Innovate or Die. But What is Innovation? It Isn’t just PropTech
A certain Mr Dick Whittington Esquire was once convinced that the streets of London were paved with gold. To be part of the capital’s community would ensure riches and success, he thought.
However, on arriving he soon realised that the reality was different and that he’d been caught by a myth and so spent his early years in the city cold, hungry and probably rather miffed at what turned out to be just hype.
Those pavements were most definitely hard and unwelcoming and seemed to be made of stone rather than anything shinier.
He bought a cat for company and worked as a kitchen scullion for a wealthy merchant. Hard graft, but to someone else’s benefit – he was paid a pittance.
Poor Dick could not see that simply showing-up was not enough to ensure that your pockets then filled with cash. There was indeed opportunity but it had to be grabbed rather than it simply rubbing off automatically. You have to dig for that gold.
And so it is that in recent years the property industry has talked a lot about PropTech as an essential route to success and something to harbour whereby the alternative would apparently be certain commercial extinction.
A bandwagon, some might say and indeed some quarters have evangelised about the be all and end all of PropTech to such an extent that there’s a belief by some in the property industry that innovation is only represented by PropTech and that it’s essential to embrace it for fear of otherwise being left behind.
But that’s wrong. Partly at least. Because not only are many of the technology applications that are proffered merely solutions desperately searching for a problem, often which doesn’t exist, but it is surely not a fact that innovation is solely confined to matters of computer-code alone.
We do tend to think of innovation as just about technology – automation, self-serve, data, marketplace aggregation, user journey, blockchain etc. But it’s not just that and I reckon that if estate agents and the like began to think differently and, here’s the point, more broadly about what innovation is and what it can be, they would be better defended against what the future may throw at them.
What am I talking about?
Innovation applies to operational improvements – to processes and centralisation. In marketing. In people. And above all, in mindset.
In culture and motivation and remuneration. In sales process and communications. It’s about entrepreneurialism.
Here’s some examples of innovation in commerce:
- Amazon launched AWS as an internet hosting business off the back of its spare capacity. It’s now worth £4 billion but was conceived as an accidental aside.
- Foyles, the bookshop, concerned that Amazon might kill it, has just expanded into installing libraries in high-end new build homes.
- Paypal, which Elon Musk intended to be a bank, pivoted and grew to become the world’s largest payment platform.
- Play-Doh spent its first 22 years as a wallpaper cleaner.
- Netflix stopped sending DVDs through the post and began to stream content via the internet because it realised that the internet was immediate and free. It then pivoted again to become an original provider of content rather than a conduit for the content of others.
- BP, Shell and others know that fossil fuels are running out and that their use is increasingly politically incorrect. Their answer was to innovate through the production of sustainable energy in the form of solar, wind and biofuels. In Q1 2019, 36% of our electricity was sourced from renewables.
- American Express went from a 19th century horse-bound courier firm that provided express riders to shuttle bank documents from the east coast of the US to the west, to become the credit card giant that it is now.
Some of these reinventions are technology-led but they are all more than that – they are fundamental changes to an existing business model perhaps empowered by technology but not reliant on technology alone. They became improvements on a former convention.
Money used to be about paper and coins and is now turning electronic via apps and we’re seeing the first wave of retailers that now refuse to take cash at all.
Even people change. Society itself in developed cultures has become more liberal, more tolerant – promoting equality and meritocracies as opposed to accepting slavery, racism and misogyny as ‘normal’ as they were once deemed to be by many. A cultural innovation.
How does this relate to estate agency?
Our industry is changing. Pressure on conventional overheads and a saturated marketplace combined with, perhaps, a new normal that will see property transactions lower than before means that the unit economics of traditional estate agency are unsustainable. Countrywide and Foxtons are testimony to this.
Yet, through innovation, we can become more efficient and use new tools to work differently in order to achieve sustainability and ultimate success.
Fewer branches if any at all; newer operating methods; an embracing of digital marketing; and, yes, some tech – this combination put together thoughtfully is innovating the sector. It’s providing a better customer experience and is making estate agency more cost efficient.
The benefit of this approach is that instead of a business employing someone to run a heavily cost-laden branch whereby 90% of customer fees are absorbed by the commercial landlord, the local authority and the plethora of people employed, instead that person becomes the business and in doing so sheds the burden of what I consider to be the unnecessary 20th century overheads.
True innovation in our industry is not a plethora of tech products. It’s to leverage the best agents to excel and to prosper and to earn six figure sums instead of the corporate overlords and premises owners that have benefited up until now.
And earning more as an individual, as the new figurehead in your market, means that instead of resenting the customer because you’re only taking a small slice of the spoils, your mindset shifts as you take a bigger chunk of the commission and consequently offer a better, more accessible service accordingly. It’s actually liberating.
So, innovation is to see the pivot, the opportunity. To understand that ‘but this is the way we’ve always done it’ is the enemy of progress and, indeed, survival.
The streets are paved with gold. But you have to scratch the surface to see it.
*Russell Quirk is Co-Founder of Properganda PR