September 2020
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"The Smart Building Effect"

Forget about Smart from Start, antifragility, and classic business models that don't offer anything new. The future will be about buildings that stay relevant and get exponentially smarter over time.
Nicolas WaernNicolas Waern
"The Building Whisperer"

https://www.linkedin.com/in/nicolaswaern/

https://twitter.com/BuildWhisperer

Contributing Editor


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“You can save hundreds of millions of dollars with continuous improvements to a Smart Building, which is a stark contrast to other Building Automation Vendors that do something else continuously:

-          Ask you to pay again!”

A Battle of business models

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.

“When Smart Buildings will become the norm, it will make ALL the difference”.

The incremental value Smart Buildings create per building for its customers is higher compared to other buildings, and that is critically important for a successful business.

The business case a smart building offers to its customers is worth some hundreds of thousands, up to millions of dollars per building over 10 years, and no one can compete with that.

Are Smart buildings the most misunderstood opportunity in the world?

Even today, with continuous strong coverage in the media and a ton of analysts turning every stone over to understand the potential of Proptech, Digital Twins, Smart Buildings and Smart Cities, almost nobody understands the basics of the possibilities of a fundamentally different business model.

The approach from incumbent Building Automation vendors to sell solutions with enhanced hardware features makes sense since they earn money with every solution sold, and even more important, with spare parts, lock-in effects, and services in the aftermarket. Their global fleet of hardware/software offerings is the cow they milk until it dies in an accident or by old age decades later. And they still get the business because they were there first, the lock-in effects are too great, there’s only a handful that knows the system, or an SLA that is infinite. Why not compete on value and outcomes?

Without the after-sales business, most Building Automation Vendors would be structurally unprofitable, because the revenue stream from the continuous lock-in effects is tremendously large and much more important for their bottom lines than new building solution sales.

Suppliers of Smart Building solutions will initially not have a large offering or significant after-sales business, so how can it make any profit, especially when giving continuous building improvements away for free? If you do not have an answer to that question, you do not understand what a Smart Building solution will provide for its customers.


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If you want to read more about this and understand what the future will look like, head over to Beyond Buildings for the full article! The full article is an 82,6% intentional copy-paste of this fantastic article by Alex Voigt which is depicting the business model introduced by Tesla. The article intrigued me because it was eerily similar to what I believe is happening to the Smart Building industry.

The reason why I read everything is because my role is to advise decision makers and companies what the world is going to do a month, a year, a decade from now. I try to have a holistic understanding of what is needed to stand out from competition, in order to better advise on pros and cons, and be the strategy partner for both technology and organization-advice in a Smart World Environment (Construction/Industry/Smart Buildings and Cities).

Please reach out if you have any questions and comments or if you have any ideas on what I should write next!

Sincerely,
Nicolas Waern

“Smart World Architect” and Digital Transformation Expert – Helping companies find their role in a Smart World Context

WINNIIO

















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