The right moves: The best leaders make time to think about the 'big picture' to stay ahead
There is nothing like travel, and free time, to set one thinking about new ideas. In business, we all know the importance of innovation, yet we allow little time for considering 'the big picture'. Where will our firm of estate agents, our development company, or our property investment firm be in ten years? Will we be needed at all? The leaders of all firms should be allocating thinking time for these questions, or risk being left behind.
Estate agency is a business I know for over 30 years. Most of the change in the business has happened over the last five years and has been driven by technology. The chief disruptor has been Stephen McCarthy. He has brought large volume auction sales to Ireland, through Allsop Ireland and made online bidding routine. Having developed his own technology, which facilitates both auction and private treaty transactions, he launched BidX1, a global property platform and a measure of his success is that competitors have been following him, both into online auctions and online bidding.
MyHome.ie and Daft.ie emerged as the most successful property portals and if one needs proof of the value of a good idea, well executed, then the sale of MyHome.ie for €50m says it all. This was the same price as paid by Savills when acquiring Hamilton Osborne King, who were 30 years in business and turning over €50m per annum.
Thereafter, technology-driven changes have tended to be aids to marketing, e.g. online viewing, rather than fundamental changes in the business. Estate agents, from time to time, add and subtract services, such as building surveying, but, this doesn't change the overall market. International expansion is no longer an option for the larger firms which have become part of global groups.
One attempted disruption, which failed, was 'Solicitors Property Services', a firm backed by a group of solicitors. The strategy was simple - one firm would handle both the sale of your property, and the conveyancing, for a lower fee. A lot of smaller agents joined the group but despite heavy marketing, the initiative failed, largely because the biggest legal firms didn't want to spoil their relationships with agents.
However, in the UK, Purple Bricks, which describes itself as a 'hybrid model' is causing major disruption. The firm offers a combination of cutting-edge online technology, a local agent, and add-on conveyancing services, at very low fees, and is reckoned to be the third-largest player in the residential market already. Don't be surprised to see a similar model tried here soon.
Leading the next strategic changes in the market will be both a profitable, and a defensive strategy. But the hard part is - where do you start? How can you predict what is going to happen, and capitalise on it? For inspiration, it's useful to look at how some of the most-successful companies in the world have done it. The interesting thing is that the best ideas are usually obvious, but we can't see them, because we're too close to the business.
Accor Hotels have 4,200 hotels worldwide. They flew their top executives to a think-tank meeting on the design of hotels. At a coffee break, one executive remarked that he was exhausted and hadn't been able to get a nap because his room wasn't ready when he arrived. Eureka! They realised that the most important thing for a guest was a guaranteed available room and they now offer that in certain brands. That led to the conclusion that the most important people working in the hotel were the cleaners, because they dictate when rooms are ready. Ryanair saw that its profitability turned on minimising the time its planes spent on the ground.
But, sometimes it's not the obvious, and we have to let our minds wander. Hitachi were one of the biggest manufacturers of televisions in the world. Motivational speaker Watt Nicoll challenged management to come up with comparisons between televisions and cheese. The winner was a comparison of the holes in Swiss cheese, with potential 'holes' in TV screens. Hitachi build nuclear power plants and bullet trains now. They don't make televisions, but for decades they received a licence fee for every television made in the world using their 'picture in picture' patent - the 'hole in the screen'.
How much more of your fund valuation can be done by a computer? Will 3D printers be producing what you build, in 10 years?
Whatever your approach, allocate time for thinking. It's the difference between leading and following.