The Adoption Challenge


For years now visionaries have been saying things like ‘change is coming’, ‘this is a new day’, ‘get on board or be left behind’. Rather than jump on board, the common human response is to challenge the speaker:

  • What does he know?
  • Who does she think she is?
  • I haven’t felt anything like that yet.

Sometimes this is exactly what must be done, for a time. The hearer attempts to discern who is selling snake oil, and who has a better looking glass. Often this is not about strength, or financial backing, or the loudest voice. Most people, after thinking through the claims of the presenter, can draw sensible conclusions about the soundness of the message, even if they cannot yet clearly see the steps to address the situation at hand.

The next stage usually has its roots in complacency:

  • That person doesn’t play in my backyard
  • I am immune to that sort of situation
  • I already have the best mouse trap
  • I will be retiring in 4 years. This is not the time for sweeping change
  • Our MLS is good enough for our members, and good enough to support our association
  • Zillow will never be a big deal, and even if they were, they are NOT competition
  • Redfin! What an absurd idea! You can’t have agents as employees!
  • People depend on me for my knowledge and experience. No computer could EVER match that!

If you just read that list and recognized at least 4 that represent your current thinking, this article is not for you. But please consider inviting us to your retirement party. We appreciate your past contributions.

On the other hand, if you recognize some of those thoughts from your past, and/or from those around you, please keep reading. You are the hope of the future!

Over the past few years many leaders have gone through three phases regarding our industry:

  1. Identifying the trends that will significantly alter the future
  2. Beginning to decide what course of action to take
  3. Figuring out what minor, innocuous changes could be made to draw a bit closer to the new chosen course of action

By now, some leaders are seeing that the tasks they pursued were too small. This is not the time for small tweaks to ‘the way we have always done it”. This is the time for major overhaul, for re-engineering the processes that drive our vision, our profitability, our very future.

The leaders that are doing this today will be household names next year. The rest of us will be trying to decide how to redecorate our work area.

If you are choosing to be a major overhaul/re-engineering leader, more power to you! This is not about killing off all the things you invested in. This is about sorting through your toolbox, lightening the load of the tools that are no longer helpful, and rebuilding the processes that need to be changed for tomorrow – even for today. Keep in mind that, just because you have not yet learned how to use that laser measure to be more accurate and work faster, it is not time to throw out that tool. Learn how to use it, and make it part of your new processes.

Those who take on this work are ‘engaged’ leaders. Overcome the misconception that maybe a title change would fix everything.  This is not about being labelled an ‘engaged’ leader. This is about being one, whether or not someone calls you one.

“Engaged” leaders are:

  • Actively learning (just about every day)
  • Systematically sorting their tools
  • Tenaciously reviewing and re-engineering each process
  • Energetically championing their vision of the future
  • Enthusiastically inspiring their co-laborers
  • Advocating for the future of those they are entrusted to lead
  • Laboring on their ‘cause’ based teams

This is not to say that all change is good change. It is certainly not to say that the optimal future will be defined by a democratic process. If the first step of daily active learning and analysis is skipped, and if leaders ignore the charts that are available to them, the remaining steps will not necessarily result in a bon voyage.

No one plans to fail. But few stumble into success. Intently study your customers’ desires and expectations – not just once, but on an ongoing basis, because their desires and expectations change as they see what your competitors are doing. Carefully consider what the visionaries are saying. For those that ring with truth, whether it is comfortable of uncomfortable, seek out opportunities to learn much more from them. And, ALWAYS, resist the charms of the snake oil salesmen.

Annual REALTOR AE Compensation Survey for 2017 is available until September 7

AEs can find out how their compensation package compares to peers, at no charge, by participating in the Annul RECON Intelligence Services REALTOR AE Compensation Survey.  This project is a pubic service of RECON Intelligence Services, as part of our regular practice of co-opetition – associations helping other non-competing associations.
ONLY REALTOR AEs may participate and receive the results. No other publication of results is permitted.
 
The deadline for participation is Thursday, September 7, 2017.

Those Spring Weather Patterns Have Appeared

Each December various industry thought leaders issue their predictions with respect to what is in store for the industry over the next year. Generally speaking only about 47% of these predictions end up being even close to true.

A much safer bet for the predictor is to wait until March, see what is actually in the air and then project those forces and directions. By way of example for 2017 there are four current initiatives that, as March approaches, appear positioned to have significant relevance and/or impact upon the American real estate industry and marketplace.

The first of these four forces would have to be the efforts of our friends from the Zillow Group. Much of Zillow’s success in 2017 will have to come from momentum gained from a terrific 2016. In 2016, after slowly climbing the market ladder for some ten years, Zillow exploded into an amazing level of success. The Premiere agent and brokerage programs gained significant altitude, the Zillow self-service program with its game changing tools was launched to an almost immediate success. We are informed that a number of new and exciting programs and products will be introduced over the next few months.

With a current market cap of $7.3 Billion it hardly matters that one of the things that Zillow is celebrating this month is having lost less money in 2016 than in any other year. Most amazing of all is the fact that Zillow’s recent success doesn’t just apply to the Zillow Group, it applies to the entire industry. Zillow’s victories are not just making Wall Street happy, they are reconfiguring an entire industry to approach the transaction in a fundamentally different fashion. That is impressive stuff.

While not a market force in the true sense of the word one must also note the probable impact of the fact that neither Keller Williams, Realogy nor Berkshire Hathaway, all of whose 2016s were rather free of flash and/or bling, have given either notice or even a hint that they will be pulling off or even presenting anything even remotely impressive in 2017. Perhaps the point that needs to be made here is that merely surviving another year in the current industry environment, while impressive versus not having survived, is not impressive enough given the nature and quality of the current leaders.

The second force that must be noted is the fact that Wall Street has seen fit to infuse over one billion dollars into the new (or at least relatively new) business model represented by Knock, Open Door and Offer Pad. These are the guys who are telling consumers that if they are tired, frightened or intimidated by the current real estate transaction experience, for a fee (small or large depending upon any particular consumer’s perspective) they will simply purchase the consumer’s property, give them a check and let them be on their way to wherever they were going.

The issue behind this force has nothing to do with whether or not this business model will be successful. What one needs to take notice of is the fact that a number of financial experts with power sufficient to bring a billion dollars to the table have determined that there is enough consumer dissatisfaction in the marketplace to make this gamble make sense. This is a small bell making yet another wake up call.

The third force that deserves careful analysis is the fact that NAR is currently conducting a search for a new CEO to replace long time change champion Dale Stinton. Hopefully most of our readers have long ago come to the conclusion that NAR no longer qualifies as a trade association. Over the past ten years the former trade association with its 1.2 million members has become an industry powerhouse with extensive and impactive investments and activities in technology, data and training services. The fact that many industry leaders are still scratching their heads and wondering why these investment and efforts were made is an embarrassing admission of a total lack of knowledge with respect to what is happening in the industry and the true nature of Wall Street’s involvement in this industry.

It is sufficient to say that the REALTOR® community is in line for forty days of rain and the only entity that has had the foresight and/or courage to build an ark is NAR. Everyone else is investing in the Yeti Life Preserver project and hopes to profit from the disaster that, in all likelihood, will befall the industry and its brokers and agents in late 2018 or early 2019.

There are forces within the industry that believe that the CEO selection process is only a cultural exercise designed to determine what color the office wall should be painted moving forward. Not only are these forces not aware of the impending rainstorm, or the critical role of the ark, it is likely that when they discover it they will use it as a stable for the industry’s horses.

The fourth force that is now poised to critically impact the industry is the fact that the clock is running out on the Upstream Project. Under the terms of the October 28th, 2015 contract between UpstreamRE, (the operating entity for the Upstream system), RPR (the contracting vendor that is building the Upstream system) and NAR (the entity that has provided the funds to finance the project), UpstreamRE must assume the responsibilities and costs of operating the Upstream system on or before January 1, 2018. Using plain English this means that UpstreamRE, within the next 240 days, must have, in place and ready to go, equipment, staff and facilities capable of operating a national program with a several million dollar annual budget and working relationships with hundreds of brokerages across the country.

The initial issue here is not whether or not such a feat could be completed, rather it is a matter of inquiring where along this amazing road the players are currently lingering. Those who believe it really doesn’t matter because NAR will just come to the table at the last moment and write the check, ought to give such an option a bit of thought, the ramifications of such an event are unsettling at best. Even more unfortunate is the fact that many in the industry are of the opinion that a failure of this project will have no ramifications other than to generate a tone of belly laughs and one million “I told you so’s.”

This is simply not the case. A failure of the Upstream Project will have significant ramifications for the industry moving forward. It will cripple operating relationships and arrangements that have been put in place to protect the industry. Such a failure would play right into the hands of entities whose fortunes are currently gambling on the industry losing altitude, strength and momentum.

What makes these four forces intimidating and potentially disastrous to the industry isn’t their inherent powers, but rather the fact that few in the industry understand how they are related and fewer yet have modeled out the ramifications of their coming together in 2017. Perhaps a few less junkets and a few more study sessions might be in order.

 

Working With Those Wonderful Millennials

As a consultant, working with a number of large brokerage and support organization clients across the country, I have an opportunity to interact and collaborate with a dozen or so different staff structures on a wide range of projects that stretch from research, to development, to event planning and execution.

Over the past few months I have become increasingly aware of (1) how many members of the millennial generation I have been working with, (2) how often their interpretation of the work experience differs from my Boomer version of the same and (3) how frequently my judgmental behaviors regarding these folks are just plain wrong.

By way of convenient example over the past month I was engaged in producing a strategic business conference for a large client. During the sixty days leading up to the conference, many days and hundreds of hours were spent creating what I very much hoped would be a really spectacular event. At almost every step of the way I found myself chomping at the bit as a depressing number of my millennial co-workers failed to meet my “expectations” or managed to annoy me with what I interpreted as childish and immature work habits.

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But then came the event itself. It not only exceeded my expectations but also managed to “wow” the client’s management team and virtually every one of the 80 or so attendees. Virtually every one of the 18 program segments, the very sophisticated coupling exercises that tied them all together, and the highly diverse cast of 9 nationally recognized experts (that ranged from national CEO’s to top researchers and recognized designers) performed without a hitch. The entire production was a thing of beauty. I have received more positive comments and compliments regarding this program than for any other program over the past five years.

So, on the morning after the show, I undertook to figure out why I had been so wrong and how this millennial-rich crew had managed to pull out what I thought was an impossible success.

The new truths and realities that I have discovered to date are alarming. First of all for those who are tracking the directions and trends of our real estate industry it has become increasingly obvious that more and more functions previously performed by commissioned personnel will, moving forward, be the responsibility of employed individuals.

One’s first review of the new Zillow Group consumer data will confirm the fact that those who carry that “I don’t need no stinking boss” sign around are not going to play as significant a role in the overall scheme of things over the near term future as they had in the past. Caring and engagement will increasingly spell success or failure for brokerages and support entities.

Where does this discovery take us?

The first realization that crossed my mind was that I had been just plain wrong with respect to my expectations of how this crew was going to perform. The second truth came like a flash of lightening as I realized that in their own way this group had outperformed any expectation I had manifested and in fact had outperformed any single performance that I had ever manifested.

Based upon these truths I made the decision to go back to the drawing board with respect to my impressions or, as the case turned out, my prejudices regarding millennial work habits. After three days of thought and research I began to restructure my impressions and reform my attitudes about these folks. The following represents the initials stages of my new state of mind.

These folks aren’t kids playing at being competent; they are young adults, new leaders and developing managers. They have some amazing skill sets that are frankly far more sophisticated than anything we boomers were demonstrating at the same age. Because of their numbers and their unique skills and cultural perspectives they will soon be the primary architects of the new work environment, and as such will fill the space with a whole new wisdom and approach. Individuals such as myself would do well to learn from them and/or get out of their way.

Millennials have thoughts and passions about matters that we boomers never even knew existed. What boomer ever considered the ramifications of social responsibility and work life integration?

Yes there are some issues to be resolved with respect to the subject of workplace engagement. Yet one cannot help but wonder if this isn’t because Boomers and X’ers interpret engagement almost no sense of priority or balance. I am increasingly of the opinion that the level of engagement for many Millennials may just be a bit difference, but no less effective.

One of the things that will move the “engagement” meter are the professional development opportunities that employers make available to their younger workers. These opportunities must be more than rewards for making nice with the boss or giving lip service to company priorities. Organizations that fail to develop specific, consistent and dependable engagement opportunities will find themselves in a constant state of turnover. The millennial worker seems to have developed a sixth sense about these matters. They cannot be faked.

As the demographics and priorities of the national employment environment continue to shift, identifying, retaining and recruiting the “right” employee will become increasingly difficult. Millennials interact with one another with respect to these matters with relative ease and frequency. The fact that an entity doesn’t care enough to create an acceptable work environment will have been noted by most would-be hires even before the interview begins. The passionate engaging individual will simply not bother.

The dynamic discussed above will impact the industry in many ways but one of the most important is that it will redefine the traditional concepts of management leaderships. The hierarchical nature of traditional leadership will give way to new ideas about collaboration, cooperation and accountability.

Finally one must be conscious of the role of transparency in this new system. As stated above, employees will be more and more willing to discuss the nature of the employment environment fostered by employers. Beyond what the employees think, there will be more and more customers and clients that will want to do business with organizations that practice “smart hire” and “common sense” personnel and over all other management philosophies. More over this trend will also spread to how firms and organizations are seen within the greater community in which they operate. Brokerages will discover that agents will avoid working for firms that aren’t sensitive or that treat their employees badly. All of these factors are part of a new societal attitude that is finding a home in many contemporary settings including the workplace.

So, if you are a boomer or X’er who is in control of a millennial infused workplace, you would do well to learn everything you can about this new expectation and the power that it is willing to exert.

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An Exciting New Tool to Use to Create Perfect Brokerage Standards and Consumer Experiences

Over the past two years virtually every sector of the American business community has been struggling to come to grips with the emerging concepts of the creating and applying product and service value propositions. This focus can be attributed to the emergence of the value proposition as the ultimate consumer evaluation tool, along with increased consumer reliance on expanded databases that demonstrate the nature and quality of the past consumer experiences.

Some experts suggest that the real estate brokerage sector is a bit behind its compatriots from other industries with respect to consumer experience research and transitions, due in part to its reliance on agent centricity. However, even within real estate, there is a growing understanding that quality determinants in the provision of real estate marketing and transactional services have not traditionally been set by brokerages, are seldom set by agents, and are now being defined by consumers.

The issue before the industry today is not whether brokerage wide standards should be set. The consumer centric nature of the contemporary real estate marketplace has mandated that requirement, which leads to the question within our industry: how have these standards have been developed, implemented and monitored?

screen-shot-2016-09-09-at-12-04-06-pmHere again the answers are somewhat simple. Standards development, implementation and monitoring are simply not an integral element of the traditional real estate agent’s mindset. Volumes could be written about why this is the case, but for the purposes of this piece it is sufficient to say that a single minded focus on “closing the deal” at any cost is almost totally inconsistent with the creation a real estate service experience that meets consumer expectations and demands, creates a long term positive consumer relationship and drives an appropriate risk management environment.

Given these factors it is neither realistic nor practical to suggest that agents develop their own standards or even that each agent have their own standards. With all due respect to those who continue to advocate agent centricity, it is well understood across regulatory, management and marketing circles that an effective standards program must be an essential element of the brokerage’s quality control, administrative and management system. Accordingly there has to be one set of standards that is capable of being monitored across every transaction and consumer interaction generated by the brokerage and programs, products and services.

The good news is that the task of designing and implementing standards for a Harvard Business Review Sep 2016winning brokerage consumer experience and value proposition became a lot easier with the publication of the September 2016 issue of the Harvard Business Review. The entire issue is dedicated to the subject of What Does Your Customer Really Want and How to Figure it out. Over the past two years we have been working with a number of our brokerage clients on the development of standards. We were thrilled when notified in January that the HBR Standards Issue would be published in September, and have spent a great deal of time over the past month digesting the several articles contained in that edition and converting their concepts for use with real estate practice and lexicon.

While every brokerage executive and manager should take the time to read all of the articles (keep in mind that reading the HBR can be a painful and lengthy experience) the article entitled Elements of Value by Bain and Company’s Eric Almquist, John Senior and Nicolas Bloch on page 47 is a “must read.”

The value proposition of this article is significant. The industry is already on notice that price is not the primary determinant of either quality or satisfaction. It is further aware that consumers have become very aggressive with respect to what elements of a vendor’s experience they like and, more importantly, what they don’t like. Those steadfast agent centricity advocates must also facilitate the understanding that consumers, not agents, are in full control of the value proposition evaluation process.

The Bain Company research as reflected in the September HBR is wonderfully broad and considers a full range of consumer related issues. The objective of this article is much more limited. It is aimed at focusing the executive’s and/or manager’s standards creating efforts on the very components that the brokerage will use to create a customized brokerage value proposition.

The Bain Company contributors organized their findings around the famous theory proposed in behavioral scientist Abraham Maslow’s 1943 publication of A Theory of Human Motivation. The vast majority of our readers will recognize this work from their adventures in Psychology 101 in college. Maslow expressed his theory around the factors demonstrated in the following graphic with the most basic (physiological) at the bottom and the most sophisticated (self actualization) at the top.

Maslow's HierarchyThe Bain researchers identified and developed some 30 specific value elements that are common the all consumer experiences. These values fall into four categories of human need; functional, emotional, life changing and social needs.

The HBR elements of value issue incorporates a really efficient Elements of Value Pyramid tool. Reviewing the components of this tool illuminates one of the central truths of brokerage standards design. The driving force behind brokerage value proposition/experience standards is not to create a “cookie cutter” industry. In fact it is quite the opposite. Using the pyramid tool, responsible brokerage executives and managers can create a unique and highly competitive value proposition/experience like none other in the industry. Use vacation planning as an example, it isn’t that everyone must go to the same destination using the same transportation and eating the same food. The Pyramid tool simply recognizes that every vacation must have a destination, a mode of transportation, and some manner of sustenance and/or nutrition. The Pyramid tool establishes the requirement that every brokerage standards program must address functional, emotional, life changing and social impact issues. Each firm is free to adopt their own interpretation of those factors.

How a specific brokerage addresses each of these elements is completely up to (1) the powers that be in that brokerage, (2) the legacy practices of that firm, (3) the unique demands and expectations of that firm’s customers and (4) the specific regulatory requirements of the firm’s marketplace.

For those readers who are exclaiming that it really can’t be that simple the answer is: “yes it can.” The starting point here is that the vast majority of brokerage’s in the United States have absolutely no formal standards in place to protect consumers who engage their services. This state of affairs reduces the firm’s marketing prowess down to “trust our agents,” which is not a winner with today’s consumer.

Consider the fact that when firms are audited by regulatory agencies (including the CFPB), and asked what documents or policies they have in place to protect consumers, the most frequent response is “why would we do that?” Imagine the response of a court adjudicating a malpractice claim against a brokerage whose representative testifies that brokerage standards are not their concern and that any standards that exist are totally up to the discretion of the agent, with no articulation or monitoring requirement.

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The standards development process represents a fascinating opportunity to focus and positively effect brokerage profitability, productivity, and team building, as well as delineate the firm’s value proposition and fine-tune its competitive advantage. Standards are not an entrepreneurial aneurism but rather a highly effective capitalist tool. Get on board with standards.

Inman Connect: Envisioning Tomorrow – Not Your Same Old Future

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Inman Connect in San Francisco is the industry’s biggest and splashiest showcase for the latest and greatest in real estate technologies and practices, and it just keeps getting better.

Over the past two decades an amazingly long list of the game-changing real estate technologies, management practices and productivity products, which are currently impacting the American real estate experience at all levels, can trace their first public exposure to various Inman Connect programs.

The driving force behind the Inman Connect program is, of course, Screen Shot 2016-08-16 at 3.15.27 PMaward winning Inman News publisher Brad Inman. For a few weeks each summer for the past twenty years he has transitioned from media executive to center stage impresario. His efforts have created an attendee experience that floats somewhere between a Woodstock festival for technology groupies, an Academy Awards show for the serious industry guru and a mental Olympics for attendees who just can’t get enough of their favorite drug called innovation.

Inman Connect has also become the place for over 2000 of the industry’s challengers, aspirants, survivors and elite to meet, greet and evolve their professional relationships. During each event significant personal interactions take place and important enterprise and developmental relationships are created. For would-be technical stars Inman Connect is clearly the place to be discovered.

While the overall event has gained the status of the industry’s renaissance festival its individual program elements offer something for virtually everyone in the industry. New agents can find veterans willing to share. Senior brokers can find “up and comers” to learn from. Nearly every attendee finds at least one opportunity to reevaluate long-standing attitudes and legacy positions. The only procedural violation or protocol gaff one can commit at Inman Connect is failing to keep an open mind and listen. Inman Connect purposely lacks the enforced structure and political correctness of other established industry events. It comes together to recognize and honor creativity and innovation and has evolved a program format that actually does just that. At the same time, and without rancor or unhappiness, it reminds everyone that whatever lies ahead for our industry is ours to embrace.

Screen Shot 2016-08-16 at 3.18.20 PMFor many the most impactive presentation last week was the keynote speech made by Gary Vaynerchuk, CEO of VaynerMedia, Partner at Vayner Capital, and 4-Time NYT Bestselling Author. While it may seem odd to recognize a keynote speaker for overall effectiveness and informational expertise, the fact is that many keynote presentations are awarded on the basis of fame rather than substance. Gary’s presentation met all of the qualifications for a perfect keynote presentation. It was relevant, easy to understand, contained the perfect amount of humor and honored the attendees by providing a number of highly valuable “deliverables.” Most importantly he demonstrated a level of personal passion and caring with respect to both the subject and the audience.

Gary “Vee,” as he is known by his many fans, moved quickly to establish the fact that he wasn’t there to tell war stories or to deliver false praise. Those in the audience understood within minutes that he had a “no nonsense” unequivocal message to deliver and that anyone who chose not to pay attention did so at their own risk.

His first point was to warn those that have become complacent or romantic about their business that they are on a journey that will not end well. Just as many people love the sound of their own voice, so do they like the familiar rhythms of their business. It provides them with a feeling of wellbeing and comfort but, unfortunately, in today’s disrupted business environment this false sense of security is the basis of disaster and failure.

His second point was that regardless of what business the attendees’ thought they were in, the fact is that their central and primary function was that of being a social media publisher. This is where their primary focus should be. The best real estate professional in the world cannot afford to rely on past fame and success. Such will not serve them well moving ahead.

Vaynerchuk’s most impressive points where delivered on the subject of “mobile” computing. “Social media is a slang term for the current state of the internet,” he said. He stressed that most are underestimating how central mobile devices will be to our lives. He points out that the world has crossed the point of “mobile first” and is now headed at full speed to a “mobile only” status.

Screen Shot 2016-08-16 at 3.20.43 PMHis final point was especially impressive. “I hope you understand that the biggest point of my talk this morning is that if you are not digitally native, you will die. The people that are, are going to take your business. Do you know what I’m most worried about? Success. That is my enemy because you become complacent. Why do I need to figure out Facebook video or Snapchat? I’m good now. I don’t need this.”

Last week’s 2016 edition of Inman Connect, upheld the event’s finest traditions and historic role as one of the first stops for introducing technological innovation and creativity.

One of the challenges that comes with the Inman Connect experience is balancing the visions of what one sees at the event with the reality of how long industries, such as real estate, take to actually institutionalize change and innovation. The fact is that such matters always take longer than one would imagine. But of equal importance is understanding the length of time that it takes to prepare one’s self and organization to move to the next level. It is just the nature of how economic cultures work. If what appeared at last week’s Inman Connect is any indication, the American real estate industry is in for an exciting ride over its next decade, but the task of preparing must start yesterday rather than tomorrow.

Managing Innovation Generated Team Conflict

Screen Shot 2016-07-08 at 5.00.56 PMThe American real estate industry has been tracking, examining, debating and denying a wide range of innovative disruptions and transitionary forces over the past several years. By way of example, transaction management has been on the industry menu for almost twenty years and is just now about to become mainstream. Agent rating can be traced back six years and is only now preparing to take its place as an industry staple. The idea of developing and implementing superior consumer experiences is starting to gain traction after having competed with agent centricity for years. Integrating intensified agent portal participation promises to be challenging given its inherent chain of command conflicts. Perhaps most dramatic will be the management shifts and transitions that brokerages will have to integrate into their operations as a result of the new Upstream broker centric data management program. These are but a few of the internal and/or external innovations that the industry is currently preparing to incorporate.

Each of these surviving innovations and developments (as well as a score of others working their way through the system) has followed a predictable course on its way to industry acceptance. Most started with a visioning experience gained through either industry publications or any one of several industry conferences provide “coming out” events for new innovations.

Screen Shot 2016-07-08 at 5.01.51 PMAt some point these introductions blossom into discovery relationships as R & D, marketing and promotional activities and/or internal innovation programs seek out ideal candidates for beta testing, utilization and adoption phases. When the discovery programs find traction, the innovation journey moves to the design phase where specific needs and applications are addressed and resolved. It is during this phase that the future of the innovation is either sealed or rejected.

Once the process finally evolves a workable, rational and equitable model, the innovated product, process or program graduates into the development phase, the decision to ‘go with it’ having been made. With this advancement the innovation begins to enjoy the benefits of company ownership, greater funding and senior management parenting.

What began as a concept is now a reality and it is time to implement the innovation and allow it stand on its own feet. Implementation is accomplished through some combination of Alpha and Beta testing programs.

By this point the concept has evolved into a program, product or service that has been found to be relevant and appropriate to the brokerage’s overall operation. Now comes the final test. Could the innovation be successfully integrated into the brokerage’s overall operation? This is where the proverbial rubber meets the road. It is in this phase where individuals, teams and entire departments, many of which stood as silent witnesses hoping the innovation would fail earlier in the process, now sense their last opportunity to ambush the innovation before its ultimate disruption is delivered. This is where the real conflict rises up from the dissenting ranks.

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Over the next twelve to eighteen months a record number of newly innovated real estate management, consumer relations, data and outreach programs, products, technologies and processes will reach the integration phase within their parent or subscribing brokerages. In most integrating organizations there will be players, or groups of players, that, having patiently stood by during the phases outlined above, come to realize that now is the time to attack the innovation in an effort to avoid its natural disruptions. This is where team conflict rises to the surface.

Team conflict takes shape in several ways. The most common is failing to cooperate and/or collaborate in the integration process. In many cases this response is amazingly subtle, and only an executive or manager who is totally focused on the project is likely to identify it. It is at this point that the dissenters seek out their “rabbis” within the organization and call in long-standing “chits” to kill the project. This is the point where the dissenters Screen Shot 2016-07-08 at 5.05.07 PMsuddenly discover that individuals or partnering organizations with which they have enjoyed career long positive relationships have suddenly acquired unacceptable and “un-American” beliefs and philosophies. It is at this moment when longtime respected superiors are called into question because stress or personal problems seem to have negatively impacted their traditional thinking.

Team conflict also manifests itself through individual mannerisms. Body English is a popular manifestation. Negative Stereotypes suddenly emerge (“You just can’t trust those engineers you know.) Communications become cloudy and disrupted. Formerly undisclosed priorities and deadlines that conflict with those established for the innovation suddenly rise up from the calendar. Previously undisclosed “sub-budgets” appear on stage. Most destabilizing is the rise of a whole new subliminal company culture that was apparently missed over the past several years of study, planning and SWOT analysis.

Team conflict is the face of innovation and creativity, and should never surprise a competent executive. It must be anticipated and managed from the first phase.

The most common mistake made by executives attempting to overcome team conflict is the election of the “I am the boss” option. Management “cram-downs” may appear to net immediate success, but most often are simply forcing descent to a more intimate level. The classic “as long as you live in my house” approach didn’t work at home and it certainly won’t work in a real estate business environment.

Business process experts have evolved several solutions. All of them seem to have the following elements in common:

  • Transparency and open discussion are critical
  • Efforts to discover and articulate the “real” points of dissent are essential
  • Seemingly unrelated factors such as geographic location, attitudes, behaviors, personalities, attitudes about time, conflicting priorities, deadline obsessiveness, self-promotion, differing levels of aggressiveness and departmental loyalties all contribute to team conflict and must be considered when managing team conflict.
  • Even minimal cultural differences between departments, units and internal elements can give rise to team conflict.
  • In today’s more diversified work environment language and communications styles can unintentionally feed team conflict.
  • The more intimate one’s understanding becomes with respect to the dynamics of a team the more important various “states of mind” become. The levels of knowledge, skill and competency necessary to maintain the modern workplace means a wide range of mind-states are present. Each group of experts (or professionals) on the team is likely to have a different mind-state about the innovation. Even those who wholeheartedly support the project are likely to differ with respect to how they feel about it.
  • In attempting to root out the cause of team conflict one must not ignore emotions as a likely suspect. Any individual worth having on a project or a team will bring their own unique emotional pattern to the table. However annoying, they must be dealt with in an appropriate fashion.

Team conflict is most frequently the result of factors that have little or Screen Shot 2016-07-08 at 5.07.01 PMnothing to do with the innovation at hand. Frequently the innovation simply ignites a long-standing or previously formed tinderbox. Real estate brokerages integrating innovations into their culture and operations must understand that team conflict management and resolution is necessary and must be addressed at the onset and continuously throughout the project.

Upstream: Our Own Manhattan Project

Screen Shot 2016-05-12 at 12.46.11 PMIn 1939 American intelligence already knew that Nazi Germany had learned the secrets of splitting the atom. By early 1940, still a year before America entered the war, and despite the impact of negative voices, concerns relative to the potential dangers of this research had reached the highest levels of the American government.

Despite what we now understand was common sense, it took advocates an amazing level of energy, time and effort to find someone in the government who was willing to listen to and believe the potential dangers represented by what became known as the “Atomic Threat.”

By late 1941, driven by President Roosevelt’s passion, America had launched a full effort to understand, design and build the World’s first atomic weapon. At the beginning of 1942 these diverse efforts were combined into what became known as the Manhattan Project, one of the greatest administrative innovations in American history.

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Because it represented something new and innovative there were, from the very beginning, endless delays and challenges until the Manhattan Project was formally adopted. As is still the case today, projects that represent a step in a new direction are bound to run into interference commensurate with the level of anticipated disruption it is likely to cause. By the time the Manhattan project was completed, over 130,000 workers had been employed and over $260 million 2016 dollars had been expended. But numbers alone do not constitute guarantees.

Even by the time the first device was ready for testing in July of 1945 none of those responsible really knew what was going to happen. On that morning in July of 1945 when the first device was finally set off literally no one was prepared for the result.

In fact the blast created a flash that could be seen for over 200 miles. The blast cloud climbed to over 40,000 feet and when the particle mass settled to ground it created a half-mile wide crater of sand turned into glass. Windows were broken up to 100 miles away.

nruh29squirrelThe intrigue and suspicions surrounding the Manhattan project lasted for decades and still exist in the minds of some. But, regardless of the unintended consequences, the world had entered the atomic age and nothing thereafter would ever be the same. The majority of academicians and historians now agree that the Manhattan project represented an excellent example of democracy coming together to do what had to be done. Most agree that its outcome saved millions of lives.

There is a parallel to the Manhattan Project in real estate. By late 2009, surrounded by the aftermath of the great real estate market meltdown, it became obvious to a significant number of real estate industry leaders, executives and decision makers that the industry, which was returning from the downturn, would never be the same. In the face of a historic level of digital disruption and consumer activism this group came to the conclusion that without internally fueled innovative disruption the traditional industry would never regain its previous strength and vitality. This group also came to the conclusion that information and data would be the center point of the disruption.

Like those whose efforts were powered by the Manhattan Project this group of pioneers, powered by the brokerage community and National Association of REALTORS®, hit the ground running. Within a year the idea of the REALTOR® Property Resource was born. Work immediately began on a real estate database that would surpass any ever created. This database would spin off data products that would deliver the benefits of the database with the potential to take every real estate professional into the new industry and marketplace environment without additional costs over and above annual dues.

RPR_optAs it turned out there were a number of unintended yet positive consequences from this project. Many important lessons were learned. One was the importance of creating and controlling a world-class technology research, design and development entity. Today RPR is a highly respected team, enjoying a “best of breed” status and now stands as one of the crowning achievements of the contemporary real estate industry. It would soon earn its place in the industry’s history.

By late 2014 it had become obvious that providing agents with winning data products would not alone save the day for the conventional industry. The industry and marketplace were continuing to experience a wide range of disruptions that went far beyond those anticipated in 2009. The level of discourse and resistance to innovation within the industry was far greater than originally anticipated.

As activism and revolutionary behavior began to arise within the brokerage community the NAR, RPR and industry teams went back into innovation mode and came up with a new concept. It quickly became clear any solution that would have the potential to save the industry from external digital disruption and the un-met expectations of consumer unrest would have to bring the interests of the whole industry together.

From these efforts came two new programs that are now the focus of the industry’s efforts to move forward in the face of continuing external disruption. These are Upstream and AMP.

The Upstream project was conceived and launched by a coalition of brokerages, networks and national franchises representing real estate companies of all sizes and business models. The mission of the Upstream technology is to create a comprehensive data technology platform that will:

  • Create a single data entry point and storage platform for real estate-related data
  • Standardize data formats between systems
  • Manage the distribution of real estate information with a rules-based engine that supports the individual requirements of each participating brokerage

Screen Shot 2016-05-12 at 1.14.33 PMA corporate entity called Upstream RE was formed to hold ownership and management of the system. NAR, RPR and the UpstreamRE, LLC Board executed the License Agreement on October 28, 2015. This agreement, coupled with financing from NAR, signaled the onset of a whole new chapter for the American real estate industry. In early May at the NAR Legislative meetings five alpha testing teams, consisting of an MLS and a large brokerage, were announced.

As part of this process, work was also continuing on the AMP (Advanced Multi-List Platform) project. AMP’s purpose is to leverage RPR’s nationwide, parcel-centric database platform to create powerful new technology options for Brokers and Agents to be offered by MLSs.

With these events the industry has moved forward into a new chapter of its history. The following points are no longer concepts but now represent its reality.

  • Our industry continues to face severe threats and challenges from a wide range of forces including digital disruption and consumer unrest. Something had to change and something had to move the industry forward.
  • The most innovative, distinguished and powerful team ever assembled by this industry has spent the past two years in the Upstream and AMP development process.
  • No other industry effort of similar status or expertise has either been proposed or has emerged. In fact in some cases quite the opposite has occurred.
  • Both Upstream and AMP are now realities and have been transfused into the industry’s bloodstream at the very highest levels. As is the nature of historic developments no one can truly know the ultimate impact of either. But such cannot be the test of success. Both are here to stay.
  • Neither Upstream nor AMP constitute militaristic dictates. In fact, just the opposite is true. Both were developed with a perspective that anticipates continuing innovation, creativity and transformation. There is room for everyone on this bus.
  • As was the case with the Manhattan Project, now is the time for the entire industry to surrender its dissident weapons, roll up its collective sleeves and see that these projects are implemented, installed and operated for the benefit of the entire industry and in the spirit with which they were created.
  • This is the rational course of the industry moving forward!

An Experience Named Eric

Many industry decision makers and leaders believe that the challenge of the century for the contemporary American real estate industry will be its willingness and ability to create and deliver a real estate transactional experience that meets the needs and expectations of the broker, the buyer, and the seller.

Over the past years this column has presented and commented many times on the subject of consumer experiences. It has discussed a wide range of both positive and unsatisfactory consumer real estate experiences. Hence, it is with the greatest of satisfaction that we now get to tell this story of an absolutely spectacular real estate service experience.

What is a real estate service experience? The Merriam-Webster Dictionary describes an experience as something personally encountered, undergone, or lived through. For the purposes of this column the term experience is used to describe the sum total of the elements, both intentional and unintentional, presented to a buyer or a seller as they make their way through a real estate transaction from search to contract, from contract to closing and from closing to ownership.

There are many industry insiders who find the whole subject of real estate service experiences to be a non-subject. These folks believe happenstance, luck and environmental factors rather than professionalism and brand management determine what matter of experience any particular consumer might have on any given day.

There are others however who believe that a perfect real estate experience is the result of a carefully considered series of well planned, properly executed and masterfully managed tasks, interactions and challenges.

Screen Shot 2016-04-22 at 1.58.12 PMWith these thoughts in mind it must now be disclosed that the real estate adventure that is the subject of this column is not just any random series of events but rather a very special and unique series of events that this author and his wife went through over the past 90 days.

The adventure began during our annual visit with our son and daughter-in-law, Jared and Edith, who live in Fort Lauderdale. One afternoon our long-standing thoughts about owning a second home suddenly turned into actions as we noticed an open house sign three doors down the street. We met the agent holding the open house and preceded to make every effort to impress him with how sophisticated and worldly we were.

Since there was no danger that we might be talked into purchasing this particular property we found ourselves feeling safe about engaging the agent with respect to our fantasies about owning a second home. The conversation resulted in a great relationship with the hero of this story, a Better Homes and Gardens real estate agent named Eric.

Marlene and I are, by any standard, an agent’s worse case scenario. We believe we are immune to persuasion and influence. We have the bad habit of overvaluing our expertise. Moreover, we are genuinely convinced that we can master any subject within seconds.

Eric appeared to take no notice of this behavior and began what turned out to be a long and detailed explanation of owning second homes in south Florida. Within minutes we were in full learning mode. Images of agent ranking and rating just evaporated as he demonstrated a truly impressive knowledge of, and sensitivity to, the marketplace and our needs. In response to our sense that condo’s were not our style we spent the next day viewing a number of single-family properties while Eric gently evolved us to an understanding that, heaven forbid, condos were created for people just like us.

The following morning was spent viewing condo units. Within two hours Eric demonstrated that he had been listening to us by finding a unit that didn’t just come close but in fact met every single requirement we had been describing through our constant babbling with one exception – the attached boat slip was 38 feet instead of 30.

This is where the real adventure began. It turned out the seller had made a number of tactical errors in his acquisition and improvement of the property during the previous year. He had paid too much, bought the wrong unit and had invested in the wrong improvements. He had compounded his mistakes by selecting a listing agent who had interpreted Christmas in south Florida as the perfect occasion to take a two-week vacation abroad leaving his secretary in charge.

The next three days were a nightmare of unavailability, inaccuracy 635919107976039503-ThinkstockPhotos-501750012and a general state of unwillingness to face reality. We went through four offer rounds only to be met with increasingly level of resistance. Throughout these long hours Eric was constantly available being very professional, responsive, encouraging and reassuring. Unfortunately our efforts were of no avail. This seller was convinced he could be made whole.

Over the following month Eric stayed in communication providing us with options that all failed to capture the special nature of the initial unit. One afternoon Marlene arrived home and announced that it was time to bang on the seller’s head and make the deal happen.

Eric responded with what can only be described as a heroic effort. Three more offer rounds later he got the seller (and his new listing agent) to come to the table. Upon reviewing the seller’s closing requirements Eric’s superior negotiation skills became very apparent.

But the trauma was still not over. It was during the pre-closing period that Eric demonstrated a whole new array of skills. The seller had demanded a 10-day closing period that no mortgage provider could match. Eric came up with ideas for interim financing, arranged for all the inspections, made us safe and the deal was closed.

Dollarphotoclub_97556501After the closing Eric stayed with the project. He arranged relationships with a super mortgage company that actually worked with us on a Sunday night, a dynamic plumber who understood the idiosyncrasies of the south Florida contracting scene and a world-renowned air conditioning contractor who understood that a six-week delay wasn’t going to work. Each of these services saved us from costs, delays and hassle.

Nobody had to tell Eric how to create and execute on a superb consumer real estate experience. It was just something that he did. We still believe in rating and wish there was some way we could give Eric a solid ten across the table.

best-choice-siding-materials-contractorsWith respect to all of the Eric’s out there, we thank you. For those consumers who are just beginning the search, keep in mind that the right agent can make all the difference in the world.

Full Circle on the Consumer Experience

This column’s first two articles of 2016 explored the relatively narrow band of issues being generated by the emerging premium agent movement being championed by the national portals, and the industry’s growing vulnerability presented by the questionable influence and impact of the subpar “facilitator” agent. This third article of 2016 will revisit the question of the consumer experience issue, first raised at the beginning of 2015, as it relates to the two issues raised above.

All three of these subjects have been on the industry’s priority agenda for the past eighteen months. The fact however, is that the industry’s current disruptive environment is making these factors even more relevant. More specifically we are seeing a classic case of convergence. Three formally marginally related issues are coming together to create a major shift in procedures. Understanding this new environment is a prerequisite to appreciating the dangers being presented.

There are two types of disruptions currently impacting the real estate industry and marketplace. The broadest reaching disruption is called innovative disruption. This is the change that occurs when new digital technologies and business models affect the value propositions of existing goods and services. Virtually every aspect of the American economy is currently being subjected to innovative disruption. Every time there is a significant digital or technological advance, the value in place of all systems that contain that technology in its previous configuration is automatically changed. The best-known and most quoted disruptive process is called digital disruption. These occur when competitors use innovative disruptions as competitive business advantages or weapons systems to improve their market positions or propositions vis-à-vis their competitors. In a relatively high tech, competitive and complex industry such as real estate there is always a high number of each form of disruption occurring. This rate of change can seem quite chaotic for those businesses and participants caught in the middle, with neither a disruption plan nor a developmental road map.

Screen Shot 2016-03-04 at 5.01.38 PMHow does the contemporary consumer experience fit into this converging environment? In the traditional real estate sector, consumers almost unanimously elected to work with an agent and used one of several processes to select that agent. Once selected, the consumer proceeded through a buying and selling experience almost exclusively designed or selected, and certainly executed, by that agent. Depending upon whether that agent was a counselor or a facilitator the menu of services “experienced” by consumers was subject to a massively wide spectrum of agent selection or, in the alternative, default. In this traditional system a consumer pretty much got what they got, with little ability to select or self design a specific real estate experience.

To its credit this system for several generations met the needs of the civic generation consumer who was, in all likelihood, selecting an agent that they were either related to or familiar with through some manner of community connection. This system was also deemed acceptable by the Boomer Generation that tended to be better financed, thus less vulnerable and, in the event of a crisis, were either an attorney themselves or had a close relationship with one. Unlike today, litigation at that point in time was a socially and economically acceptable option.

It was the arrival of the new “X” or “Y” generation consumer that spelled the end of the traditional Screen Shot 2016-03-04 at 5.04.15 PMsystem. Today’s “super” consumer is more informed, sophisticated and communicative than any of their predecessors. They fully understand that a consumer experience is now something that is investigated, determined and/or negotiated, prior to entering into the transaction. They come into the marketplace having sought the wisdom of their peer group through various social medias. They monitor the experience they are having in real time, and stand prepared to take immediate action in the event that the experience being delivered differs from the experience they negotiated for and expect.

These considerations now bring us to the new real estate market and transaction experience. In today’s real estate marketplace and culture there is an increasing awareness that there is a right way and a wrong way to execute and/or deliver a consumer experience. Moreover, there is an understanding that a proper experience includes dozens of factors and components, many of which involve external and third party resources.
Today there is a rapidly expanding movement within the industry to take the consumer experience to the nexScreen Shot 2016-03-04 at 5.13.24 PMt level through the automation of consumer experiences. Increasingly, automation includes the use of technology to monitor and/or to evaluate both mandatory (using transactional standards) and optional (selected by the consumer) elements. The current emphasis on transaction management (a primary form of automation) will soon lead to “branded” consumer experiences such as Nordstrom’s in the clothing industry and Ritz Carlton in the hospitality industry. The expressed interests of the Consumer Financial Protection Bureau, and even the soon to be experienced Upstream project, will all contribute to this
consumer centric movement.

This movement will, over the next few years, impact the marketplace and transaction in many ways. An immediate effect will be felt as consumers become more and more familiar with “branded” experiences and begin to demand similar experiences from brokerages and agents who have no formal experience model. One of its most dramatic impacts will occur as branded and automated programs become legal standards that courts begin to interpret as community standards. Recall that during the medical malpractice era of the 1980’s courts routinely adopted standards developed and implemented by medical schools such as UCLA, Stanford or Harvard as community standards in such places as Minot, Mount Pleasant and International Falls.

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In any event whether by intent, judicial declaration or marketing genius some combination created by the current disruptive forces sweeping across the national real estate marketplace will converge to create a national standard. This convergence will raise questions regarding the roles of both organized real estate and independent brokerages. Ultimately universal standards will emerge. These are issues that the industry should consider in advance of the pain, suffering and loss of litigation and regulation.

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