Dave Marcinkowski is a Founder/Partner in Madera Residential and Quext, focused on creating smarter, healthier apartment communities.
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Those invested in the multifamily industry are fans of the proven. They stick to the status quo. And while that means doing what works, it also makes it hard to find what’s next or what’s better and push the industry forward. That means the bar for what’s radical is very low, and that makes multifamily an industry that is ripe for disruption.
That’s not to say there aren’t innovators in our space. There are small companies doing interesting things, but too often these startups are bought by larger organizations. And often, despite best intentions, these unconventional ideas or approaches to problems struggle to find a place inside a legacy product offering. That means these ideas either change radically, or worse, they die.
How do we create innovation that sticks? I have a few ideas.
Start by solving actual problems.
Innovation is a challenging process, but it starts by solving actual problems. Does this sound familiar? You attend a conference and one of these big groups presents its new ideas. During the presentation, you begin to think, “Well, what does that do?” Or, “Well, that’s great, but it needs to do this.” Too often, this “innovation” is created in a bubble and then sold through motley, meaningless jargon. This happens because the information isn’t solicited from the industry’s actual operators. We aren’t asking them where their struggles are. We aren’t asking them where they are seeing points of friction. If we did, I know they’d tell us, and that’s when we could start really innovating.
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Make it easier to innovate.
Growth can make it hard to innovate. For large organizations that are leaders in their space, they have spent years building up massive data infrastructures. In our industry, that includes things like accounting, leasing and maintenance data. It’s a behemoth data structure that just keeps getting bigger. In a very real way, this data is their product, and if they are not careful with their database, then the entire structure can collapse when new systems are added. This disincentivizes them to innovate, so they stick to incorporating new features but not making changes to the full product. Alternatively, they use the product independently and attempt to support it with their extensive sales groups. These sales groups focus on selling a good idea and not continuing to develop new systems.
That’s one reason innovation is so difficult in this industry. Another is related: Because they control so much data, it virtually requires any small company that wants to innovate any aspect of the multifamily leasing or management process to work with them. And for the privilege of integrating with these platforms, small companies have to pay a hefty sum, often in the mid-five figures for each platform. For these small companies, having to budget more than $100,000 a year to integrate with the leading technologies in our space is difficult at best and impossible at worst.
We need to remove these kinds of barriers if we want to create an environment where innovation is possible.
Find like-minded individuals to help you push the envelope.
It used to be that innovation happened in garages and basements , a couple of folks with a big idea plugging away. And it can still happen that way. More often, though, innovation is a collaborative effort. The organization I work for has reached a point of success within our real estate venture that we can invest back into our organization and engage with some of these industry challenges. We are quick learners, and the challenges are not necessarily difficult to understand. But to be effective, we have to find the right people who are open and willing to be bold and inventive. Once you have the right people, then it’s about finding that great idea. As operators in the multifamily space, we have an endless list of great ideas. You have to find people who are willing to turn those ideas into a solution that you can market. We’ve done that, but we can’t be alone.
This is an industry that’s ripe for innovation. We just need the people and companies willing to do it.
Forbes Real Estate Council is an invitation-only community for executives in the real estate industry. Do I qualify?