Real estate companies are using a variety of strategies to develop in-house innovation engines to keep pace with the rapid changes coming to the industry.
With a framework for identifying and integrating new technologies through an innovation engine in place, the work of piloting the most promising solutions can begin.
There are a variety of benefits that come from infusing technology into real estate: faster and more precise back office processes, a better experience for current and future tenants, and improved financial results.
However, there’s another, often overlooked, advantage to piloting new technologies. Simply the introduction of new solutions to existing problems causes the people who make up the organization to think differently about their work and the company’s performance.
Instead of sticking to a process just because it works, seeing technology in action encourages employees to find additional opportunities for infusing data and automation into the processes that they perform every day.
There is an important caveat here: deploying technology does not necessarily guarantee improvements to financial performance and productivity. To have this effect, investments must be selected carefully to address real-world inefficiencies and weaknesses by streamlining existing processes. A solution for a problem nobody knew existed that creates more work and responsibilities is likely to have the opposite effect.
Improving the bottom line will always be paramount, but the tangential benefit of changing how teams think is worth considering when evaluating technology pilots.
Data-Driven Decision Making
At Enertiv, we provide IoT data analytics solutions to reduce operating expenses for commercial real estate. Because, until recently, granular and real-time data at the equipment level hasn’t been available to drive operations and maintenance decisions, the field has developed as more of an art than a science.
Now, instead of basing maintenance schedules on “best practices”, equipment performance data is being leveraged to create schedules that are driven by empirical evidence. In addition, granular data is enabling equipment-level benchmarking to drive better decisions around capital expenditures.
The more data have helped prioritize workflows and decision making, the more teams can begin to see opportunities for how digitization could improve their effectiveness.
It has been said that “good is the enemy of great.” Without seeing the benefits of technology first hand, teams are likely to continue activities that are inefficient and potentially inaccurate because it works well enough. A hands on approach could be good, whereas a data-driven hands-on approach could be great.
As competition increases and technology becomes a more significant differentiator, “good enough” will no longer suffice. Piloting technology trains teams, especially those who have worked without data for years, to begin making data-driven decisions and develop buy in to the larger transition happening to the industry.
Continuous Improvement
In addition to making better decisions with data, the automation and process standardization that the right technology provides creates the conditions for a culture of continuous improvement.
Like anything in life, if most of someone’s time is spent reacting to problems, he or she will be less able to think strategically and implement long-term solutions. This is the case in many portfolios, where simply maintaining the status quo by running from emergency to emergency is a full-time job.
Technology can help shift teams towards a proactive approach to their work, resulting in fewer emergencies and a steady increase in productivity over time. This frees up time to see the big picture and identify where improvements can be made to existing processes.
In addition, continuous improvement requires measuring performance. Without technology, going around to each equipment, manually recording its sensors value at regular intervals to create even a simple performance metric is so time intensive that many teams simply ignore designated procedures. With the right solution, outcomes are recorded and reported automatically, saving time on data collection and standardizing a set of key performance indicators (KPIs).
Morale
Given the opportunity, few would choose to have to constantly deal with unpredictable events at work. Running from emergency to emergency is mentally and physically exhausting. Even if it results in becoming proficient at quickly diagnosing problems and solutions, most employees do not derive any higher-level satisfaction from being so reactive and morale tends to diminish over time.
Morale has a significant impact on productivity and retention. In fact, one study found that employees who have high morale tend to work 21% harder than those who don’t and another study found that 46% of HR professionals blame burnout for more than half of annual turnover.
On the other hand, accurate forecasts and real-time alerts enable workers to avoid emergencies, working on nights and/or weekends, and becoming overwhelmed.
The people who make portfolios run properly often take pride in their work. Proactivity, enabled by technology, leads to better outcomes, which increases the morale of the team and the performance of the portfolio.
Accountability
Despite genuine pride in the work, if management doesn’t have visibility into what is happening on the ground, accountability naturally suffers.
In addition to encouraging teams to think differently about how digitization can make their jobs easier, piloting new solutions creates the transparency necessary for true accountability.
With granular and real-time data, managers can track the performance of their teams and ensure that data-based recommendations are being executed in the field.
Just the knowledge that performance is tracked and reported upon encourages teams to take responsibility for driving results.
Entrepreneurship
Taking responsibility for driving results will require thinking outside of the box more and more as disruptive forces put pressure on traditional commercial real estate.
To adapt, real estate companies are going to need to learn how to solve problems like entrepreneurs. This means moving quickly, being willing to test new ideas, automating routine manual tasks, and using data to drive decisions.
Most real estate companies do not have the infrastructure or institutional knowledge to implement a change like this purely from the inside.
In addition to the innovation engine strategies mentioned earlier, piloting new technologies help facilitate this change in thinking.
Conclusion
Real estate is a business like any other. The tangible return on investment for technology deployments has been, and will continue to be, the main driver of adoption.
That being said, decision makers would be wise to recognize that the value of piloting new technologies is not limited to dollars and cents.
The positive effects on how teams think after technology is introduced to complement their work and enhance their capabilities should not be discounted.
Not only does this change in thinking promote buy in early, it creates the potential for technology recommendations to come from the ground up, based on the experience of those closest to the processes that are being enhanced.
The world is changing quickly, the only way to keep up is to expose your team to new frames of thinking early and often.
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