A very quick survey, I promise it should take less than 30 seconds and I will post the survey results next week.
Paraphrasing from Eric Lowitt’s recent book ‘if all buildings were green buildings, would we achieve a state of sustainable development?’ My answer would be no. So then the question is “what would enable the world to achieve a state of sustainable development?” and “can we acheive sustainable development?”.
So three questions, that’s it, go for it.
A great quote from a recent article on Harvard Business Review called “Established Companies, Get Ready for the Collaborative Economy”. The question is are you ready for the disruption?
The HBR article offers some insight into what they believe are the core drivers for the collaborative economy. Below are a summary of the four key drivers together with my views on how the property industry can respond.
“1. Less buying, more sharing.
Big brands need to stop measuring success in terms of units sold, and think in terms of units used. The collaborative economy is shifting us from a consumerist economy to one in which people buy less because they’re sharing more. Companies that have traditionally relied on selling goods need to think about offering those goods on an access model, too.
For example, as Daimler AG has done by providing by-the-minute car sharing through Car2Go. And those that offer services need to think about further offering their customers access to products well outside their traditional spheres, as with Westin’s partnership with New Balance to offer fitness gear rental for their guests.”
For property this could be as simple as a building owner providing shared IT resource or back of house service for tenants to reduce their purchasing requirements.
“2. Less consuming, more producing.
The emergence of the collaborative economy is closely tied to the growth of the maker movement, in which individuals can become producers and sellers thanks to technologies that support small-scale production (like 3D printing) as well as those that facilitate peer-to-peer distribution (like online marketplaces).
To succeed in the collaborative economy, companies will need to integrate crowd-produced goods into their supply chain, as West Elm has done with Etsy.”
In construction this could be larger contractors working with individual producers or sellers. We could see the return of low cost bespoke items like door handles or light fittings.
3. Less working, more freelancing.
As a number of observers have pointed out, one effect of the collaborative economy may be to increase self-employment in place of full-time employment.
Rather than engaging in a race to the bottom (on wages) or a fight to the top (competing for skilled labor), these companies would do well to focus on offering new value-added services enabled by the collaborative economy, as Home Depot did by partnering with Uber for Christmas Tree delivery.
There are so many opportunities to collaborate within the complex supply chains of the property industry. The only question is – which one will you collaborate with?
“4. Less regulation, more risk.
One challenge that has bedeviled sharing startups is the emergence of regulatory efforts aimed at limiting sharing activity — or tapping it for tax revenue. Partly in response to pleas from established players like taxi and hotel companies, municipal governments have tried to corral the Wild West of sharing.
Yet the involvement of bigger companies in the sharing economy itself could instead strengthen the hand of those who would preserve currently low levels of regulation. Either way, unless big companies want to see their breakfast eaten by collaborative startups that profit by flying under the regulatory radar, they will need to tune into their customers with co-innovation initiatives that help them understand how they can play in this space, too.”
There could be a lot of resistance to the emergence of the collaborative economy by established players in the property industry. There is potentially a lot to lose. But there is a lot of opportunities for those who embrace the change.
HBR sums it up well “It’s a disruption that big companies must not only address, but accelerate, unless they want to stand by and watch while their own business models and revenue streams are disrupted instead.”
Collaboration will drive success in your company over the next 5 years. You will have to collaborate with your competitors, with your supply chain, with Government, with NFPs and with companies and people who aren’t even on your radar.
The companies that get it right will be riding on rocket powered roller skates, those that don’t will be left behind. Do you have Collaboration for Impact strategy? Here are 3 tips to get you started.
We often see trends start out as individual or society driven before they make it into the mainstream. It does happen the other way round – the ipod as one example – but I think collaboration is a trend that is coming to corporates. It started with the rapid uprise of individual collaboration.
Trends in individual collaboration
This has been massive over the last few years, if you missed it its because you didn’t see it as collaboration. Here is a summary, we have had ‘collaborative consumption’ bandied around as the label but also ‘sharing economy’, which ever label you use its about people sharing products or services rather than buying their own. Oh and a few people have made a bit of money along the way.
Enabled by technology we have seen AirBnB (and who an forget its bastard child AirPnP), in Australia we have seen GoGet car sharing services, Uber is now in most major cities, city provided bike sharing, crowd funding, crowd sourcing and a few more that I have probably missed. The theory goes ‘why would you want to own a car if I can make it so easy for you to borrow one on short and simple terms’ – well yes absolutely.
The other side of collaborative consumption which hasn’t taken off is the idea that for example ‘I need a hole in the wall, I don’t need a drill’. Well yes that is true but it’s difficult to set up a business that makes money from providing quick easy simple term access to drills, so far.
But putting the drill aside, individuals are now collaborating or sharing services, yes it has been accelerated by people making a bit of money but it is still collaboration.
And from my post early this week the Millennials are claiming the ecological and social benefit of collaboration as theirs – “Millennials are far less likely to own a car, or to even make that a priority. Instead, we tend to opt for public transit, biking, or car sharing. While millennials don’t identify as vegetarians, either, we actually trend towards eating less meat – and we value the eating experience, which means that, though we tend to make less for our work (or sometimes nothing at all), a lot of us are still willing to spend a little more to go organic and local. Heck, even the fact that so many of us still live at home, or choose to live in shared houses or dorms rather than getting a place of our own, translates to a more efficient use of household water, electricity, and gas.”
A recent Deloitte’s survey found that “Millennials believe solutions to society’s challenges will not come from business and government acting on their own. Individual businesses will need to work with governments, universities, and non-profit organizations, as well as with other companies. The clear message is that businesses need to look outside the confines of their own enterprises and seek collaborative partners if they are to maximize the chances of finding innovative solutions to the issues facing society.”
So it’s not just that they are doing it as individuals they are expecting that business collaborate like they never have before as well. If you read the Deloitte survey you will be looking to collaborate purely to attract and retain the best talent.
Collaboration in business is starting to happen
The first sign of trend towards collaboration is the recent shift within the business or corporate world away from Corporate Social Responsibility (CSR) to Corporate Shared Values (CSV). It is a subtle but important shift away from CSR being a internally focused process of creating our company values on our own to creating and sharing our company values with others – typically with government. It takes it away from compliance and reporting to something towards sustainable or transformative.
So in the regulatory world of companies – the annual reports – we are seeing a shift towards companied being less internalised about what they are trying to do beyond the bottom line. But that’s reporting, what about doing?
I wrote a series of posts late last year Competitive Collaboration and how as a business you and the planet can thrive as a result. I got a lot of positive feedback about the posts and the need for more competitive collaboration to happen. Better Building Partnership is a great example of competitive collaboration in the property industry.
Again the start of competitive collaboration is at the individual level where companies are trying to work out how to keep their employees competitive but to also collaborate towards the common goal of making the company awesome.
Collaboration for Impact – Rocket Powered Rolled Skates
So, we have some great trends, survey data and anecdotal evidence that suggests that collaboration is part of future business models and in my opinion that future business model is only a year or two away.
Collaboration is key to our necessary move away from ‘green’ or ‘reducing our environmental impact’ towards ‘creating positive social and ecological impact’. But how?
Well apart from the obvious ‘contact me at firstname.lastname@example.org and I will tell you how’ here are 3 tips to get started.
1. You and your company are connected to everyone and every company.
What ever your service or your product, your upstream and downstream supply chains are huge and like Kevin Bacon, you are probably only 6 links away from impacting every single person in the world.
2. You probably don’t currently know the collaborator that has the rockets.
The person, or company, or NGO, or government body that holds the rockets and fuel for your roller skates is probably not even on your radar. You probably haven’t even heard of the service they provide or the country they reside in. So be open to any opportunity.
3. Find your shared values.
Not just in the corporate annual report sense of shared values but in the sense of the not reported values. Find the commonalities and exploit them. And yes when its not used in relation to people and resources, exploit is a good term to use. Exploit the hell out of the impact you can create through collaboration.
4. Contact me at email@example.com
Interesting article in Grist about a new piece of research from Pew that has found that being an environmentalist is at an all time low. Which is kind of in line with other trends that we are seeing in the world. So here are some opinions from others, some thoughts of my own and some take home hopes.
First some opinions of others.
A friend and believer in the industry “Sustainability seems to be all talk at the moment”. Hhhmm, there is some truth in that. But maybe the recent state of the construction industry has a lot to do with it.
Or from a recent convert to believing in climate change “if it is true, why is there so much apathy about it at the moment?”
A short survey I admit but I would agree there is a lot of apathy, green fatigue and general malaise about environmentalism and green – particularly in the property industry.
The industry is certainly in a ‘been there done that’ phase at the moment. But whenever I talk to property owners or developers, which I do very regularly, the question I always get asked is “what’s next?”. So the apathy is there but the desire to achieve more (for whatever reason) is still there.
The Grist article gives some interesting insight into the why ‘environmentalism’ is at an all time low.
The article is written by a Millennial, Samantha Larson, she writes “look at what’s actually happening. Millennials are far less likely to own a car, or to even make that a priority. Instead, we tend to opt for public transit, biking, or car sharing. While millennials don’t identify as vegetarians, either, we actually trend towards eating less meat – and we value the eating experience, which means that, though we tend to make less for our work (or sometimes nothing at all), a lot of us are still willing to spend a little more to go organic and local. Heck, even the fact that so many of us still live at home, or choose to live in shared houses or dorms rather than getting a place of our own, translates to a more efficient use of household water, electricity, and gas.”
“Which isn’t to say that millennials are making these choices exactly for the purpose of being green. We do it because it makes sense: Green living is more affordable, more enjoyable, and thus perhaps makes us more able to deal with the messes we’ve been left with. But, as long as things are starting to change, does it really matter what the motivation is? And can’t there be more than one motivation? Millennials seem more likely to recognize that the environment doesn’t exist in a glass bubble, that it’s tied in with business, technology, and what’s on your plate. Protecting the environment is not something out there and far away, but something right here that needs to be intelligently incorporated into our day-to-day.”
There are two interesting commonalities between the article and what I am finding in the industry. The first is ‘We are doing and want to do more’ and it doesn’t matter what the motivation is – it maybe marketing, it maybe CSR, it maybe a point of difference, but whatever it is there is a driver to do more. And the second is a growing recognition that sustainability, or the environment, or ecology, is complex. Its not as simple as ticking a few boxes. There are unintended consequences of trying to make it too simple. The apathy in the industry seems to be a result of trying to over simplify things. We have grown up a lot as an industry in the last 10 years and we don’t want to be stuck on the ‘gum nut babies’ books we want to move on to Enid Blyton.
But I also think there is a growing concern or recognition that even if we did tick all the boxes and get 100 points it probably still isn’t enough.
Paraphrasing from Eric Lowitt’s recent book ‘if all buildings were green buildings, would we achieve a state of sustainable development?’ My answer would be no. So then the question is “what would enable the world to achieve a state of sustainable development?”.
Take home hopes.
Probably one of the key ones is a growing market trend in Impact Investing.
The google trend data below shows a slowing down in social and ethical investing and a growing trend in Impact Investing.
Impact investments require a benefit or return beyond purely financial, it requires an ecological and social return on investment. The great thing about impact is that it requires us to think beyond our buildings as being simplified boxes to tick to seeing our buildings as being part of a wider system, and more importantly as being able to create change in the system.
The second take home is we have a growing ability to be able to assess and analyse the complexities of our systems. The data being collected and being made available allows us to compare the ecological impact of energy efficient lightbulbs to recycled steel to mode shift transportation models. It allows us to calculate the social value of providing cycle spaces rather than just the emission reduction or the social value of local community facilities.
The third take home is that the challenges and opportunities we face in the world aren’t limited to ‘environmentalism’ so even if there is apathy or a reduction in environmentalism, there does seem to be a growing recognition and desire to see system change. As Samantha summed up nicely in her article “So go ahead, call us “environmentalists.” If we don’t answer, it’s because we’re too busy trying to make things better.” Better, now that rings a bell. And luckily we have some awesome nerds to be able to help make it better.
There is a lot of press at the moment about whether the carbon tax is a significant influence on the financial performance of Qantas and Virgin Australia. It’s a good distraction from the elephant in the room – fuel price.
The peak oilists seem to have gone quiet in recent years but I did come across this one recently via flipboard crudeoilpeak.info and their fascinating and Qantas data filled article on the end of airlines.
I think the article is very well written (being a data nerd myself) and I think it presents the data and facts about the current Qantas an likely Virgin Australia financial performance.
The image from crudeoilpeak.info sums it up well.
The price of fuel has increased 138% since 2005 where as passenger kms travelled has only increased 24%.
So yes, the $90m carbon tax bill that is being floated as significant for Qantas pails into insignificance when you look at the overall fuel bill of a likely $4.6b in FY2014. That’s only 2% of the fuel bill. That would be like us paying an extra $3c per litre on top of $170/litre at the fuel pump.
What has helped until recently has been the strong AUD against the USD. Our slightly out of parity dollar meant that we were getting a price reduction on oil.
Since 2009 we were getting around a 5-10% reduction in oil cost as the AUD was higher than the USD. But as the AUD slips below the USD we get an uplift in oil cost. If the AUD sits at 0.9 to the USD then a $110USD/bbl now becomes a $122AUD/bbl. When oil gets to $125USD/bbl then we will pay $138AUD/bbl – that’s financial crises levels.
Any cost on a business has an impact on it’s operating profit, so yes the carbon tax is a cost on Qantas but the rise in fuel cost makes the carbon tax insignificant.
So if our domestic airlines such as Virgin Australia and Qantas are struggling to make money with the current revenue per passenger, and if they increase the fares the number of passengers will decrease and therefore so wil revenue then we are likely to see a declining number of passengers flying domestically within Australia.
Which then begs the question. Why are we pushing ahead with a second airport in Sydney and stalling on high speed rail!
There was a great article in Forbes magazine recently called “We Are Not Alone. Climate Change Laws Span The World”. But unfortunately the ‘we’ refers to the US not Australia. In Australia we are alone. And it will put us in a competitive disadvantage. Here’s why.
Let’s start with the article. The main gist is that American’s aren’t alone in the creation of national or state level climate change legislation. The article focuses on the results of a global study put together by the Globe, the Global Legislators’ Organisation, and the Grantham Research Institute at the London School of Economics. The study found “almost 500 climate change laws having been passed in the countries covered by the study” and that “Eight countries passed climate laws in 2013, from Bolivia to Poland to the United Arab Emirates, with another 19 making positive advances.”
The article goes on to talk about the momentum of climate change legislation.
“According to Lord Deben, the former UK minister for environment and now head of the UK government’s Committee on Climate Change and president of Globe: ‘More countries than ever before are passing credible and significant national climate change laws. It is by implementing national legislation and regulations that the political conditions for a global agreement in 2015 will be created.’”
And that the emerging markets are taking the lead, not developed countries.
“Emerging markets will be the motor of economic growth in the decades to come, so climate-related laws will shape the future business environment for the world’s biggest companies. We’re already seeing this in markets such as China, which has introduced seven pilot carbon markets with a view to introducing a nationwide carbon market by 2015.”
I wonder what impact a China carbon market will have on where they import their goods and services from! Makes our ‘stuff’ look very expensive considering our carbon intensity.
And here is the clincher.
“The fact that so many countries are taking action also removes one of the key barriers to agreement in the past, which was the view that tackling climate change would put companies and national economies at a competitive disadvantage.”
“Increasingly, the reverse is being seen to be true – that laws to tackle climate change are leading to greater resource and energy efficiency, cleaner, lower-carbon growth and improved energy security.”
What happened in Australia in 2013? We changed government and we now seem hell bent on revoking climate change laws because they believe that it will put our companies at a competitive disadvantage.
This morning Joe Hockey was still blaming the Qantas situation on the ‘penalty of carbon pricing’ that the company had incurred, stating that pricing carbon had affected their international competitiveness. Qantas voluntarily signed up for being included in carbon pricing, as did Virgin Australia. Qantas denied that climate pricing was a significant influence on their current performance.
Our current government has been banging the same drum for the last 5 years but the world was very different 5 years ago. Five years ago there was some ‘justification’ for not doing anything as a lot of the rest of the world wasn’t doing anything. But now “almost 500 climate change laws having been passed”. We are in a very different world.
The world has turned. It is now our legislative inaction on climate change that will be our competitive disadvantage.
We are alone! Climate change laws span the world except for Australia.
We are in interesting times again. The bulls are claiming a restart of growth, there is a prediction of 2% global GDP growth in 2014 and the talk around town is 2014 is the start of the next 5 years of growth. But we have many (non-australian) political leaders around the world stating climate change as one of our biggest risks in the near future. It creates an interesting dilemma for all of us. Here is my dilemma, is it yours and is it real?
I recently gave a presentation to a senior management team in Sydney about what the trends we are seeing in ‘sustainability’ and what I believed the future opportunities were sustainable property development.
I believe that the trends we are seeing in impact investing, the sixth wave of innovation and the resource constraints of one planet are driving challenges and opportunities for all sectors and in particular property.
To highlight the collision of these three trends I used collaborative consumption as an example of resource productivity – rather than one person using the resources of one drill you share it among 10 people and you therefore only have 1/10th of the resources per person.
A very good statement was made by one of participants , “that’s all very good but that would mean we need to make 9 less drills and if drill manufacturing makes up part of our GDP growth then our GDP won’t grow”.
Exactly. And that’s bad. Oh wait, no that’s good for the planet. Oh hang on no that’s bad for business.
As a treehugger my reaction is that’s a good thing. GDP isn’t a measure of progress and we should be looking at genuine progress (GPI) not GDP. If we used genuine progress then we would see a positive from collaborative consumption because we would take into account the positive ecological impact of using 9/10ths less resources. And also the positive social impact of the relationship / community building involved in sharing and collaboration.
As a business man I have to keep an eye on GDP as I and probably all business men, have been engrained with the assumption that – negative GDP = bad, positive GDP = good.
It isn’t always the case but in my limited 20 years experience it seems to correlate pretty well.
So when we talk about collaboration, sharing, reducing resource use and resource productivity the immediate engrained response is ‘that equals bad’.
When we talk about maybe not knocking down buildings to build new ones, maybe sharing buildings, maybe dual using buildings our immediate engrained response is ‘that equals bad’ for business.
It’s a dilemma and it’s potential barrier to continued business progress.
Maybe if we chose Genuine Progress or something like that as an indicator then our reaction to resource productivity would be completely different.
I know a lot of people have been calling for this change for a while. Particularly when you look at things like Healthcare, healthcare is part of our GDP so the more sick we get the more progress we make? Prisons and the justice system is part of our GDP so the more our social fabric breaks down the more progress we make?
The problem of GDP as progress indicator in a social sense has been known for a while but what we are now seeing is the need for change at a more granular level, at the level where our measure of progress is actually accelerating our use of our planets finite resources not protecting it. And when it comes to finite resources progress is slowing down the use not speeding up the use. If you are spending all your savings and you don’t want to run out of money then making progress is not spending so much.
We need to retrain and reprogram everyone to see GDP as a measure of how quickly we are going down the pan and not how we are progressing. Businesses need to be valued by the genuine progress they are making not by how quickly they are spending their savings. Governments need to share the potential societal savings that businesses can create through their ecological and social impacts.
On ABC24 this morning the presenters were having a conversation about meeting emission reduction targets and discussing the reduction in emissions due to a declining manufacturing sector in Australia. The commentator on the newspapers said “if only we could entirely collapse as economy”. Oh my god, that’s terrible. That means that the only way we can meet emission targets is to collapse our economy. Hhhmmm.
If we saw GDP as a measure of how quickly we are going down the pan the his comment would have been accepted as a positive truth rather than a threat to a fake reality of GDP being a measure of progress.
It is good to be back 🙂