Why a real-time strategy is the backbone of a 21stcentury real estate company
At a time when the landscape is changing faster than ever, it is still difficult for real estate companies to keep up. Changes are rapid and often unexpected. Staying involved in the digital transformation means either developing a real-time strategy or get lost in the future.
Real estate companies are part of the PropTech movement, the movement of the built environment to digital transformation. It must all be smarter, cheaper, more sustainable and customer-centric. Contact is being sought with young PropTech companies and established consultancy firms and IT companies like crazy. In addition, new people are attracted, who preferably have experience (or at least affinity) with technology. It goes in all directions. What is the strategy, and what do you strive for?
- A plan is a document that an organization uses to communicate its objectives and associated actions. A plan is an intended course of action, very concrete and allows few/no deviations.
- A strategy is a blueprint, layout, design, or idea that is used to achieve a specific goal. A strategy is very flexible, provides direction and is open to adjustments when change is needed.
Using the classic management models (SWOT analysis, BCG matrix, Porter’s five-power model) to your heart’s content of yearly business plans. However, the often-standard strategy day (with post-its) is too short in time, unimaginative, energy-guzzling and not very motivating. In addition, these management models and time-honored strategic thinking – focused on the industry and competitive advantage – are very limited and static, despite the dynamic time we live in. A missed opportunity to use 21st-century methodologies such as Business Model Canvas, 3H model, Vested, Sprint, Lean Startup and LEGO® SERIOUS PLAY®.
Pyramids make mummies
The hierarchical structures and organizational processes that have been commonplace in the real estate sector for decades to run and improve businesses are no longer sufficient to win. Strategy definition and implementation with a top-down approach where 20% of management determines 80% of the strategy fails. Traditional ways of working do not allow everyone to express insights and the world is changing faster than plans can be executed. In most companies, strategic planning is not about making decisions for the day of tomorrow and the day after tomorrow, but about documenting choices that have already been made. The (annual) plans are often an update (extrapolation) of last year’s plans, which are often based on old motivation and reward systems instead of doing good things because they are good. Companies in the new economy are reconsidering the way they develop their strategy so that they can make more, better and faster decisions.
“If you think you can let the technology develop and then be a successful follower, think again” – McKinsey, April 2018
In times of major change, management is often no longer able to indicate where and when the consequences of decisions arise. Companies often run into problems because management does not know what they do not know. Certainty no longer exists, and organizations can only be successfully managed in the new economy if management realizes that continuous change is the only constant. In fact, the term ‘strategy’ – a term now used loosely to cover sporadic (transactions, production, hours, budget) planning – has yet to evolve. Strategy matters, but its execution is the key. A strategy is something you experience, feel and act upon, as opposed to a planned route and a document (stored in a closet).
A new form of leadership
Making better use of human potential, new forms of leadership, new business models and methods of the twenty-first century are needed to make companies more agile again. Wise leaders recognize that the only sustainable source of (competitive) advantage is the experience, new knowledge, and imagination that is present among the people in the organization. By unleashing the full potential of people and developing new propositions in co-creation, more new insights, new knowledge, more trust, involvement and ultimately also more commitment are created, and a faster implementation takes place. The (inevitable) future for real estate companies and the full potential of people to be exploited is working with a real-time strategy.
Faster and better decisions
A real-time strategy is dynamic and constantly changing, based on a shared identity and a set of ‘simple guiding principles’. Simple guiding principles guide the company throughout life regardless of changes in goals, strategies, type of work and management. The principles improve the speed and quality of critical decision making and make the company agile in the rapidly changing real estate (PropTech) landscape.
Real estate companies can grow to the next level by focusing on the shared identity and simple guiding principles developed in co-creation. Real-time strategy is required to successfully transform into a (PropTech) organization of the twenty-first century. How seriously do you dare to play the game?
Founder – PropTechNL
Founding Board Member – PropTech House, the European Network