Small steps or one big leap?
The real estate sector is beginning to embrace digitisation. But a key question remains unresolved: what is the best way to implement digital innovation? Some thoughts from Thomas Müller.
In my opinion, the real estate industry is still very strongly attached to the concept of making one big leap, where everything is achieved in a single bold move. Having a strategy with a target vision and long-term planning is important, there’s little doubt about that. But at the same time, corporate structures and company hierarchies shouldn’t stifle progress. There is always a risk that innovations – developed with German engineering precision and slowly and carefully refined to perfection – might already be outdated and thus less innovative by the time they finally come to market.
The successful companies in the platform economy – Apple, Amazon, Google and many others – provide a good example to the real estate industry of how major innovation can be implemented in small steps. Or to put it more dynamically, in short sprints. It is the concept of the minimum viable product (MVP) that drives change and thus makes innovation possible in the digital economy. Companies should therefore allow people the freedom to develop prototypes; these then need to prove themselves in practice and undergo further refinement based on direct feedback from users. Tesla is a prime example of this philosophy. While VW is busy announcing ambitious e-mobility targets without having much practical experience, US-based Tesla has been collecting data from real users for years, kilometre by kilometre, in order to improve its products. A start was made on an MVP long before approval was issued for road use.
The development of minimum viable products also raises the question of “make or buy” for real estate companies when it comes to digitisation. Proptechs are crucial partners to the established real estate industry at many points along the value chain. Having said that, there will also be areas in which in-house development or spinning off a start-up seem to make more sense. The automotive industry again offers an example. Both Daimler, with Car2Go, and BMW, with DriveNow, developed their own mobility concepts within their group structures before the two strategies were recently merged. That too is one of the effects of the platform economy.