Sink or swim in the digital age: are you keeping up?
For all of us working in the industry, it’s a question of how much to adapt, both now and in the future. There’s a lot of change coming – most of which our industry isn’t driving – but which has big implications for what we do and how we do it, from valuing buildings to optimising workplaces.
Those who sit still are taking a huge risk, and some will struggle to survive if they don’t, or can’t, adapt.
Technological advancement isn’t new; business has been adapting and accommodating new technologies to different degrees for the past hundred years.
The main difference now is that the pace of advancement is getting faster and technology has never been more integral to how we live and work. Just think: The iPhone launched just over 10 years ago. Imagine life and work without a smartphone. I can’t.
A digital first world
The rate of tech advancement, however, makes it increasingly difficult to keep pace with tech adoption, leading to a gap between the two. It’s called technological obsolescence and it’s a key risk for real estate businesses.
This is where innovation comes in, specifically R&D innovation – the ability for companies to invest in their own future and test, trial and scale new concepts and products.
As expected, technology and software companies lead the way on R&D spending – typically over 10 percent of their revenue. In contrast, the construction sector spends approximately 1 percent and the real estate services industry less than 0.1 percent.
This gulf highlights the significant gap between leaders and laggards when it comes to tech investment. I’m not saying real estate needs to match the tech leaders, but even a 100 percent increase in R&D spending would be paltry by comparison.
Strategies that work
Creating an R&D innovation strategy is the starting point – and it’s essential to ensure companies focus their limited resources and develop a tech strategy that supports their USP.
It’s a mixture of building the right team and the right products in-house to deliver solutions that provide an edge in the market, choosing the right partners when it comes to implementing tech and developing new ideas, and acquiring and investing in the right businesses to drive growth or diversify revenue.
At JLL, we’ve got a growing number of technology and data experts in our business who have been critical in developing tech solutions like our immersive NxT platform for office location and investment needs and our new digital office assistant JiLL.
We have a range of tech partners – both large and small – to support tech-oriented solutions, and dedicated roles, such as mine, to help establish these partnerships and ensure they add value.
We created our own strategic VC investment fund – JLL Spark – which has invested in 10 start-up companies to date, and we’ve also acquired pioneering tech-enabled business models such as Corrigo, BRG and ATG to better deliver value to clients and keep us on the front foot as the digital age gathers pace.
Keys to success
Yet there’s no one-size-fits-all model. Each company will need a tailored approach that aligns with its values, USP and resources. That said, there are some key factors to ensure success.
For leaders, it means setting a clear vision, creating an environment which promotes discussion and allows innovation to thrive, and to bring in the right talent and to let them get on with it. Importantly it’s not just about tech and data. Bring in forward-thinking people to roles that will make a critical difference to how the business operates; change management, customer services and business transformation.
Traditional business models also need to adapt by adopting a bi-modal tech structure which separates IT infrastructure and services from agile and innovative tech development – with greater investment in the latter. If an idea looks good, then back it; there’s no point investing in tech half-heartedly and treating it as another capex project.
Finally, don’t apply the same rules of IT to R&D. Set at least a three-year time scale to allow sufficient time to learn, adapt and improve; the idea you start out with might not be where you end up. Success involves taking some risks and making brave decisions, while also managing the costs.
For me, real estate right now is all about new opportunities. It is an exciting time and there are so many possibilities to bring in new skills, partners and approaches. Old ways of working are getting a digital makeover. We have to embrace it – because it’s happening anyway.