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What you do does not change, how you do it does. I’m of course speaking about adopting new technology regarding how you perform property valuations.
Adopting new technology can be intimidating. It may require us to change or even abandon processes that today get the job done and work well enough. So why change and risk wasting time and money? In fact, there are so many reasons for not adopting new technology that countless books have been written on the topic of “change.” One that is quite famous is titled Crossing the Chasm by Geoffrey Moore. It talks about early adopters and late adopters and why people do and do not adopt high tech advancements. It states, in essence, that no matter what the technology, there is always a small group of people known as the innovators or early adopters that are willing to try new things. The rest of us will only try these new things after the early adopters have proved that it works and there are true benefits to making the change. In other words, we wait for the early adopters to take risks before we are willing to adopt it. It’s human nature.
The pitfall to waiting is that you don’t get the big return on investment that early investors and the early adopters get. You miss out on the competitive advantage and the opportunity to make more money. It can literally be the difference between a thriving business and one that is just trying to survive.
So when is the right time to adopt new technology? If the industry is evolving slowly, “when” may not matter. This is similar to investing in a stock that is increasing in value very slowly. However, if the industry starts to undergo rapid change, adopting (i.e., investing) in the new technology as early as possible will provide the highest profits and the greatest opportunity for success.
The key then is to recognize the changes that are coming and pick the new technology that will give you the biggest advantage and highest profit. For example, when digital cameras were introduced, it would not have been wise to invest in more film cameras. Another example where adopting a new technique was literally the difference between winning and losing is in the sport of high jumping. In the early 1900’s everyone jumped over the bar with a technique called the Western Roll. They literally rolled over the bar. In the 1930’s the jumping technique had advanced to the Straddle jump, where they kicked up with one leg and straddled over the bar. By the 1968 Olympics, the gold medal was won by jumping over the bar backward with a new technique now known as the Fosbury Flop. The point of this example is that if you did not adopt the changes (advances) in jumping technique, you would no longer be competing for a gold medal and were probably out of the jumping business.
This last example also helps illustrate how to recognize when to adopt a new technique or new technology. As I stated in the beginning, the guiding principle is this: “what you do (in this case jumping) does not change, but how you do it does.” When the “how” technology improves “what” you do – adopt it as soon as possible for the greatest return on investment.
We’ve seen this kind of change in the appraisal industry numerous times. Remember, the transition to digital cameras from film cameras and 24-hour photo labs? While all appraisers now use digital photos, those appraisers that started using digital cameras early realized the most savings in materials (film and lab fees) and time – it was a huge competitive advantage over their fellow appraisers who continued to use film and the photo lab. That early adoption advantage is now gone as everyone in every industry captures photos digitally. Anyone who was late to this transition most likely lost money on lower order volume. The lesson here is “what you do” (take a picture) did not change, but “how you did it” (took the picture using a digital camera) did and it made a big difference.
If we look at the area of appraisal inspections, early adopters of first generation, mobile inspection apps experienced some increase in productivity. Now, the next generation of inspection apps is changing the industry yet again. The first apps made you fill out the 1004 form in the field which was inefficient because what you really wanted to do was collect inspection data – not fill out a form. The second generation is focused on the inspection process and only deals with data relative to the inspection, a clear advancement in efficiency by changing how you do the inspection.
Today, there is a push to use third-party inspectors to collect the data. Will you adopt this change or continue to collect the data yourself? Or will you hire a trainee to collect the data for you? Either way, first generation inspection apps are dead because you’re not going to pay anyone to fill out a 1004 form in the field on their iPhone. You want high efficiency when you’re paying the bills.
The key to making this decision and others like it is remembering that you are in the valuation business. You produce and sell property valuations – that does not ever change. What does change, is how you produce property valuations. If you always aim for producing valuations better, faster, cheaper, it’s hard to go wrong when selecting new technologies to invest in.
Being an early adopter may look risky, but waiting for the majority in a rapidly changing environment may be even more perilous. Don’t sit comfortably in yesterday’s armchair waiting for the crowd to come and get you. The innovators and early adopters that are confident enough to adopt these new technologies are reaping the benefits today. And they are setting the standard for the future of this industry. Make sure you’re not straddling over the high bar when everyone else is doing the Fosbury Flop and competing for a gold medal.
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