People in and outside of the commercial real estate world ask me all the time, what makes this period different. They know technology is hitting all aspects of our lives, but that’s basically old news, right? Well, as all of us in the business know, we haven’t seen anything yet.
Other folks like to point out that commercial real estate hasn’t really changed that much in the last 100 years or so. After all, it boils down to doing deals and client relationships. Obviously, that’s true, but those of us the front lines of IT are acutely aware of another story: the way we do things is undergoing non-stop radical change and our business models are also being upended.
Big numbers for a little perspective
Here’s some big numbers for perspective: way back in 2014 (three years ago) $400 million was invested in real estate technology; this year, that amount has ballooned to $3 billion.
Still, $3 billion is a mere fraction for a global real estate market valued at $2 trillion. This tells us that there’s a lot more money out there waiting to be spent as investors increasingly recognize that they need technology to both drive value and transform $2 trillion in real estate physical assets into digital assets. Yes, that’s right: CRE is turning into a technology-based sector, too.
When it comes to technology adoption, global commercial real estate – like other industries – is at an inflection point. What that means in plain English, is that if we don’t keep up, we risk obsolescence. So, with disruption transforming every business sector right now, how do we stay focused? How do we decide which digital innovations will best serve our firms and people when so many are emerging from likely and unlikely sources around the world? Our technology program has identified four clear but complex goals:
- Optimize our portfolio by making the most of existing systems
- Monitor shifts and threats
- Determine where to place bets
- Harness the power of data
These goals keep us focused on critical areas that support systematic, effective, and wise decisions. We know that we can’t fall prey to every cool new idea touted by hotshot tech startups and equally we know that can’t ignore all of them and expose ourselves to the “risk of ignorance.” We watch the trends like hawks, knowing there are lots of game-changing surprises to come.
Moore’s Law? You ain’t seen nothing yet!
Up until now, we techies have used Moore’s Law to predict the pace of change. As you know, Moore’s law refers to an observation made by Intel co-founder Gordon Moore in 1965. He noticed that the number of transistors per square inch on integrated circuits had doubled every year since their invention – and would stay that way. Though the number now doubles about every 18 months – Moore’s law has been applied to the speed of technological change, and it’s held true.
But wait! Next up is quantum computing, which will blow Moore’s law out of the water. Think of it as computers teaching each other to analyze problems more like humans. Quantum computing is to today’s computing what the IPhone 10 is to a pocket watch from 1920. All of the big players in tech, including IBM, Google and Microsoft, are in the global race to build the world’s first practical quantum computer, and the prestigious journal Science said Google expected to have a 50-qubit quantum computer by the end of this year.
Once quantum computing is made widely available, it will spark the next industrial-super revolution, which will be many times bigger than that caused by the birth of personal-computing in 1984, or the rise of the searchable internet in 1995.
Meanwhile, while we wait for this seismic shift, the digital revolution is gaining momentum. Take data for a moment: In 2010, you might have produced a gigabyte (1,000 megabytes) of data in a week or two – or even a month. That’s the equivalent to about 200 songs, 10 episodes of the “Game of Thrones,” or roughly 34,000 emails.
Today, an enterprise user produces 60 gigabytes per hour! So, before lunch, the average employee produces about 400 gigabytes. Multiply that by the hundreds of millions of people creating data every day and you can see how 90% of the world’s data was created in the last two years.
Transformation, disruption, change
With this mind-blowing speed of change in mind, think of companies like Facebook, Google and Amazon. They only got started in the mid-’90s, not long ago considering their ginormous size and power. And, just as these new giants rose up, other iconic brands were taken out by disruptive change, including:
- Kodak, which had more digital photography patents than any other company
- US Steel Mills, which had the highest quality and tremendous customer loyalty
- Many national hotel brands that had consultants hooked on their points and rewards
- Blockbuster, which is perhaps everyone’s favorite story of a giant that was killed by a fledgling startup.
As we move deeper in to the digital age, the forces of change will continue to broadside unlikely companies. What’s always separated winners from losers is what leaders do at critical inflection points that demand change.
Will we be Blockbuster or Netflix? That’s top-of-mind question for corporate leadership today. Should we be worried? Not if we focus on delivering value, which always relates to giving your people the right platform to drive growth. That, and always keeping an eye out for the next big thing!