so well. This way their competitors wouldn’t know what they were looking at doing and solutions they were looking to find for a competitive edge.

However, we knew this wasn’t ideal but was necessary. Waiting for other people to do it first is, quite frankly, the stupidest and weakest excuse for leadership I have ever heard. The biggest mistake anyone can make is sitting around doing nothing. You are learning…nothing.

I think I have made my feelings clear.

Let me summarise other findings from the report before I continue down the rabbit hole of disbelief. Remember this has a commercial bias, but there are certainly key bits to draw out here which I believe can be important learnings.

Transaction process – origination:

• Nearly 70% believed that listing portals would become a more important source for deal origination (Amazing statistic in my mind as commercial portals just haven’t really made purchase in the commercial world).

• 70% of respondents thought the use of alternative data (e.g. taxi pickups, people tracking and consumer payments data) sets would increase, with 59% of these being the C-Suite and senior professionals. Only five percent of respondents thought alternative data sets would be less important in the next few years.

• 90% of respondents believe building personal relationships would be as or more important than before - travel restrictions have meant that real estate players have relied on existing relationships as trust has become even more important - I have always said about the importance of the personal relationship. Now and in the future. It is what we are good at. We need to double down on this skill set and use tech to augment the rest of the operation.

Transaction process – underwriting:

• 67% of all respondents felt technology will be increasingly important in underwriting, particularly as real estate valuations are a key issue and more problematic in the current conditions.

• 73% of all C-suite respondents thought that scenario planning tools would increase in importance.

• 70% of all C-Suite respondents thought that digital twin technology would increase - such a very important tool in the armoury and expect to see more and more of this coming through the residential development market too. 

Transaction process – due diligence:

• Only 14% of all respondents thought in-person site visits would increase in importance, with a majority of respondents believing their importance would stay the same.

• 84% of all respondents thought that virtual reality/video fly-throughs would increase in importance.

• 91% of all C-suite respondents thought that drone-based inspections would increase in importance.

• 78% of C-Suite Respondents thought that the application of artificial intelligence and machine learning for extracting information from building documents would increase in importance.

Transaction process – execution

• 65% of all C-Suite respondents thought that the exchange of paper contracts between lawyers would decrease.

• 76% % of all C-Suite respondents thought that automated legal document assembly tools would increase in importance.

• Just over three quarters (76%) of all C-Suite respondents thought that smart contracts would increase in importance.

Despite my frustrations at the start, there are some really interesting conclusions drawn from this report. I think the audience surveyed are showing some real maturity in learning, but perhaps not the doing.

This report was done at the height of the Covid challenges and it does show that the decision makers are coming around to the idea of having technology fuelled companies that underpin the operations.

This really pleases me obviously and combined with the draft recommendations I am currently seeing from the British Property Federation (I am part of the Technology Steering Committee), there is real progress in terms of advising on how to approach innovation. These will be out shortly so keep an eye out for them.

But. But. But. If people just sit around waiting for others to innovate and try and learn lessons from others, nothing is ever going to get done and we won’t move forward.

For once, don’t say after you. Just stride on through and lead please.

*James Dearsley is a leading PropTech influencer and commentator, and is co-founder of PropTech platform Unissu. You can follow James on Twitter here.

  • Kristjan Byfield

    Innovation has, for a long time, been driven by the independent agencies. They can make quick decisions, pivot and adapt quickly. I am sure it's similar in the commercial sector, products are almost 'road tested' by the early-adopters and innovators before (if successful/quality) spreading more widely. The bigger the operation the more layers of decision-making there are and the more fragmented the business is, making it hard for them to test, review and roll-out quickly. There is still a lack of digital & innovation roles at the larger operations and this means not only is there the situation James speaks of 'you go first' but there is also more fear around the blame for a adopting a product that doesn't work than the excitement of a reward for a successful one.
    I am actually surprised the larger agencies haven't created a micro-agency within their business- operating like an independent as a test-bed for product innovation- thereby giving detailed insight at little cost before deciding on wider adoption in the organisation.

  • Daniel Hamilton-Charlton

    I sense some real frustration in this article and I am not surprised.
    Estate agents tend to work in bubbles, the valuer is incentivised to win instructions and doesn't care if it sells (in many instances), the sales teams are motivated to get up their sold board and stroke their ego's and then it is all up to the sales chaser to bank the money.
    Not many businesses have someone taking the time and looking at what might benefit all parts and do something about it.
    The sales progress teams frustrations can probably be fixed by better preparation of vendors by the valuer, however, the valuer is likely too scared to push their luck by offering a broader solution to clients out of fear of breaking the instruction. They are quick to get in the car and punch the air with another win.
    Change is for the brave business owners prepared to drive it. There are not as many of those as you might think as many are to busy cheering on the individual parts rather than looking at the big picture.
    Too many businesses did not take any thinking time during the first lockdown when the market was forced to shut and now they have reverted to tradition just to keep their heads above the water.
    It is frustrating to see, but I can empathise with their position.
    I would urge the progressive firms to take a look above the parapet and see whether there is something that they could be implementing to enable them to retain or gain market share when things get tough next year.... as it is very likely to be a tough 2021.

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