Where is the PropTech Sector on the Hype Cycle?
In the Technology Industry, we understand the hype cycle.
The principle has been developed by Gartner and shows the theoretical lifecycle of a technology – from birth to death. It charts the perceptions/expectations of the technology by the market, over time. It is a widely regarded but some might say simplistic way of any form of strategic decision making. However, there does seem to be evidence of technologies that have followed its path accurately.
Figure 1 – The Hype Cycle - source Gartner.com
Whilst the hype cycle shows general technology areas under an expectation spotlight, a more commercially focussed way of showing the progress of a sector might be the recognised industry/product lifecycle of:
This charts the way that organisations can understand expected sales and profitability.
Figure 2 – Industry Life cycle characteristics – source Wikipedia
To answer my opening question however, Proptech requires a hybrid of the above with more measures thrown in. Things like; procurement questions and weighting, VC funding by region (actuals and growth trend), M&A activity, supplier consolidation/decline, contracts let and value created – all need to be brought into the mix.
Evidence of M&A activity and the consolidation of organisations that make up the industry earlier this year was the point that made me think this topic needs to be debated. Is the sector demonstrating a maturity that exceeds others? (perhaps those involved in FinTech can comment here?).
Certainly, the open data sharing requests, ‘users come first’ and ‘for the greater good’ attitudes witnessed in Proptech could lubricate blockages that ordinarily exist. Inhibitors around protectionism, 'what does the contract say' and other low margin behaviours could be removed and advance the value to clients and the industry in quick time.
But does that mean that enlightenment has passed and stabilisation and decline are just around the corner? i.e. we quickly get to established players saturating the market and who then implement fast
For all us old timers, who have worked in the sector for decades, this all needs to be considered in the undoubted acceleration of ‘cycles’. Things seem to be a ‘thing’ for ever shortening periods of time. The purported Industrial Revolutions are evidence of this.
Entering the 4th Industrial Revolution upon which the Proptech sector is basing a great deal of its claims, with artificial intelligence and machine learning and massive levels of process automation, its difficult to see what lies beyond this and that the end is nigh and is pretty much being created right now.
Most Proptech articles and viewpoints are focussed on the forming/storming stage of the sector’s life.
Figure 3 – Industrial Revolutions - source LinkedIn
My focus has always been on the norming/performing stages and this opinion piece is focussed on the adjourning stage.
Viewed under a further lens, all told, Proptech is a supply solution to a demand challenge. Well, what if the demand changes? i.e. the whole sector is disrupted by two not unreasonable things occurring:
- Global recession – leading to low/zero investment and cautious business models.
- Wellbeing and activity based working challenging orthodox business models and the concept of ‘work’ changing. This goes well beyond space as a service and the concept of the current workplace having little/no value.
I’m sure there are more.
I’d be interested in your views on how to measure this area and have set up a mid-week semi informal survey/poll here: with options around a balloon analogy:
- Just out of the wrapper (hey let’s blow this thing up)
- Being inflated #1 (lots of room for growth)
- Being inflated #2 (stretching capacity, possible burst)
- Tying a knot in it (getting value from energy input)
- About to pop (when placed under any strain)
- Already letting air out (a slow decline until the next party)
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