How to drive digital transformation in development or construction companies.
There is still a long way to go in the digital transformation of real estate development or construction companies.
Although it is often said that among productive sectors, real estate has been one of the most reluctant to engage in its digital transformation, it is also true that these digitalization processes took a leap of several years forward out of necessity with the pandemic. However, there is still a long way to go in the digital transformation of real estate development or construction companies.
McKinsey’s 2021 global survey on digital strategy concludes that a strategic approach to technology is a universal imperative. Companies with the best technology resources, along with talent and leadership, also have the best economic performances.
With that being said, Mckinsey’s survey also highlights data that should be alarming for anyone in our industry. Only 11% believe that their current business model will still be economically viable in 2023. Which is to say that the vast majority of businesses are being challenged to transform their business models in just one year or prepare for their own demise. The study states that 64% of companies will have to create new digital businesses to make it to 2023.
The strong impact of COVID-19 in the office, hospitality and retail sectors speaks for itself: there are clear signs of obsolescence. Real estate needs new models in which technology plays a leading role in optimizing processes, to improve the way we bring the real estate product closer to the consumer, and to diversify the experience we offer to customers.
As we undergo the first stages of the digital transformation of development or construction companies, it is urgent to accelerate the pace of this transformation. How to design and implement a technological transformation strategy? McKinsey’s report points out that there is no universal method for initiating a digitalization process. However, it highlights five key steps, which I all agree with and share.
5 keys to the digital transformation of development or construction companies
1. Define a vision
The digital transformation process of development or construction companies starts with a vision: how we see the business in the face of implementing a large-scale strategy of digital technologies and advanced analytics. This goes far beyond converting manual processes to automated ones.
These are the basics, and while some might dismiss this aspect with their exaggerated ambition: “To become the best real estate development company in the world with state-of-the-art technology”, it is key to remember that defining a vision for digital transformation takes time and analysis to be realistic and feasible. It also requires that this vision be communicated and shared by all the teams involved in the digitalization process.
This vision for the digital transformation process is much more than simply adding technological tools. It implies a clear commitment and dedication to innovation, while recognizing the importance of collecting and analyzing valuable data, and an understanding and acceptance that the business model is going to be transformed.
2. Start with an honest diagnosis of the company
This is where the hard work begins. Identify which areas require greater technological adoption, how urgently they need it, what costs and risks are involved, what is the complexity of the technology implementation required, when to expect investments to be recovered and what support actions the technological implementation will require.
It is a thorough examination of the organization’s strengths and weaknesses, its processes and the available data. There is no room for this diagnosis not to be totally honest, which can undoubtedly be uncomfortable for many.
The viability and success of the digital transformation process of developer or construction companies is based on this diagnosis.
3. Establish the roadmap
As with any process, there must be strategic planning. The work plan must define:
- Actions to be carried out to develop, test and deploy the technological solutions, according to specific deadlines.
- Quantifiable indicators for clear goals of what is to be achieved.
- Specific skills and expertise to be developed or strengthened within the team.
- Required infrastructure and data.
- Timeline to deploy and accelerate the transformation.
4. Pilot testing
It would be naïve – and risky – to believe that a digital transformation project is going to be carried out throughout the organization simultaneously. You have to do a pilot with one unit or one process, if not several pilot tests for each. These tests will help measure the effectiveness of the work plan and make the necessary corrections.
Likewise, this test allows for a better assessment of the benefits that the digital transformation will bring to the developer or construction company.
Of course, at this point the choice of the right pilot is key. McKinsey recommends selecting a project with a high probability of success, so that it generates a meaningful and relevant experience for the entire organization.
5. Scaling the project
After successful pilots, a more comprehensive digital transformation can move forward. Planning for this phase will need to incorporate the lessons learned from the tests. This directly impacts the technologies selected, the implementation methods, the requirements and moves to be made with the team, and the growth of the infrastructure.
The digital transformation of developer or construction companies demands agility from the business leadership, both from the CEO and other key positions such as the CTO and the CIO. This transformation will move and redefine strategies, structure, processes, people, and technology itself toward a new operating model. It must be assimilated by the entire leadership of the company.
To remain productive and profitable in our changing environment, we have to forgo improvisation and procrastination. Digital transformation is the key to reorienting our industry towards service and innovation. Technology is there for users to use, and there are endless possibilities and solutions. We have to incorporate it into our daily lives and change our mindset