Will there be an ‘IKEA’ in the Real Estate industry?
Over the last two months we have met many real estate industry players and two points have come up in nearly all conversations.
How WeWork and Airbnb have changed the industry operating model towards listening to clients and
How can we differentiate as an organisation?
Most players believe that they are innovating and creating differentiating experiences by listening to the needs of their clients. The reality is that they are in fact just catching up with the competition and creating expected experiences. Although this refocus and commitment is encouraging and much needed to sustain existing business, it will not on its own create differentiation and new market growth. Just listening to clients may create incremental improvements to the existing proposition to the point where it becomes difficult to see any significant difference between the players. This creates commoditised offerings like with telecom providers, banks and most consumer products where no specific brand stands out for uniqueness.
What is still lacking in most real estate organisations is design thinking around the experiences that will transform the operating model. Clients tell us how to make the existing better but not how we can differentiate. In fact, they probably give the same feedback to all market players. IKEA’s business model was certainly not only derived based on feedback of how to make furniture better but rather on user experiences. They turned the entire industry model upside down. No user of furniture would have asked for self-assembly, lower quality, mass produced, low cost disposable furniture when it goes against all prior beliefs on why we own furniture.
This is the power ofdesign thinking and innovation around the problem to be solved for stakeholders. It allows the organisation to create a break away brand resulting in growth, the ability to scale and new profit pools. Over the last year, a few of these brands have started to emerge in real estate but the verdict is still out on who will emerge as the ‘IKEA’ of the industry.