In this time of celebrated disruption and accelerated change, the context for everything, including home buying and selling, is facing disruption and change, globally and locally.
Corporations and governments are struggling to anticipate impact and benefits from disruptive technology while they try to manage change on many fronts at once. How successful they are in your area and in the industries that employ you and your neighbors will determine how sustainable your community, lifestyles, and property values are.
The question that demands an answer is, "What's that got to do with me and my real estate - my present and future home?"
The recent Toronto Global Forum — the 11th organized by the International Economic Forum of the Americas — hosted representatives from 54 countries, including 130 expert speakers and more than 2700 participants. Many were high-profile leaders from governments, academia, public and private sectors, and civil society. The Forum focused on major issues related to economic globalization with emphasis on relations between North and South American and the other continents. The three-day global conversation zeroed in on Redefining Globalization in reaction to significant political and economic volatility around the world.
Redefining globalization involves transformation of the concept to "promote an atmosphere of shared prosperity," according to opening remarks by Louis Audet, President and CEO of Cogeco. Many Forum speakers provided insight into leaders' responsibility to ensure the economy works globally and benefits all.
"If you do not think technology is affecting your business, you're dead," said Mark Wiseman, Senior Managing Director at BlackRock Inc., during a panel discussion titled Global Economic Outlook: The Search for Growth. "[Technology] is affecting business around the world."
Wiseman illustrated his point by relating his recent "back to the future" experience in Beijing, China. He saw "millions of bicycles, like in Europe, but no [central depot] stand." The bikes rent out at 15 cents per hour by using a mobile phone to unlock the lock on a wheel.
"The value in the bicycle is not in the bikes or in the value in environmental pressure off mass transit," explained Wiseman. "The value is in data as owners know where every [bicycle] is ridden and by whom. Investors and marketers are willing to pay a lot for that data. Owners are not in the bicycle business, but in the data business."
The Forum, a meeting of ingenious, globally-focused minds, proved that if we are not receptive as individuals, little or no progress will be made as this new industrial revolution rolls over us all.
Speaker and participant discussions at The Forum revealed 5 challenges — problems and opportunities — for corporations and governments facing technology-induced transformational change that can be mirrored in our lives:
#1. Redefining Context Jim Barber, President of UPS International, explained that UPS now has 450,000 employees and automation has not hit their sector yet. "If we rest for more than a minute, we would be dead."
To illustrate the disruptive effect of technology, another speaker used the example of the 40,000 elevator operators in New York City who were displaced by push-button automation in 1915. Then, he posed a key question, "As corporation and political leaders, how will we treat those who will be left behind?"
How prepared are you for Automated Intelligence (AI) and machine intelligence changes in your industry and workplace?
How sustainable is your income?
How could you use your real estate as a financial partner if your income were disrupted?
#2. Redefining Risk Originally, the benefits of globalization "took for granted the world would come closer together." The key risk for the economy was Wall Street as was evident from the financial collapse of 2008. Now, Brexit and similar geopolitical events represent risk. Many still perceive risk in an archaic way, but risk is now arising "from behavior and geopolitical reaction." The world always faced disruption, but only in one sector at a time, like the textile revolution. Now, there is disruption in every sector at once. Unprecedented disruptions are changing the way we work, live, play, dream….
Which risks would threaten real estate ownership, either present or future, for you?
#3. Redefining Change "Change is 10X faster than in the Industrial Revolution, 300X the scale, and 3000X the impact of the industrial revolution," reported Patricia Meredith, Fellow at the Rotman School of Management, University of Toronto. "These trends are gaining magnitude and impact to create monumental change. Combine this with climate change...and this is a truly complex and uncertain environment."
One suggestion for harnessing technology lies in being courageous, innovative, and curious.
If this unprecedented change is forcing corporations and governments to make decisions in spite of significant uncertainty, don't be surprised that individuals will share the same fate.
What decisions might this change force on you?
What role or roles could your real estate play in solutions and opportunities for sustaining your chosen lifestyle?
#4. Redefining Corporate Thinking Corporate thinking is notoriously short-term while that of consumers and other investors can be the opposite. Wiseman shared a corporate decision-making study which reported that "55% of CEOs would forgo a project if it meant they would miss their quarterly stock value by 1 cent."
The cost to society of corporate short-term thinking is estimated at a trillion dollars. A shift to long-term thinking would have significant impact.
"The issue is systemic... Short term behavior caused the economic collapse, but in the decade since, thinking is more short-term," said Wiseman who explained that the neglected long-term thinking includes issues regarding the environment and the future of displaced employees.
Are you a short-term thinker when it comes to real estate? Real estate buyers who concentrate on the fleeting-glory of decor over the long-term benefits of location and quality of construction are short-term thinkers.
#5. Redefining Paradigms During the "Navigating a World of Disruption" panel, Jonathan Crane, Chief Commercial Officer of Ipsoft, attributed the escalated, expansive growth of mega companies like Google and Amazon to the fact that they "did not do paradigm shifts, but paradigm leaps!"
Crane's perspective on AI is that it will remove drudgery and monotony from the workplace, but not jobs. Work and careers will be transformed, expanded, or elevated. Disagreeing with the stated figure of "47% of jobs being at risk to technology," Crane stressed that transformation will hit 100% of jobs.
If your job were transformed by technology would you still be qualified to receive that income?
Real estate location has long been valued based on its proximity to "the best schools." That trend continues, but now "best" means forward-thinking, technology-based education that creates valued talent. When you buy real estate — even if you don't have school-aged children — do you seek out property near the best schools to take advantage of their market-value boost?
Holly Benson, Managing Partner, Infosys Consulting Inc. discussed the tendency to "rush to automation and deal with people later." She shared two insights that ring true in even the most intense vortex of change:
"Never attribute to malice what can be attributed, in the full sense of the word, to ignorance."
"Never assume that people automatically know what to do just because they have a title."
In future columns, we'll continue to explore technology, disruption, and much more to discover what this all has to do with you and your real estate - present and future.
Check out the 2016 Global Forum: "Explore New Markets At a Global Forum"