Innovation in the built environment sector is broken, but the PropTech ecosystem can fix it.
In the last decade, we have seen numerous PropTech firms enter the built environment sector — filled with energy, enthusiasm, smart people, funding, and the latest technologies. This is of utmost importance for the development of the sector; however, true digital transformation requires much more than tech startups.
By Olli Vigren, KTH Royal Institute of Technology
Progress within digital transformation
It is the traditional and established actors — such as real estate owners, constructors, portfolio managers, and users — who, with their purchase decisions, determine how digital transformation progresses. Therefore, a better understanding of the client-side innovation dynamics could unlock the potential that the proptech movement promises. Such understanding could help PropTech firms become better at selling their often complex services.
At least that is what we thought when we produced the report ‘Digital Transformation — Survive and Thrive: A Survey on Innovators in the Built Environment’. “We” here means the collaboration between Cherry Pick People – a recruitment specialist in property and construction; Unissu – a global PropTech procurement platform; and Olli Vigren – a PropTech researcher from KTH Royal Institute of Technology, Stockholm.
Findings based on 183 innovations leaders
We interviewed 7 and surveyed 176 innovation leaders in the built environment sector to better understand their roles and the innovation work within their teams and organizations. These roles are quickly emerging in the sector; therefore, their systematic study is topical. The results were fascinating:
1) Firstly, it is evident that cultural barriers prevent the broader acceptance of innovations in the industry.
Innovation leaders report that they are most challenged with change management and resistance to change in their organizations. Therefore, we recommend that cultural change should be identified as a priority for transformation work. We believe that in the long run, it is in everyone's interest if the industry has a broader interest in technologies beyond Chief Digital Officers. This requires a cultural shift.
2) Our second finding is that innovation leaders, on average, spend only 53% of their time on innovation work.
As Nick Wright, Head of Digital Sales at CBRE UK, put it: “It is fascinating that organizations that hold real estate – namely the investment managers and the funds – do not have these innovation roles at all. It tends to be individuals who do it off the side of a desk – it is almost a voluntary role.” It is no good news for the PropTech firms that the persons who would be natural buyers of the PropTech services do not have a mandate, budget, or time allocated for innovation. The results also more broadly show that innovation work suffers from resource scarcity, and this is a clear bottleneck holding back the industry. It is our understanding that innovation leaders should have a full-time focus on innovation.
3) Our third finding is that the 176 survey respondents have 139 different job titles, which shows little consistency.
We believe that harmonizing the innovator role titles and descriptions would make it easier to communicate about innovation – both internally and externally. It would also build legitimacy to the quickly emerging role of innovation managers. Further, we recommend including “change” or “transformation” in the job title and organizational function, as these descriptors would establish that the aim is to foster cultural change and the adoption of innovations.
4) Our fourth finding is that managing digital transformation is a demanding task beyond a narrow focus on technological innovation.
Digital transformation is more strategic and should focus on setting goals and guiding firms towards these goals. We recommend that innovation leaders should take the role of strategists and orchestrators of digital transformation. This has implications for the job markets of such leaders: the innovator roles are springboards to C-level roles in the built environment.
Therefore, our last recommendation is that innovation leaders should prepare to become leaders in the sector more broadly. They are already key personnel for their firms today and are on track to advance to top management positions in the future. Future leadership, however, requires a holistic understanding of the sector beyond digital transformation.
Finally, the built environment sector is under heavy external pressure as achieving Sustainable Development Goals requires changes in how we design, build, maintain, use, and demolish the built environment. PropTech has great potential to make this change possible, as technology can improve the living conditions of the people and the planet. However, tapping into this potential requires that traditional organizations must also be able to renew themselves – for they have the keys and budgets.
About the author & blog
Olli Vigren is a researcher and teacher at KTH Royal Institute of Technology in Stockholm, Sweden. His research focuses on PropTech, digital transformation, and sustainability. This blog was written by him for PropTech Denmark. Reach out to our Head of Communications, Aya Fabricius to learn more, or reach out to Ollie directly at olliky@kth.se.
