That’s how I would best describe my own internal wiring. I am constantly curious. Always trying to improve. Continuing to seek out what is new, interesting and leading-edge. I am obsessed with change and transformation.
Does it lead to a lot of failures? Sure. Is it risky? Absolutely. But it is also what drives the great business leaders and companies of our time. Of course, I don’t put myself in that category, but I do attribute a lot of my inspiration to continually learning from others that inspire me whether they are business leaders or artists. The risk takers. The change agents.
And investing in technology and embracing innovation is core to this philosophy.
If you look at the companies that have weathered many a business storm/cycle and remained viable, growing and relative, they all innovated during the most challenging of times. Think Goldman Sachs, J.P. Morgan and Citigroup in financial services. It’s not a coincidence that they are three of the largest investors in FinTech and remain the dominant brands in financial services. In the world of retail it's the same story. Target, Walmart, Home Depot and Best Buy are among the most active in the industry with regards to investing in tech and it’s no coincidence that they have outperformed their peers in the “retail apocalypse.”
You can look at any industry and see the connection between investing in technology and the leaders in that particular business segment like big pharma to automotive. And you can also see the “innovator's mindset” at work recently in some fascinating M&As such as in the Lululemon acquisition of Mirror as well as Uber’s acquisition of Postmates.
Is real estate about to be characterized by the same correlating trend of “$ + tech = success?.” Unequivocally, yes! But I actually think it's going to be much more profound than simply investing in “tech” as the next cycle of real estate -- it’s going to be all about “innovation.”
We are living through one of the most challenging and transformative real estate climates in history. The pandemic has forced real estate companies to innovate, improvise and lead as it relates to getting people back to work, back to shopping, secure in their homes/apartments and more efficient in their warehouses. But additionally, it has forced them to rethink much of the way the industry has operated for decades.
Is remote work a fad? Is co-working dead or will “flex” be the new norm? Will people flee cities for suburban living? Will malls ever recover or will they become the next generation of residential or schools? What will the future of mixed-use look like in a period of social distancing? These are the questions that are being asked around the world every single day now.
In my many years of being an advocate and community builder in the world of real estate technology, I have never seen such demand, focus or content centered around tech. But it’s more than tech. It’s about rethinking old models. It’s about reconfiguring spaces for the new reality of what life is like in this pandemic but it has also given business leaders and employees an opportunity to hit the “reset” button. And real estate has been on everyone’s minds as this pandemic is indeed all about the “spaces” we occupy. (Real estate, education and healthcare are likely the three most challenged industries to innovate in this COVID-19 world we are living in and will be living in for the foreseeable future).
It’s why we have rebranded our company as “Reimagining Real Estate” and why we have made this big push into Consulting. The leaders we are hearing from and will hear from are all saying the same thing -- ”In order for our companies and spaces to remain relevant and address the new realities of the time we are living in, we must innovate… As a company and as an industry!”
Which brings me back to “infinite learning.” I think that's what our industry really needs to be embracing as a new mindset in these unfamiliar times. The old “rinse and repeat” simply won't work. For decades, we have seen proven formulas work in real estate as they have led to great fortunes and dynasties by meeting market demand and building reliable, somewhat cookie-cutter development projects that the market wanted. Today, the consumer/customer/occupier is demanding things like wellness and safety more than at any other time in history. And they are now questioning not only where they live but how they work. Lifestyle and life/work balance are at the forefront of most people's minds. As a result, companies that rely on old norms and customs will become laggards in the industry as a new future is taking shape right in front of our eyes.
Those that embrace an innovator's mindset throughout their company will emerge as the new leaders in the built world. It’s no coincidence that we selected these leaders to be on our Advisory Board for our Global Innovation Consulting Practice -- just listen to their responses when I asked them what “innovation” means to their company:
“Embracing innovation starts at the top, with an interest in trying new things, support for the financial investment and more importantly -- time to engage and finally an acceptance of controlled failure and risk. With this in mind, associates are encouraged to raise ideas and propose projects to contribute to a larger strategic growth plan.”
- Karen Hollinger, Senior Vice President, Strategic Initiatives, AvalonBay Communities
“Companies are like markets, when there is no change there is little motivation or opportunity for improved performance. Distress and volatility are the conditions that compel innovative response and creativity. A static environment breeds complacency not new ways to produce and enhance profitability. Again, a dynamic world precipitates positive action. Obvious to most but worth repetition.”
- David Knowles, Co-Founder of the Stanford Real Estate Council; Chair of the Innovation Committee for Stanford Professionals in Real Estate
“At Essex, we are not satisfied with the status quo and have set out to create an environment that embraces innovation and change. We work together with our business operating teams, technology teams and partners to brainstorm areas where innovations and new ideas can be energized. Innovation is about the teams collaborating rather than designating a team that does innovation.”
- Pat Klein, SVP & Chief Technology Officer, Essex Property Trust
“Jamestown believes innovation requires a willingness to incubate and to be nimble. It's investing in the right processes, partners, and technology that can translate a community insight or need into a new business opportunity. This belief has caused us to incubate new retail concepts when we saw a gap in the market, run a monthly crowdsourced idea program, offer hands-on, iterative support to the startups we work with, and to even launch a new technology-enabled investment vehicle, Jamestown Invest."
- Ginny Miller, VP of Technology and Innovation, Jamestown
“PGIM Real Estate has been at the forefront of innovation in the industry and our efforts have led to success in many ways, including helping to increase revenue and decrease expenses at the property level, improve talent acquisition and retention, strengthen investor relationships, and improve investor outcomes. Our philosophy of embracing innovation and technology begins at the most senior level of the organization. Our CEO Eric Adler has long been focused on creating a culture that empowers individuals across the company—and at all levels—to research and bring forth innovative ideas that enhance operational efficiencies and improve how we manage our properties. Because PropTech is a very fragmented sector of real estate, we recognize the need for our efforts around innovation to be truly cross-organizational in order to stay educated on all the latest advancements and make sure that we have a comprehensive view. We have structured “innovation groups” globally that are organized by region and property sector, and each includes employees that span all levels of seniority. These groups are tasked with evaluating new technologies that address specific issues that we face as a company and at our properties. PGIM Real Estate also has strong relationships with other forward-thinking property owners, PropTech associations, and venture capitalists in the technology space, all of which we can tap into for product evaluation and for information on pilot programs and best practices. The same goes for our JV operating partners and our property managers. Collecting all of these insights from both inside and outside of our organization allows us to ensure that we are learning as much as possible and that we are able to adopt the right technologies across properties, sectors, and regions.”
- Sara Shank, Managing Director, Global Head of Innovation, PGIM
“We are constantly looking for partners who can help us identify the smartest technology solutions and who can also assist our company with embracing innovation throughout our operations and assets. What we did last year already feels old. By continually pushing ourselves and our partners we are able to consistently meet market demand in an ever changing marketplace. Embracing innovation is obviously core to our company philosophy in everything we do.”
- David Levine, CEO, Presidio Mortgage Holdings and Levine Family Ventures
“The enemy to innovation can sometimes be a successful business. We consider ourselves a very successful business by all financial, value-delivered and people measures, and many CRE firms have enjoyed a 10 year with unprecedented growth and prosperity. As the world changes rapidly under current conditions, it will be interesting to see who invested in innovation during the booming times. The visual in my head is when the lake water recedes rapidly, you get to see who’s not wearing a swimsuit. Our approach to innovation is founded on three of our six core values, “We take the long view” (our objective is long-term value, versus short-term gain), “People matter” (our relationships with customers and colleagues are our most valuable assets) and “We innovate” (a curious, empowered and diverse workforce challenges the status quo and drives change). Upon these core values we built an innovation organization, which includes dedicated and seasoned leaders driving business transformation/evolution/adoption, product development, data and cloud. All these necessary functions work together with business owners in the continual re-imagining process in iterations and increments. We succeed at some things and we fail at some things, but we learn from our mistakes and we course correct as we go.”
- Darren Wesemann, EVP and Chief Innovation Officer, Berkadia
Now is the time for real estate professionals and companies to adopt the “infinite learner” mindsets. If they do, I am convinced the market will respond favorably and they will emerge as the new leaders in this fundamental new paradigm shift taking shape in not just real estate, but society at large.