February 2020

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Are Existing Companies Built to Die?

This article is about the importance of understanding how and if businesses can capitalize on all the shiny new tech that exists in the market. And how the embryo of a re-born connected strategy might look like. If you are worried that new technology isn’t delivering as expected, and wondering why that is so? Then this might be something for you.

Nicolas WaernNicolas Waern
"The Building Whisperer"

Contributing Editor

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Did you ever hear the tragedy of the companies failing to adapt to change? I thought not. It’s not a story that technology companies would tell you. It’s a Management legend. AI, Machine Learning, IoT, sensors, Digital Twins, open standards and everything in between have the ability to make companies powerful and wise, beyond belief. Comparing to the current state of things, new ways of working could be considered to be a pathway to many abilities, some consider to be unnatural.

“Change is the only constant, and the ones who don’t

keep up with it are destined to fail.”

Does this help most companies out there today? No. Unfortunately not.

Yes, companies are built to die

Because I do believe that most existing companies are built to die. The reason is that most companies aren’t built for change, nor have the capabilities needed to change fast enough. They are built for a purpose. Maybe that purpose was to build phones in a certain way, to build cars in a certain way, or to build or manage buildings in a certain way.

But the problem is that change is the only constant, and the ones who don’t keep up with it are destined to fail. We’ve seen it with mainframe computing, with phones and Nokia/Ericsson/Blackberry, with cameras and Kodak, with car manufacturers, in pharma, and we are starting to see it in the CRE space.

Some people know about it. Some don’t. But it’s a fact across the board that disruption is the name of the game.

I will discuss my thoughts on why this is. And also, if companies can be re-born, again, anointed with all that magic that a connected society will bring about. I’ll tell you of a way to learn this power. But it won’t be about technology.

Born Connected – A new business reality

I wrote about products being born connected, alluding to the fact that people today are born connected as well. The millennials, the X, Y, Z generation, or whatever you can call it are saturated, even marinated, in the hypes of digitization in arguably most parts of the world. And soon with Space Internet becoming a reality, we’ll get exponentially more connected as time goes by.

New companies are leapfrogging past existing companies creating exponential value with organizations that are software companies through and through.

Slide .i

i. Slide from the Confluent Kafka Summit in London 2019 about the importance of real-time data

“Major banks that see themselves as software companies that just happen to deal with money. Major retailers see themselves as data companies just happen to sell shoes. If companies don’t reinvent themselves with technology, they will lose” - Neda Narkhede - Confluent

But I would argue that having great technology is only a small piece of the puzzle for existing companies.

Understanding the organization

Viewing companies today, utilizing the Five-model, we can see that they consist of five main perspectives that together form a company. Hierarchy, Processes, Culture, People and IT.

The main thing about the below is not how they work in the individual sense, but instead the interdependencies between them and how this resonates with the organizational aptitude in adopting the speed necessary to keep up with the times.

Slide ii

ii. The "Five-model" depicting the main perspectives of any organization

A New Company

A new company built from scratch today can decide everything about how the company should operate and what IT systems to buy, which people to hire, and so on. Existing companies don’t have that luxury. They always have something to adhere to. Sometimes it’s a good thing; sometimes it’s a bad thing. But it’s seldom easy.

Companies are built to die eventually. Unless they have strategies in place on how to change and evolve in a continuous fashion. But that requires an understanding of where they have been, what path dependency they are on, and where they want to go and to keep up with the times. Because business models expire like yoghurt in a fridge. Understanding the business utilizing the Five-model is one thing. Understanding what the company does, in its context, and what it should do next is something for another article. But let’s start with that of a “Traditional Business,” depicted below.

Slide iii 

iii. A slide depicting the current state of workings for a traditional business

Even if you had the most connected product in the world thrown at this company, they would never be able to capitalize on it from an enterprise perspective. Not in a million years. Because the existing systems wouldn’t be capable of ingesting the data. The people wouldn’t even want to try it out because it could threaten their jobs. And new people with the correct mindset, wanting to do it, would never see it go above their paygrade due to existing structures, partners, chosen vendors and the path the company is taking.

And even if the POC (proof of concept) would be successful, the benefits derived could fall in someone else’s lap, so the decision would be made not to do anything. Or the decision would take months or years to implement and then it will be too late. Business as usual, until they die.

So what’s the point?

Re-Born Connected – Do or Die?

If we have a product that is born connected in the left hand. And in the other hand we have this traditional organization that wants to utilize all of this cool new technology. What do to? Can the company be re-born connected?

Maybe. But there are a few buts and ifs;

“Companies need to be trying to disrupt themselves before anyone else constantly does.”

And the list goes on. Becoming re-born as an organization requires much more than fancy technology and access to real-time data. It seems to me that the only option a company has is to do either one of three things

  1. Business as usual, thanking everyone for the good time they’ve had so far.
  2. Change the existing organization to capitalize on existing and future opportunities.
  3. Disrupt the existing organization, start new from scratch and out compete the existing one.

Trick question, since the answer is number three. Changing the organization requires a hard look at what should be kept, what should be left by the wayside, and what should be put elsewhere. Where if companies want to survive, they need to be trying to disrupt themselves before anyone else constantly does. Anyone with a “connected mindset” doesn’t want to work for a company where all the data is in excel-files and PDF’s in someones’ Email inbox. Or try to summarize Excel sheets from 10+ different applications, trying to compile historical information that takes days, where they know that the same task takes five seconds from a connected company.

Is this all doom and gloom then? Of course not. But it’s important to understand that technology is but a small piece in the whole scheme of things and adopting a holistic view of the past, present and future is required to spot and capitalize on short-term and long-term opportunities. There’s an equal sign between the technology that exists on the market and the organizations that want to use them.

Slide iv 

iv. There's an equal sign between the level of digital maturity between the organization and the tools it is using

Strategic alignment and a sense of urgency

This is only the start of understanding the challenges as well as the opportunities within the internal organization. And to be able to ask and answer, at a glance, if the company in question has the capabilities to extract the value promised from any new technology undertaking. Because it’s only the organizations that have the culture, the people, the hierarchy, the processes, and the IT-structure in place that can capitalize on the products that are born connected. And this is just the start. What business model the company is using, and how that relates to the existing resources, and which of these (if any) are valuable enough to form the basis of the future organization.

“Doing things right has never been this easy – but doing the right things have never been this hard”

All of this must come together and work towards the strategic goals, with a sense of common urgency. Otherwise, the company is destined to fall behind, sooner or later.

Final words

[an error occurred while processing this directive]I have spent the last 4-5 years in the Real Estate industry, and I’ve been diving quite deep into the technological wonderland of all things connected. I would say I know enough right now about IT, IoT, OT- conversion, the lack of data quality for AI, ML, Digital Twin initiatives. The BACnet, HVACR, Lonworks, Modbus, KNX, Dali, Profibus, Canbus, MS/TP, S/C, W/S, GraphQL, RESTful, DotDot, and protocols and whatnot that is out there. I know the open hardware side of things and the connectivity and wireless scene with RPi, Arduinos, Zigbees, Conectrics, LPWAN, LoRa, Satellite, NB-IoT, CAT-M, Sis, MSIs, Open, Proprietary, GSI, NOIs, RS-485, OPC, I/Os, Haystack, Brick, REC, Edge, Cloud, FDD, 5G and yeah, I would say a lot of the things that are going on at the moment. Thinking that this would be the answers I was looking for.

And here comes the paradox.

Because doing things right has never been this easy. And the whole business is slowly but surely moving the way where we are moving to more open systems with quality data.

But doing the right things?

That’s the beauty right there. It’s all about asking the right questions, be willing to fail fast, and to understand that setting, and continuously improving and amending the organizational strategy is the only way forward. Why are we doing this, what should be faster, how does it scale, and a million of other things.

It’s not easy with the myriad of options and the speed of technological development as well as the contextual turmoil in and around the Real Estate Industry. Here’s an article about what was going on years ago from the AI/ML – data science and BIG DATA perspective, where politics are blamed, siloed data, expectations don’t match reality, and unclear responsibilities. Throwing IT, or “IT-people” at the organization rarely works.

And one, two, three wrong moves, might lead to the end of business as we know it. Companies that find what they are good at, work with ecosystems in mind, participating in cross-industrial platform thinking initiatives based on openness, standardization, realizing that there’s no time like the present. Those are the ones that will reap the benefits.

The only way forward is to begin the journey to get re-born in a connected way, in order to understand the obstacles and capitalize on the opportunities that exist and will emerge in the years to come. The real estate industry truly is in the hands of the companies that prescribe to the new land of the free, and it will be the home of the brave. What a time to be alive.

As always, go out there and start something, fail fast, learn fast, and make sure it is aligned with the overall strategy of things.

As a wise man usually says, “To your success!” - And do let me know if there’s anything you need!

Hope to see you at the AHRExpo!


v. Picture depicting the two sessions I am participating in at the AHRexpo in Orlando 2020


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