Leadership

2024's Top 10 New Trends In Homebuilding: No. 2 Gen A.I.

Gen A.I. could put machine learning to work in a process builders are already working through to remove time, money, materials waste, policy burdens, and other "costs" a consumer household does not value and only does, develop, and build more precisely what consumers do value.

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Leadership

2024's Top 10 New Trends In Homebuilding: No. 2 Gen A.I.

Gen A.I. could put machine learning to work in a process builders are already working through to remove time, money, materials waste, policy burdens, and other "costs" a consumer household does not value and only does, develop, and build more precisely what consumers do value.

Together with
November 20th, 2023
2024's Top 10 New Trends In Homebuilding: No. 2 Gen A.I.
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Some days, we start with a digression. Today is one.

Around this time of year, many years ago, the CEO of the firm I worked for challenged every one of my managerial colleagues and me to come up with the best ideas we could to improve our respective lines of business the following year.

Be bold. Don't hold back. Whatever it takes to make more value for our customers in what we do, and to do it with greater competence, and to sustain its impact, I want to know," he instructed us, with further guidance that he wanted three-to-five business- or operational-transformative proposals by the end of the following week.

At the end of the next week, each of us stood and elevator-pitched our respective brainstorms while he stood at a big flip pad on an easel, recapping every idea in strategic shorthand, capturing the gist of each. When the last of us finished, there were about 60 initiatives on those big sheets, which he then took the time to quickly review again, and out loud, let his support and encouragement for their direction and merit be known to us all.

And then, he said:

The good news is, you have all the resources you need right now to accomplish these ideas, and it's up to you to manage just how you'll do that."

Now, of course, every one of our best ideas to improve the business from its current state of strategic and operational status quo came with a budgetary increase in our own minds. Each new initiative would warrant a bump up in resources, people, etc., because weren't we – as we'd been thinking about it – tapped out merely "keeping the trains running" at their current levels? We would need to add to our wherewithal if we'd be expected to pivot and start new programs and go after new market opportunities.

His punchline was the first of many valued lessons in leadership. One was the idea that "not doing" work we were currently doing that our customers value less might allow us instead to do work that they'd value more, driving an overall business improvement. Another was that his conveyed belief in our capability – despite the obvious constraint of resources – came through as a vote of confidence and pride and expectations that we could be our best selves.

This is by way of recognizing, as many have before, that generative A.I. will likely prove out as a residential build-cycle game-changer by the end of 2024 and will rank among residential real estate development and construction's Top 10 New Trends In Homebuilding.

Based on work by the McKinsey Global Institute (MGI), we believe that gen AI could generate $110 billion to $180 billion or more in value for the real estate industry." – Generative AI can change real estate, but the industry must change to reap the benefits

Above all, it will take leadership to get the domain's critical data read into gen A.I.'s knowledge and reference base and to get it put into action and implementation and adoption and embrace among team members. That's the case if for no other reason than that they're pretty sure they have more than enough on their plates right now, and are equally sure the way they're doing things now is about the best way they can imagine getting them done. And if they're pressed to come up with ways to improve their business and improve value for customers using generative AI, they're likely to think that it'll cost money and other added resources to do that.

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Writ large, the opportunity around gen A.I. is to put machine learning to work in a process builders are already working through to remove time, money, materials waste, policy burdens, and other "costs" a consumer household does not value and only do, develop, and build more precisely what consumers do value.

One way not to cultivate the leadership fitness and resolve it will take to get all team members to draw on the resources they currently have – or less of them – and spark their own fullest capabilities is to continue sounding the trope of homebuilding and residential development as "backward" industries.

For example, vis a vis the A.I. challenge:

One industry in which AI’s transformative power has been missing, however, is real estate, a historically slow adopter of new technologies."

Now, tell a group of business owners and leaders whose firms may likely clear low-20% gross margins in an off year ahead that their business models are broken, that they date back to "the dark ages," and that they're at serious risk of being disrupted.

Tell them this despite there being no viable, scalable, nor sustainable alternative to doing what they do – which is to almost universally produce and market shelter, protection, sanctuary, health, lifetimes of memories, and peace of mind, something few can live without, and even fewer can flourish without.

Tell them this despite the capital they've toiled to build up in trusted relationships with land sellers, lending and investment finance partners, materials distribution channels, local contractors, product manufacturers, real estate sales representatives, design and marketing partners, and their own team members. That secret-sauce trust capital in those relationships contains the difference between face values and values that extend deeper and higher and farther in every way.

Tell them this with a straight face, as consultants, advisors, academics, experts, so-called disrupters, and others have been doing for decades. Let us know how that goes for you.

McKinsey analysts, in all of their expert wisdom, prescribe the following as one of "Seven pivotal actions real estate players can take to realize the full value of gen AI."

Align the C-suite around a business-led road map tied to a specific part of the real estate value chain

CEOs who want to lead in gen AI can prioritize technology, onboard new internal capabilities, and organize for agile delivery just as top start-ups and tech-native companies do. New ways of delivering technology are essential not just to gen AI delivery but also to ensuring modernity and staying ahead of the strategic curve. Winners are willing to experiment, iterate, and self-disrupt.

You can spend quite a bit of time trying to attach practical, real-world meaning to all of those words above, or you might just try the exercise the CEO of my employer almost 30 years ago. Get your folks to come up with their best three-to-five ideas on what they can do to improve on their customers', colleagues', and their operations' experience with A.I., and then support their internal capability to put those ideas into action.

A.I. as it relates to recruiting has been super basic," Thomas Carpitella, CEO of The Builder's Daily partner FTS. "There's not a ton of knowledge in the space unfortunately at this stage – but if you check back in, in 12 months, I should know more."

ABOUT THE AUTHOR

John McManus

John McManus

President and Founder

John McManus, founder and president of The Builder’s Daily, is an award-winning editorial, programming, and digital content strategist. TBD's purpose is a community capable of constant improvement.

ABOUT

Staffing and recruiting done right. Fast Tracking Solutions specializes in delivering top talent in accounting/finance, construction, and technology operations.

Website

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