In Part 1 of this blog series I explored the Built Environment at the eve of the Fourth Industrial Revolution. In part 2 I look at the disruption fast approaching the existing industries of Property, Construction (including design and engineering) and Facilities Management…
Challenges and Opportunities…
The Fourth Industrial Revolution has the potential to raise global income levels and improve the quality of life for populations around the world. Yet those who have gained the most from the technological advances of the Third have only been consumers able to afford and access the digital world.
This mirrors the property world, with only the most wealthy being able to truly benefit from access to environments of choice and to trade in the commodity of property. Most of us have to make do with the frequently below par offerings made by the hierarchal and very traditionally capitalist property market.
Technological innovation is also leading to a supply-side miracle, with long-term gains in efficiency and productivity. Transportation and communication costs are falling, logistics and global supply chains are and will become more effective with the cost of trade will diminishing. Yet little is being actually felt as benefit by consumers. This is very true in Construction and Property, the cost of building seems to be ever increasing, whilst the quality and choice diminishes.
So, one of the biggest fears of the revolution is that it could yield greater inequality, particularly in its potential to disrupt construction labour markets.
‘As automation substitutes for labour across the entire economy, the net displacement of workers by machines might exacerbate the gap between returns to capital and returns to labour.’ – say economists Erik Brynjolfsson and Andrew McAfee
However. With a growing awareness of the harm that Construction does to those who work in it, it is entirely possible that the displacement of workers by technology will, in aggregate, result in a net increase in healthy, safe and rewarding jobs. See Health in Construction for more on the urgent need for this.
The acceleration of innovation and the velocity of disruption are hard to comprehend or anticipate, what is for sure though is that Property and Construction are set for a tsunami of disruption.
Although many (within the industry) might disagree, it is startlingly obvious to me that it is still grappling with the technologies of the Third Industrial Revolution. Yet they believe they’re on the cutting edge of innovation. The clearest sign of this is the excitement and debate around a technology coined ‘BIM’ (Building Information Modelling). A technology that exemplifies the Third that first emerged in the late 1960s.
Negroponte wrote of this in The Architecture Machine, published in 1970, at the very start of the Third Industrial Revolution. BIM is at best adaptation the Fourth will herald the unanticipatable.
Let us not forget that adding incremental technology to buildings, what many call Smart Building, is just not good enough.
What are needed is intelligent and autonomous environments that genuinely enhance consumer wellbeing. Buildings that for once are subservient to people, not the other way around.
With more than 30 percent of the global population now actively using social media platforms to connect, learn, and share information. What impact supply chain disruption have on Property, Construction and Facilities Management?
As consumer demands and awareness grows, and this is happening at an exponential rate, the increasingly poor performance and quality of the built environment will become more and more of an issue for people that they simply will no longer accept. Before social media if you had a problem with a building, what could you do? Complain to a builder, an architect, write to your MP or to the papers? More often you would not know how poor or otherwise the environment you endure was, you had no comparators. However, social media has changed all of that. Now you can find out, you can compare and more significantly add your voice to many. Property and Construction must pay heed to this.
Construction is almost entirely supply side to Property and comprises many tenuous fragmented chains. Whilst the Property industry traditionally is less supply side, more a pseudo-demand, creating it’s own markets, both driving Construction and foisting products onto consumers who (unless they are adequately wealthy) have little choice. After all – how many people reading this actually get to choose where they really want to live? Or have real control of the environments in which they live, work, learn and socialise? Yet many industries are seeing the introduction of new technologies that create entirely new ways of serving existing needs and significantly disrupt existing industry value chains. Disruption is also flowing from agile, innovative competitors who, thanks to access to global digital platforms for research, development, marketing, sales, and distribution, can oust well-established incumbents faster than ever by improving the quality, speed, or price at which value is delivered.
This will impact Property – the consumer will gain power. I’ve been asked on occasion, when I speak about this, “but I want to do this, but what about the client, the contractor, the developer, surely they are calling the shots?” True, in the market we see today. But that is changing. Look at wikihouse for an early example.
Leading to an increased demand side expectation…
Major shifts on the demand side are also occurring, as growing transparency, consumer engagement, and new patterns of consumer behaviour (increasingly built upon access to mobile networks and data) force companies to adapt the way they design, market, and deliver products and services.
Combine both demand and supply to disrupt existing industries, such as those we see within the “sharing” or “on demand” economy…
- on customer expectations
- on product enhancement
- on collaborative innovation
- on organisational forms
…and consumers and customers are increasingly at the epicentre of the economy, which is all about improving how customers are served.
Physical products and services, moreover, can now be enhanced with digital capabilities that increase their value. This is very true of the Built Environment. New and emergent technologies are and will allow us to enjoy greater wellbeing in existing environments. Without the intervention of the clumsy Construction industry refurbishment or remodelling activity or the greed of Property Developers.
New technologies will make existing assets more durable and resilient, while data and analytics are transforming how they are maintained. So, be ready Facilities Management, Construction and Property! You will need to think differently about how you work and who your customers are. You will need to learn and practice ways of working that to date have been unthinkable and unanticipatable.
Which is the topic for third and final part of this blog…