Why the Real Estate Industry is in Desperate Need of Disruptive Innovation
Five years ago, a little company called Uber was founded. Fast forward to the present and that fledgling startup has not only skyrocketed to a staggering $68 billion valuation, but completely revolutionized the transportation industry as a whole. A few years earlier, Netflix dethroned Blockbuster as the king of video distribution, and it completely changed the way we consume media in the process.
The kind of sea change that fundamentally alters a whole industry doesn’t happen every day, but it can be a powerful force to revitalize an ailing and stagnant market. It’s a force called disruptive innovation and a force that, now more than ever, the real estate industry desperately needs.
What is Disruptive Innovation?
In essence, disruptive innovation is any situation where a smaller company or startup with limited resources and scope succeeds in challenging a market already saturated by what are called “established incumbent businesses.” These are large businesses that previously had a stranglehold on the market and imposed the dominant practices and tools that defined it.
Disruptive innovation happens when those entrenched businesses fail to cater to the needs of certain segments in their market. Segments that they deem too unprofitable or otherwise unworthy of their attention. That’s when the entrant — the startup or small company — steps in and gains a foothold, usually by offering cheaper and more efficient functionality.
As Clayton Christensen, Michael Raynor, and Rory McDonald of the Harvard Business Review put it: “When mainstream customers start adopting the entrants’ offerings in volume, disruption has occurred.”
Why Do We Need It in Real Estate?
In the past decade, the smart phone — with the help of the internet — has brought many established industries to the point of obsolescence. The real estate industry is one of the last bastions that hasn’t experienced serious disruption, but this isn’t really a good thing.
The real estate market has been experiencing a steady rate of diminishing value over time as online listing services have tried to invalidate the services that agents provide. What these services fail to appreciate is that the value of a professional agent — a person who can personally address every problem that a client has to deal with — will never go away.
It’s not the agents that are the problem, but the support structure that they use to do their businesses. Outdated practices, tools, and marketing strategies have steadily fallen well behind the curve and only made the already difficult job of the agent more challenging. They’ve stagnated and a massive overhaul — a true disruption — of the infrastructure will keep the real estate industry alive and well.
How’s It Going to Happen?
True disruptive innovation in real estate will be born out of the efforts of startups and small businesses that recognize the travails of today’s agents and provide new, innovative technologies that support them. It’s time for the painfully clunky access to Multiple Listing Services to end, and a truly modern solution to replace them.
The pain points are there and so is the opportunity. Once there’s truly a better method in place — a solution that empowers both the agent and consumer — that will be the moment when the real estate industry experiences genuine disruptive innovation for the first time. It’s time to let go of the rolodexes and brochures and embrace that change wholeheartedly. That’s exactly the kind of change Theo is building with a powerful and accessible application that keeps agents at the heart of every interaction — agents that have modern tools to help do their job better than ever.
It’s the only way this business is going to thrive.