Transformation

What does Digital Transformation mean to each of us? The question returns many individualized responses, only complicated by how past business models are rapidly transforming.

(This topic was part of the recent discussion on Monday Live https://www.mondaylive.org/past-shows )

We need to stop focusing on the digital part and refocus on the complete Transformation that is now occurring everywhere. In an organizational context, transformation is a process of profound and radical change that orients an organization in a new direction and takes it to an entirely different level of effectiveness. Transformation implies a basic change of character and little or no resemblance with the past configuration or structure.

This article from BusinessWire.com talks about major Transformation of one of our building business models:

Pinterest, Inc announces that it has terminated its lease for approximately 490,000 square feet of office spaceto be constructed near its current headquarters campus in San Francisco, California. Instead, the company’s present plan is to continue to lease its current buildings in downtown San Francisco and remain an active member of the local community.

This action is intended to support a more diverse and geographically distributed workforce at Pinterest. "As we analyze how our workplace will change in a post-COVID world, we are specifically rethinking where future employees could be based," said Todd Morgenfeld, CFO and Head of Business Operations of Pinterest. "A more distributed workforce will give us the opportunity to hire people from a wider range of backgrounds and experiences."

The agreement involved a one-time payment of $89.5 million in the third quarter of 2020. This will be reflected in Pinterest’s financial statements as a GAAP general and administrative expense, to be filed with its Quarterly Report on Form 10-Q for the period ended September 30, 2020. As a result of the termination, Pinterest will no longer be subject to future minimum lease payments of approximately $440 million as disclosed in prior filings.

Here, from Sebastian Orbando, writing on the National Real Estate Investor site, are Seven Takeaways from UBS's Real Estate Outlook Report:

Uncertainty looms over the U.S. economy and no property type is immune from the potential financial impact… However, some clear trends have emerged in the commercial real estate market and UBS researchers advise investors to take a long-term view on how the various property sectors are likely to perform. Here are seven takeaways from the report…

Highlighting some of those points is this article from Memoori, Dumb Buildings are the Real Losers in a post-COVID World:

COVID-19 is one of the most disruptive events human society has experienced in the last 75 years. Beyond the struggles of 2020, this harsh reminder of the biological threats we face will go on to reshape the way we live for years to come. At the center of this debate is commercial real estate (CRE) — the indoor environments where people of different households gather — where 50% to 100% drops in occupancy levels have been common for months. CRE must now adapt to a post-COVID world that will create new winners and losers to reshape the buildings industry forever.

This article, The Smart Building Effect from Nicolas Waern "The Building Whisperer,” in the latest issue of AutomatedBuildings.com, posits that the classic building models don’t offer anything new:

The future will be about buildings that stay relevant and get exponentially smarter over time…

One of the major reasons why Smart Buildings are winning against its competition hands down is completely overlooked, underrated, and rarely mentioned. It is the continuous value creation for customers and that buildings grow better over time. Other manufacturers have no answer for this.

The companies creating Smart Buildings will add value for its customers like no other companies in the world. I am not talking about safety features, being fun to be in, or sustainable energy efficiency of soft values, but about hard dollars in the pockets of companies, tenants, and especially real estate owners. This has nothing to do with automated buildings, or AI-infused robot buildings, which, if they arrive one day, will add 6-digit value appreciation on top.

What we are experiencing today is not a competition about who has the best net-zero building with the best energy efficiency rating on the planet, the best technical asset management team, or the newest silo solution from a building automation vendor. What we are experiencing is not a competition between automated buildings and traditional buildings, but the competition between two contradicting business models.

This article from the Realcomm website talks about how no-code development platforms will bring speed, ease and agility to REM systems:

Embracing no-code

According to Pitchbook.com, “Low-code and no-code development platforms expedite the creation of new applications with minimal coding requirements and offer tools for non-programmers to create their own apps. These platforms use a combination of drag-and-drop graphical interfaces and prebuilt models and templates that enable non-developers to create software.”

This article, The Show Must Go On… from Scott Cochrane, President & CEO of Cochrane Supply, says that even with the ongoing pandemic, networking and sharing ideas are more important than ever.

Not only are our business models transforming but all our underlying infrastructure and way of life is.

From Manu Fernandez & Sergio García writing on the CitiesToBe website comes this article, Covid-19 and the future of cities - 9 emerging trends:

The covid-19 crisis has been an unexpected accelerator of the digitization of public services. The compulsory switch of the administration internal procedures and the formalities for citizens to the online mode marks a milestone in a tendency that is sure to be accentuated.

From a recent article in The New York Post by Kevin Sheehan and Kate Sheehy:

Rich Manhattanites are fleeing the city so fast because of the pandemic and deteriorating quality of life in the Big Apple that moving companies can barely keep up with them.

And from Andre Mayer writing on the CBC website: COVID-19 poses a unique challenge.

Ensuring people have access to transit, shopping amenities and fresh air, all while maintaining a two-metre distance, is difficult in high-density areas. The importance of streets Brent Toderian, a former chief city planner for Vancouver who now runs a city planning consultancy, said "the biggest conversation during the pandemic is the role of streets as a principal public space in cities." As a result of our collective self-isolation, there are fewer cars on the road. At the same time, people are seeking respite outdoors by walking. But it is increasingly challenging to maintain a respectful distance on sidewalks without veering into traffic.

From Erik Brynjolfsson, director, MIT Initiative on the Digital Economy, professor, Information Technology, quoted in an article by Brian Eastwood writing on the MIT Sloan School of Management website:

There’s going to be a big division between nimble and slow companies...

This is a huge shock to the economy, but it’s also a big restructuring of the economy. There’s going to be a fundamental change in the way companies work. We’re compressing 10 years of structural change into 10 weeks

A big part of that is a shift to a more digital economy. That has been going on for some time and will continue for some time, but the current situation is compressing the efforts of a lot of businesses, managers, and workers to become more digital. Even when you have technologies in place like Zoom or Slack, people don’t always make full use of them; they stick to the old ways of doing things, and for most companies, if it ain’t broke, they don’t fix it. Most of us have been forced to think about whether we can work remotely. It hasn’t worked for everyone, but overall digital tech has been quite impressive, so that’s a win.

From Lyxspring’s Chief Marketing and Communications Officer Marc Petock: COVID-19 is Accelerating Digital Transformation within the Built Environment.

From the Memoori website, Occupancy Analytics is Becoming an Essential Building System in the Post-COVID Era: 

Real estate is a $71 trillion asset globally. In the US alone, there are 10.9 billion square feet of leased or owned corporate real estate but as much as 4.4 billion of that is vacant and paid for. Every year, US corporations spend $250 billion on space with nobody in it, and it’s not that they don’t know they have this problem, they know. It is just that they can’t agree on which 41% is vacant paid for and which is actually being used. So they make decisions anecdotally...

Some of my key “Transformation takeaways” from all the above.

Transformation is…

A more diverse and geographically distributed workforce.

Buildings that stay relevant and get exponentially smarter over time.

Enabling non-developers to create software.

Virtual or in-person, learning, networking and sharing ideas.  

Compressing 10 years of structural change into 10 weeks.

Making use of vacant space that is paid for.

…and so much more. We all need to Transform.