Brad Inman, CEO of HomeGain opened the recent Real Estate Connect conference in San Francisco with film footage of the Apollo space mission. He said it takes "passion, money, and brains" to succeed in space and in real estate industry innovation.
Comparing the web and e-commerce to the Apollo space mission in terms of technology; he says the web was made for people addicted to adrenalin and attention. It was a rather wild start but in March 2000 it all blew up. There were some rather silly plans and plenty of capital to fuel the 'irrational exuberance.'
The challenge now is to take the traffic that has amassed and drive it and find ways to monetize it. Some the brains left the industry when capital dried up but others still have the passion and a huge commitment to change the real estate transaction.
"We're here to improve this snarly transaction.... we will never make it easy... but can't we make it better? We can help the industry to better serve the consumer," Inman told the audience at the Real Estate Connect conference.
Ward Hanson, author of 'Principles of Internet Marketing,' is from the Stanford Graduate School of Business. In his presentation, 'Fork in the Road: Brand Enhancement or Customer Confusion,' he said we are at a 'fork in the road' because we have solved many of the easy problems of the dot com world.
The first stage of web site development was just getting a web site... then maybe we added product information, support documentation, some flash animation. Now we are dealing with real time data-inventory, shipping records, dealer locators.
Now it is time to think about brand marketing vs. individual marketing. The basic branding solution is control through branding. Individual level marketing is not possible. A company relies on branding to develop a place in an individual's consideration set, available whenever the purchasing cycle occurs.
In real estate we may have four to seven purchase occasions. You need to be able to attract the purchasers. Branding, for the most part, is wasted most of the time, Hanson says, and it looks like a lot of wasted money.
You need to see customers as connections -- you are not selling soap, you are selling hope. E-mail is what drives Internet usage, not in volume but in frequency, importance, and value. It has been very common for competitive pressure generated by a new technology to lead to substantial improvement in the old technology, so that the new one establishes its superiority more slowly.
Hanson quoted his colleague Nathan Rosenberg who wrote in 1984, "The adoption of a new technology is often critically dependent upon the availability of an entire supporting infrastructure..." Hanson feels we must use the connections to improve products, services, and support and create a strong word of mouth loyalty and expanded purchases. He closed his presentation by saying that 'permission skills, privacy skills, and real time skills.... all of these things take a very strong infrastructure to pull this off."
Peter Sealey, of the Haas School of Business, UC Berkeley, talked about Simplicity Marketing. Sealey believes the real birth of the Internet will be 2001, not eighteen months ago. Why? Because new technology starts off with high expenses and a low rate of return, just as we have seen. It eventually reaches a point of diminishing returns.
We now have the challenger technology versus the incumbent technology. What is the track record with disruptive technology when it comes on the scene? Sealey says there is a time lag, there are too many competitors, and there is incorrect first use.
For example, the steam engine was originally created in 1770s for coalmines and later used for textiles. Although electrical power was available in the 1880s, there was a major lag for 30 years and in the 1920s practically every town had a company making automobiles.
All of these problems exist in the Internet now. Funding was done for companies that were going to replace bricks and mortar. Now we are working out from the backend. The new technology repeated every mistake.
Although some youngsters from Palo Alto created the Internet - version 1.0, the Fortune 500 will define the Internet - version 2.0 and the Internet version 3.0 will transform the concept of the corporation (wireless, etc.)
The Internet slashes multiparty transaction costs and demolishes the limits of time and distance. The concept of the corporation will be redefined. There will be alliances, joint ventures, partnerships, and outsourcing. Companies will only do their key competency and outsources everything else.
There will be no boundaries, we will have frictionless transactions. The good news is that we have a shot at doubling productivity increases.
Dr. Tom Kelley, General Manager of the award-winning design and development firm IDEO and author of "The Art of Innovation" believes that everyone has the ability to foster creativity. His company hired an outside research firm to interview their dozens of clients to learn their needs back in the mid-80s. At that time innovation was surpassed by speed and expertise. Today, innovation is number one!
IDEO has been involved in the design of over 4,000 products and services, including the Apple mouse, Polaroid's I-Zone instant camera, and the Palm V. Business Week magazine says that innovation is what makes the best performer companies tick and it is what will let them survive. Innovation, Kelley says, begins with an eye - their concept is to watch real people and see where they stumble. Find the customer's confusion, and then improve the process.
Kelley talks about how IDEO helped design the portable Heartstream defibrillator and made it as simple to use as 1-2-3. Brightly numbered markings on the equipment direct the user: 1. turn it on. 2. put pads on patient... a diagram shows where to place pads. 3. put yellow connector in slot - it lights up, beeps and flashes. It takes only 6 minutes to save a person's life.
Kelley mentioned the book, 'The Experience Economy: Work Is Theater and Every Business a Stage' by Pine and Gilmore and cited the birthday cake as an example of an experience. Mom can bake a birthday cake from scratch or a mix, she can go to the bakery and pay twice as much and have it 'customized' with their decorations, or she can bring the birthday celebrants to Chucky Cheese for a birthday 'experience'. He cites Disney and Las Vegas as the ultimate in the experience economy.
When IDEO helped Amtrak design the 'Acela' high-speed train experience, they broke the experience/process down into learning, planning, starting, entering, ticketing, waiting, boarding, riding, arriving, and continuing, not just ticketing.
When they helped Steelcase design a better furniture showroom, they found a way to get office furniture buyers involved by creating a sandbox with mirror image of chair with the guide that shows how the chair works. This improvement allowed the buyers to really compare the furniture instead of just sitting in it. He says that when verbal language and body language disagree, always trust the body language.
Kelley says office space is the final frontier - it is the most powerful tool for affecting culture. Physical space is a very powerful tool. Dreariness from the reception area to the research lab destroys the spirit.
Pat Rioux
