THE ABC’S OF THE FUTURE
I want to thank you for this opportunity to speak to your group because I believe that we’re on the cusp of some radical changes in how and where we will all be working – driven largely by the introduction of new players and suppliers, new business models, new automation technologies and new connectivity tools – which together are changing the face, the composition, the size and the future of our workforces.
Sitting, as I do, at 1871 in the midst of 500 new startups and about 2000 entrepreneurs and visitors a day, I feel like I have a ringside seat at the innovation circus and also a perspective informed by 50 years of my own entrepreneurship and by presiding over 1871’s dramatic growth from a startup itself in 2012 to what is now generally regarded as the largest and most successful mega-incubator in the world.
We’ve grown from 50,000 square feet to 170,000 square feet of space in the Mart – tripled our revenues and become financially self-sufficient, created over 10,000 new jobs, and raised over $300 million dollars in new capital for our companies. The Mart itself has also been transformed by 1871 and it now has more than 11,000 tech jobs in the building and has become the tech center of the city while also attracting major Chicagoland and Illinois corporations which are all seeking to get closer to and more involved in the action.
When we talk at 1871 to our major corporate partners and sponsors, apart from their constant desire and need to recruit and retain new, young, digital and creative talent, the two largest concerns they have are (1) that they aren’t moving quickly enough to generate and incorporate new ideas and new thinking into their organizations and (2) that the people who built most of their systems and solutions are unwilling or unable to break them and radically change them going forward. I imagine you’ve heard the same conversations in your own shops.
How and how rapidly these new forces will change everything you do in your own companies isn’t clear, but it is inevitable. These changes aren’t going to be slow and incremental – that’s no longer the way the world works – and, as a result, the sooner you start thinking about them and planning for them, the more prepared you’re going to be and the more likely you are to be surfing the waves rather than drowning in the floods.
Today, we’re all connected by powerful and fully-portable devices which are increasingly intelligent and sentient – we’re prepared and we’re expected to work anywhere and everywhere – we’re on call – like it or not - 24/7 and 365 days a year – and because these are the requirements of our work world today, we readily extrapolate and extend them well beyond our own day-to-day lives into the broader workplace as well. What’s good for the goose is equally good for the gander. We’re all in a hurry these days and time is the scarcest resource of all.
And, in fact, once we’ve experienced these hyper-speed services – either as providers or recipients - once we’re an active part and a participant in the “right now” economy – it takes no time at all for us to mentally up our own expectations and anticipate exactly the same levels of speed and service throughout the rest of our lives. Why would anyone wait for anything?
If Walgreen’s can give me a walk-in, one-minute flu shot, why would I wait three weeks to make a pain-in-the-ass appointment - with my regular doctor’s nurse – to get the exact same shot and pay a lot more for the “privilege”. And, oh by the way, while I’m at Walgreen’s, I can drop off my Fed Ex packages as well since every Walgreen’s is now a Fed Ex hub.
Everything is basically about the same three things today – speed, access and convenience. We’re all looking for a friction-free future and Amazon is leading the way in so many different ways that it’s simply amazing. Right now, Amazon is installing automated hubs and pick-up depots in schools, condos and office buildings across the country – they are faster, easier and more convenient than your conventional mail rooms – they’re self-service so they’re around all day and all night long without staffing – and, of course, they’re totally free to the users.
No business or industry is going to escape these kinds of changes and the smart money is on the people that are thinking today about what they will need to do differently tomorrow in order to not just survive, but thrive in the new mobile and digital economy. The question that you need to be asking yourselves is not simply how do I use some of these new-fangled technologies to do my business better – the critical question is how will I use these new tools to do things for my clients and customers that I never imagined that I could do before.
I’ll bet you didn’t know this, but UPS trucks almost never turn left. Every morning the computer develops a delivery route for every truck based on the packages in the load and every possible turn is to the right – fewer accidents, no waiting at intersections for left turns – and, best of all, the routing system is saving them 10 MILLION gallons of fuel a year – yes, I said 10 MILLION gallons.
Tesla isn’t a car with chips. It’s a computer on wheels. Detroit is falling further behind in the battle between steel and smarts every day and the consequences are important for your businesses as well. At their peak, the BIG 3 auto companies used to employ 1.2 million workers – today the big 3 Tech companies employ around 137,000 people – a workforce reduction of almost 10 to 1 – and they generate substantially MORE revenue than the automakers. It’s not clear that we have jobs today for all those displaced workers or that they’ll need office buildings of the same size and scale ever again. And those are just the problems facing the car guys.
Hospitality isn’t much better. Marriott employs 226,000 people and has a market cap today of about $34 billion. Hilton is about 2/3rds of Marriott’s size in terms of market valuation and has roughly 169,000 employees. Airbnb has a market cap of $31 billion – 50% greater than Hilton and closing in on Marriott. How many employees does Airbnb have? Remember Marriott is 226K and Hilton is 169k – Airbnb has less than 4000 employees – about 1/100th of the size of its two biggest rivals combined.
UBER isn’t a better taxi cab company – it was a new two-way marketplace connected by a powerful new platform that completely changed the game. One active UBER vehicle at full utilization replaces roughly 7 private cars in any major urban setting. Think about the implications for the parking facilities in your buildings. Our own cars are used on average about 5% of the time – the remainder of the day they are sitting empty somewhere – taking up space, costing us money, and slowly wasting away. And we’re seeing more and more Divvy bike utilization in the city every quarter.
These changes (which are coming at a faster and faster pace all the time) will have significant and disruptive impacts on the workplace and on the demands that the users of your services and facilities will be making on you and your team. It’s not going to be enough to say that your people are fairly responsive and pretty quick – you need to have a plan that is focused not on how fast you are today, but on how fast your business is getting faster and becoming more adept and – most importantly – how capable you are of anticipating and exceeding the needs and requirements of your tenants and consumers. You need to learn to skate to where the puck is headed, not chase it down the ice.
It’s a little bit like running ahead of a steamroller – on any given day, you can beat it, but you better not sit down and take a break to catch your breath because the thing will roll right over you. Think about this – the rate of change today is the SLOWEST that it’s going to be for the rest of our lives. Tell that to your kids. At 1871, we say that we’re playing the whole game in double overtime and that’s what it feels like every day when you’re trying to keep up with your customers and your competitors.
The expectations of all customers are perpetually progressive, and the movement is always up and to the right. What was great yesterday – even things that were miracles of speed and service – are just “so whats” today and business as usual. It’s increasingly a “what have you done for me lately” world and – if you’re not meeting the demands, you can be sure that there are plenty of others waiting in the wings to step in and fill your shoes. The idea of parity – that “we’re no worse than the next guy” is being blown up by new entrants with new business models that aren’t held to the same old standards and aren’t doing business in the same old way. Traditions these days are – by and large – just excuses offered by people who don’t want to change.
Now I understand that almost no one likes change, but it’s really not change that’s the problem. Changes – when they come – take place in an instant. It’s overcoming the resistance to change – the reluctance to leave behind the old ways – to abandon the things that have worked “pretty well” for you in the past – that keeps us from moving forward. But here’s the hard news – what worked for us in the past – simply won’t cut it in the future – things aren’t going to be a little bit different – the shifts in the ways we do business will make a lot of the old methods and programs – not simply slower or less effective – but essentially meaningless. And, if you don’t do it to yourselves, someone else will promptly come right along to do it to you. So, now’s the time to get started.
We use a simple approach – it’s basically asking 5 questions about your business.
WHO are you serving?
WHAT are you offering them?
WHEN AND WHERE are you providing your products or services?
HOW are you providing those products and services?
It couldn’t be easier, but too few companies today are taking the time to pay attention to these simple questions and to honestly ask themselves how they’re doing in these various areas? That’s the first step in the process. Eat your own dogfood and see how it tastes.
The second step in the evaluation and audit process is also pretty straightforward. Since you can’t be “all things to all people” and you don’t want to spread yourself “a mile wide and an inch deep”, you have to ask yourself what is your competitive advantage. What do you do best or at least better than the rest? Maybe it’s your customers, your distribution systems, your size and scale, special expertise or intelligence, your brand, reputation or network, or maybe it’s your platform.
But we know for sure that it can’t be all of these things and so you’ve got to pick your spots and take your best shots and double down on the areas where you’ve got an edge. All the rest are just commodities and they’re not gonna help you win. But remember that these are also moving targets and changing all the time. I often hear about pocket listings and competitive/confidential intelligence, but I can tell you that in the new aggressively transparent digital world, it’s only a matter of time before everyone you know will know everything you know. Not only will they know what you’re doing, they’ll know just how well you’re doing it and – here’s the real rub – if you’re not killing it, doing the absolutely best job that you can, then they’ll find someone else who can do it better or faster or cheaper or more easily or globally, etc. You get the idea.
Customers and clients are increasingly fickle folks these days and their definition of loyalty is also new. Today, loyalty doesn’t mean much more than I haven’t seen anything better – YET. I realize that that’s not encouraging, but that’s life in the fast lane. No one really owns the customers or clients any more…you can own the moment and the experience, but you have to deliver the goods each and every time.
So how do you compete successfully in a world of more options, more competitors, fewer workers and a finite base of clients. I break it down into what I call the ABCs of the Future. Don’t worry – my alphabet is pretty short.
A & B are for Amenities and Benefits. It’s an absolute arms race and you need to be aggressively in the game. But it’s not just about shiny bells and whistles any more – it’s about things and offers that add real value – save time and money – increase productivity – help your clients attract new talent, etc. It’s about making your properties stand out in a crowded and noisy marketplace.
We’re seeing this with malls already. There are about 1000 malls in the U.S. and half the aggregate value of those properties is wrapped up in ONLY 100 of them. The other 900 malls are in trouble. Retail chains are also over-stored and so they’re all trying to cut several hundred locations from their inventory. As they review their properties, they are looking at the sales numbers for sure, but also because they’re concerned about branding, they want to be in the malls that matter – the malls that have something more to offer – that have a presence and a personality. Places that still pull people in.
Your businesses aren’t going to be much different. I brought some materials today from an 1871 company called LISA which provides easy tenant access to all kinds of onsite personal services. It’s like an automated concierge service for office buildings and it’s just one good example of what’s coming down the line. Another 1871 company, Sparkl, provides on-site, on-demand waterless car washes for a clean car wherever you are. We have other businesses building better systems for package tracking; for automated replenishment of basic supplies and staples; and for automated access control and security.
C is for Community. It’s easy to think of your properties as consisting of an enormous number of individual tenants and clients and that’s certainly part of the job. I’ll talk about data in a moment and the need for what I call “mass customization” which is essential today. But, for the moment, I want to suggest that you look at ALL of the occupants in each of your buildings as members of a connected community – not simply in a negative way – like when the air conditioning isn’t converted over soon enough each spring and it’s a sweat fest – but as a positive population which you can help combine and connect in order to make your properties into special places. Centers for charitable events, places to gather after hours to talk politics, hubs for adult education and for lifelong learners, etc.
Social media – for better and for worse – has made us far more connected than ever (we know other people in our buildings these days that we would never have met in a lifetime before) and you need to build on and capitalize on those channels and connections to help distinguish and differentiate your buildings. It’s more work, but you’ll be surprised how many volunteers will turn up to help you in the process. It’s a chance to see a lot of people when they’re not in pain or being a pain in the ass. In the future, community will be as important a component as concrete in building the lasting connections to your clients that will make the difference.
D is for Data. Data is the Oil of the Digital Age. Your job is to use the enormous amount of information which is now available about just about everything that’s going on in your buildings to design and develop systems to make it easier and less expensive to deliver better and more extensive products and services to your clients. It’s a world where you can actually be all things to each person because we have the tools today to build highly-individualized offerings to millions of people in minutes.
We call this idea “mass customization” and frankly it means that large-scale, general, and basically boring communications of any kind are relics of the past. If a million different vendors from all across the country know my shoe size and my sushi preferences, your “one-size-fits-all” tenant letters and boilerplate solutions aren’t going to get the job done. I want you to make an investment in getting to know me or I’m going to find someone else and someplace else that will. These things take time and effort, but they aren’t about money – they’re about attention and engagement – and those are the new dimensions of connection in the digital world. If I’m not listening or interested, it doesn’t really matter what you have to say.
And E is for Experiences and Environments.
In the new world, no one wants to own much of anything. Ownership and possessions are out; utility and experiences are in. It’s about agility, flexibility and mobility and it has implications which we are just beginning to understand about how workplaces will establish and broadcast their newly-appended identities - how they will signal to the clever and the initiated that this is the kind of place where they need to be and where they need to locate and build their businesses – and how they will assure those same people that – as solid and substantial as things may seem – they’re ready to change and upgrade them in an instant if the need arises in order to keep raising the bar and providing the best tools, technologies and resources possible.
I wish I could tell you that even 1871 has cracked the code on these new questions, but all I can say for sure is that what really matters in the end is not the bricks-and-mortar or the concrete – it’s the culture you create and that you consistently reinforce – that will determine your success or failure. This business of taking care of people is all about a moment of inspiration and creation – followed by a lifetime of maintenance – and that’s what determines who lasts and who succeeds even in times of radical change.
At 1871, we’ve built an air and an electric aura of tension, excitement, enthusiasm, and energy that permeates the place and one that’s apparent from the moment you enter our doors. We believe in hard work, not wishful thinking, and it shows. You get what you work for, not what you wish for.
And we believe in one more thing as well…it’s not big money or fancy cars or expensive houses that will ultimately make us happy … it’s finding something to do every day that we can be enthusiastic about. There’s no greater pleasure or privilege. Thank you.