By Christopher Cullen
Future Proofing through Disruptive Innovation
Now that’s a mouthful. It generally means do it to yourself before someone else does it to you. The idea is like building a fail-safe around current and future industry innovations, by generating them yourself, instead of hoping they never happen. If it’s going to happen anyway, and change is coming, better that you create a way to control it and benefit from it as an organization.
According to BYU, Oxford, Harvard business guru Clayton Christensen, “disruptive innovation is the process in which a smaller company, usually with fewer resources, is able to challenge an established business.” Examples of disruptors are Uber, Netflix and Etsy and among their negatively affected predecessors Yellow Cab, Blockbuster and Hallmark Stationers.
In a HBR article in 2018, by Matt Gavin, he identifies 3 industries “…On the Verge of Disruption.” Real Estate is listed among the three. He says, “The process of buying and selling a home has remained largely untouched by technological innovations, but a wave of real estate startups in the field of property tech, or “proptech,” are aiming to change that. In a KPMG global survey of the proptech industry, 93 percent of business leaders said they agreed that traditional real estate organizations need to engage with proptech companies in order to adapt to change.”
Real Estate has long been an extraordinarily democratic profession. If you hustle, and can learn by doing, paying attention and working harder than anyone else, you can do very well. No college degree required. As a member of the industry’s professional association you become a REALTOR, which means that you have achieved the proper certifications to professionally help people buy and sell property and to be compensated for that service. The National Association of REALTORS is the largest trade association in the country, with 1.4 million members, almost 90% of all real estate transactions are conducted by members and the NAR has thus far been successful in defending their commissions.
In the good old days, the agent had a corner on the multiple listing services and the home’s nearby comparable prices; they were the data masters. Buyers and sellers could not access this vital information, nor could they truly interpret it. Zillow, Trulia, Opendoor, Offerpad and Redfin and a host of other sites (including Realtor.com) now provide that property and financing data directly to consumers on super slick and useful platforms and search tools, reducing the search and marketing aspects to keyboard strokes. In some instances, these platforms are cutting out the agent and commission altogether. The Realtor has been somewhat pigeonholed now as a neighborhood consultant, a property escort and relationship manager between the transaction parties. At some point these roles may not be equal in the mind of the consumer to a 6% commission.
The National Association of Realtors knows all this, they are smart folks, so they made a strategic shift to focus the profession on where it is headed and not where it came from, announcing bold new initiatives to enhance the Realtor value proposition in the Zillow age, and signaled it with a new identity for the association and the profession. The NAR also created internal disruptive organizations, including one called “Second Century Ventures,” which acts like an investor for NAR, seeks disruptive technology companies and funds them for equity positions for NAR. Docusign (developed by the National Association of Realtors) is an example of one of these tech companies funded and co-owned by NAR. The member development team, in charge of specialized real estate education, has developed an internal challenge to staff and volunteers to rethink the way professional training is done in the way a competitor might and to explore ways to implement those ideas as a member benefit.
Realtors are not going away, but their role is changing and the way they make money will change as well. NAR is not waiting for the change to come to them, they are making it happen and controlling it. That’s future-proofing through self-disruption.
Chris Cullen is the CEO of The Zodiac Group, helping associations and non-profits tell their most powerful stories.