Industrial shift

In the first industrial revolution, the UK economy shifted from agriculture to manufacturing. During the past 50 years, a similar shift was made towards services, which have risen sharply in the composition of labour force activity, (1961: 48%, 2011: 81%). Over the course of the coming decade we will see a new shift to digital services. A recent report by Dell examines our preparedness for this change, with Michael Dell concluding: ‘In the near future, every organization will need to be a digital organization, but our research indicates that the majority still have a long way to go’. 78% of business leaders stated that digital transformation needs to be more widespread in their organisations with 1 in 3 concerned that they will no longer be able to service customer needs in 5 years without transformation. A staggering 91% felt held back by the following persistent barriers: data privacy, lack of budget, lack of skills, regulation, and an immature digital culture. Three out of five of these issues are legacy challenges, whereas two are about governance. The big challenge for all of us in the property industry, whether we are investors, advisors, or operators is to transform our businesses quickly enough, such that new entrants unburdened by legacy issues don’t see real estate as fertile ground for disruption.