One of the topics in the built sector that seems to require infinite clarification: digitalization.

There's two versions of digital transformation to keep in mind for any industry confronting modern tech:

  • digitization: the application of digital techniques to existing problems
  • digitalization: the reframing of problems, opportunities, business models and whole social frameworks, through the evolution of digital technologies.

In the real estate space, digitization would include online property brokerages, where, instead of on printed notices in brokerage windows, you can see properties for sale listed via a website. This existed before the information age, and digitization makes it better for everyone involved without changing the essential dynamics very much.

Digitalization of real estate, on the other hand, would include something like AirBnB, which never existed before the info age, and is hard or impossible to imagine without it. And it's also the inevitable direction of all digital transformation: digitization is just a temporary stage, of which many or all signs will eventually disappear over time.

Things change a bit, and the present has adapted; then they change a lot, and the present has become the past.

You can't make this distinction too often, in explaining digital change in real estate - even if it's not new - because so much of what is going on is digitization presenting itself as digitalization. Why is this so prevalent?

It's in part because the implications of digitalization are scary for existing real estate actors: so they either fall back to feeling like the understand nothing, or hope and claim that digitizing what they have is the future and it's all under control.

The truth is the digitalization is scary not just becomes incumbent actors may lose their roles, or margins, or returns because of new actors and biz models. It's also scary because it's truly unknown and unknowable what is coming next. No-one knows what to do, and the costs of doing the wrong thing appear to be, and often are, enormous.

The way to engage with this is to use the technique that Jeff Bezos has used to great effect: to understand the bigger picture, and within that to make a ruthless differentiation between what will change a lot, and what won't change very much, over a given time period.

This doesn't offer a roadmap for what to do, or even a strategic guide, but it does create a framework for learning, planning and doing that, I think, is useful enough for actors of all sizes.

Enigma encryption-machine | In case of emergency, run around with your hair on fire shouting 'digitalization is coming!
In case of emergency, run around with your hair on fire shouting 'digitalization is coming' | Photo: Mauro Sbecego

In the bigger picture, the information age so far comprises three universal features:

  • Computation: everything that can be computed will be computed
  • Connectivity: everything that can be connected will be connected
  • Information: everything that can be known will be known.

Not only will these features arise wherever than can - universally - we can assume that the cost for all of this will eventually, at least marginally, be zero.

Now, individuals and society can and may need to put barriers in the way of these, and not all of it has arrived, but this is the framework that the leaders of the info age have both build, build on and build for.

What this framework helps us to, in the built and built design professions, is think and act with something like x-ray vision. Those phenomena are not going to change in the coming decades - but any one instance of them is likely to change a lot.

Here's some examples that are upcoming for the built professions:

Universal Computation: spatial optimization, energy, life-cycle assessment, cost modelling and more become real time and free

Universal Connectivity: accounts, then CRM, then ERP and other management tools go to the cloud

Universal Information: sensors start producing reliable data that really matters to performance, including parking, energy, access, space use and more.

So, for real estate and the built professions, if you want to engage with digitalization, these are useful starting points.

1 distinguish digitization from digitalization
2 plan responses to digitalization in the context of the three universal features of the information age - Compute, Connect, Info.