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No matter what industry you are in, the word “innovation” gets tossed around a lot, so much so that it has started to lose its meaning. If you were to cut through that corporate jargon, innovation effectively means “to introduce something new.” While newness is certainly part of the equation, the way we use innovation has more to it. It usually means technologically advanced, forward-thinking, and groundbreaking. Here I am getting into the corporate jargon myself.
According to experts, innovation is a state of being. “Innovation” in the modern business sense refers to the actionable strategy, which generally translates to “enacting change for the better.” But that vision doesn’t always get translated by people in organizations that are trying to be innovative. Alex Goryachev, US technical expert to the International Standards Organization (ISO) and bestselling author of Fearless Innovation, phrased it perfectly in his book: “Innovation is the thing that every leader demands, yet many don’t understand why they need it, or even what it is. Leaders are often very enthusiastic about encouraging everyone to be innovative, yet vague about what it means in practical terms.”
Because of that, “innovation” often gets shelved as nothing more than a polysyllabic platitude in the company lingo. It looks good on paper, and it rolls off the tongue, but innovation involves more unknowns and, by extension, more risk. This might be why we see so many real estate companies being so slow to embrace technology.
The concept of innovation may have been one that’s difficult to define, but it’s become a top priority to execute. In fact, Boston Consulting Group, a global management consulting firm, did a survey that showed that innovation is among the top three priorities for a whopping 75 percent of companies they surveyed last year. But what’s particularly interesting about that number is that it’s the sharpest increase that Boston Consulting has seen on a year-over-year basis since the company started issuing this annual survey in 2005.
Companies, even real estate companies, finally understand that they need to innovate lest they be sidelined, and that realization spawned an entirely new role in the corporate hierarchy: the Chief Innovation Officer or the CIO. By default, the CIO links business and technical divisions inside organizations, however, each organization has different requirements for the background of the individual holding the position. Two decades ago, the CIO wasn’t even a thing. Now, upwards of 400,000 hold that title.
As technology and digitization become the driving forces behind real estate companies, CIOs have been urged to play a more critical role. Just a few years ago, a white paper from Pixces Consulting Group, a professional services consultancy based in Maryland, advised real estate CEOs to encourage their CIOs to play a more critical role in the business. The paper argued that the CIO’s responsibilities be expanded to include educating the brokerage’s board of directors of the company about difficult issues and persuading them to focus on the present rather than the past. All in all, the white paper proselytized that CIOs should be the sole drivers of innovation within the company. Pixces’ white paper wasn’t the only source of information that claimed that companies should put all of the responsibility of innovation on the CIO. Deloitte, McKinsey & Co., Harvard Business Review, and even our very own Propmodo all cranked out articles that implored companies to hire CIOs and give them the power to innovate.
CIOs have led the charge for “digital transformations” of organizations. Olli Vigren, researcher and teacher at the KTH School of Architecture and Built Environment, is no stranger to the impetus for innovation within the real estate industry. In fact, the breadth of Vigren’s research focuses on management and organizational issues connected to sustainability and digitalization in the built environment. Vigren told me that when he began his research for his Ph.D. dissertation five years ago that the topic of digital transformation “almost didn’t exist back then. But now it’s been growing, and it’s been interesting to see these kinds of innovation leader roles emerging along with that.”
Vigren’s academic career led him to collaborate with Cherry Pick People, a UK-based property recruitment specialist, and Unissu, a PropTech procurement marketplace, to conduct a global study that gathered insights from real estate innovation leaders. The study titled Digital Transformation: Survive and Thrive demonstrates that real estate organizations’ aversion to change and lack of resources is preventing them from undergoing digital transformation and fully realizing their potential to innovate. The study’s objective was to determine how successfully the industry is implementing new technology. “A lot of people know that real estate is behind the curve of digitalization,” said Vigren, “but when you see the hard data that shows the root cause of these types of problems in the industry.”
One of those root causes identified in the report was that all of the survey’s respondents spent half of their working time on innovation and half of the time on other tasks in business, which Vigren said is problematic. “Innovation is very difficult, and I think that the first thing you should do if you want to accelerate the digital transformation of the sector is that you should let these innovation leaders work on innovation tasks full-time.”
The report stresses that innovation leads should have a full-time focus on innovation and that doing so requires very concrete action that leads to organizational change. Alex Wiffen, Managing Director at Cherry Pick People, who interviewed a number of the respondents himself, said that the main issue, in terms of within the business and how the business addresses the challenge of innovation, was cultural. “Rather than throwing around some buzzwords, innovation needs to be holistic throughout the whole organization,” Wiffen explained. “As opposed to having one person in charge of innovation, what we found is that it works better if everyone has responsibility for it. Sometimes people think they can just leave innovation to the CIO, and that mindset is really counter-productive.”
Though the report focused on digital transformation for the built environment, it highlighted the fact that limiting innovation to one role in the C-Suite holds the entire industry back. Innovation needs to be ingrained in an organization’s culture and have everyone’s support in order to be successful. Does that make CIOs obsolete? Absolutely not, in fact, CIOs need support and understanding to pursue innovation full-time. But the rest of the organization also needs to contribute to the company’s innovation strategy. Even if we can’t share the same definition of innovation, we all need to share the responsibility for it.
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