Leadership

Tech's Disruptive Innovators Face Comeuppance: What To Learn

A wave of layoffs, business retrenchments, and shut-downs of once-vaunted game-changers steamrolls through Silicon Valley tech firms. Resist the urge to gloat and say, 'I told you so.'

Leadership

Tech's Disruptive Innovators Face Comeuppance: What To Learn

A wave of layoffs, business retrenchments, and shut-downs of once-vaunted game-changers steamrolls through Silicon Valley tech firms. Resist the urge to gloat and say, 'I told you so.'

November 17th, 2022
Tech's Disruptive Innovators Face Comeuppance: What To Learn
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It's so tempting, but don't succumb to it.

If you work strategizing, running, managing, supervising, or as a team member at a homebuilding operation or one of its umpteen umbilically dependent trade, distribution, manufacturing supplier firms, it's so tempting right now – even in the face of a brutal market and a harsh outlook – to feel a welling up of vindication, pure and raw.

Why?

After more than a decade of taking a thrashing as an industry sector poster child averse to change and "unimpeded by progress," a slew of players who got all the glory and recognition as the new paradigm of innovative disruptors has entered their "emperor has no clothes" vortex.

  • US tech companies have laid off 33,000 people since October - Quartz
  • Big Tech pulls back on big gambles - Morning Brew
  • Amazon Offers 'Voluntary Severance' to Employees Who Resign Amid Ongoing Layoffs – Gizmodo
  • Activist Investor TCI Calls on Google Parent Alphabet to Slash Costs – WSJ
  • Never even mind the spreading mess that is crypto

What's more, the axe is falling at all of these disruptive innovators not just on people, but on some of the most vaunted, nurtured, most game-changing initiatives they'd promised transformative impacts from as they evolved.

Word is that as part of its layoffs, Amazon's cost-cutting pivot is said to be hitting its "AI assistant, Alexa. That division has an operating loss of more than $5 billion per year." Google/Alphabet, meanwhile, is under pressure to cut back on the  "Other Bets division that incubated 'moonshot' projects like Waymo, the autonomous vehicle company. That Other Bets unit brought in $3 billion in revenue over the last five years, but incurred $20 billion in operating losses."

Now, the temptation is this: to look at this comeuppance – hitting precisely the organizations everybody's been holding up for a good long stretch and challenging homebuilding firms, "why can't you be more like these innovators?"

They are the future, the narrative said, over and over. They don't ask for permission; they beg forgiveness, but only after they've changed the game and made people say, 'wow' and set their imaginations spooling up what might come next.

Homebuilders, meanwhile, were regarded by Wall Street, by major consultancy firms, etc. almost universally as the laggard when it came to modernizing for the present and future of residential construction and real estate.

So, the temptation now – as a cyclical and secular and structural shock convulses up, down, and all around through an economy unaccustomed to and highly vulnerable to a double-whammy of high inflation and high costs of borrowing – is to feel vindicated.

But succumbing to it, and saying it, "I told you so," is not something that's in the nature of very many homebuilding leaders. They know better to snipe at the hands that feed them. For one, the decimation going on at these firms – taking out high-paid knowledge workers by the thousands – is a direct hit on present and future demand for new homes.

They know better, as well, that the real focus, the real challenge, the real opportunity for them is an existential one.

One way or another, every human being whose livelihood springs from the business and work of making new homes and neighborhood is part of a generation that has no choice other than to innovate.

Everyone on every payroll and on every shareholder roster and on every end of every contract in the homebuilding and residential real estate development and investment ecosystem is part of a current generation for whom the future has arrived ahead of schedule.

This current cohort of leaders, stakeholders, frontliners, team members up and down organizational charts, and their entire tree of partners face a now moment of decision, conviction, commitment, and action.

  • The necessity to build affordably
  • The necessity to build buildings and communities that impact climate positively
  • The necessity to tap and attract the super talents among 20s- and 30-somethings.

Necessity is driving the need for innovation now, not discretion, not preference, not nice-to-have experience ... none of these are motivators enough in isolation, save necessity.

The wrong message from the stumbles and face-plants and embarrassments among Big Tech organizations would be, "there, I told you that would happen eventually."

The right message is what we can learn from what's hung in and hung on as valuable and structurally impactful from these gigantic experiments in free-money gone haywire in incubators and accelerators and Skunk Works and learning laboratories. Much of what's best about what these innovators brought to life during the free-money period amounts to sturdy prototypes or crude early models of something really consequential.

For homebuilders, solving households' – young adult, less young adult, early middle-, middle, late-middle, late career, early post-career, and later life – cost-of-living and cost-of-value crisis is a non-negotiable, not just through high Fed funds rates, but for the decade to come.

The other non-negotiable this current generation of homebuilders and their partners have no choice other than to wrest improvement from is the negative climate impacts of sourcing, building, and operating our homes.

This is not woke. This is not telling you what to do or trying to sway you from what's more important. This is as common sense and as basic economics as you can get.

It's an area you can look at another old-school manufacturing culture's investments, commitments, and imperatives and compare theirs to yours: the auto industry.

Electric vehicles are taking the US auto industry by storm as new models are introduced to the market, appealing to a broader market of buyers.
In the third quarter of 2022, electric vehicle sales continued to outpace their gas-powered predecessors, with a new record of over 200,000 EVs sold in three months.

Further, McKinsey reports:

EVs, which now represent a small portion of vehicles sold, are at a tipping point and are responsible for much of the enthusiasm within capital markets. In the second half of 2020, sales and penetration of passenger EVs accelerated in major markets despite the economic crisis caused by the COVID-19 pandemic. McKinsey projects that worldwide demand for EVs will grow sixfold from 2021 through 2030, with annual unit sales going from 6.5 million to roughly 40 million over that period.1

Investment in R&D necessary to bring EVs to where they are now – rapidly being embraced by a willing and enthusiastic car-buying consumer – was huge. Homebuilding firms normally don't park that type of R&D into their balance sheets.

In this case, however, this generation of people in homebuilding and partner companies might do well to push for that R&D money.

So resist the impulse to blurt, "I told you so" to those who've been badgering and hammering as to why the residential construction is still so unevolved. Your better angels will be to start right now at doing what you do best. Inspire and motivate your teams to try new things to make homes better and to better make them more affordable to those for whom shelter is not a choice, but a necessity.

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.

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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.

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