- A true reset occurs when there is a 30-35% shift in consumer behavior.
- During COVID-19, online buying rose from 15% to 25% in just eight weeks.
- A typical office is modeled after the first-ever private office, opened in London in 1729—proving that the business environment is ripe for a reset.
As humans, we tend to think our experiences are unique and idiosyncratic. In doing so, we ignore a clear pattern of historical cycles that “end up resetting the entire planet,” said keynote speaker Leonard Brody at the REALTOR® Broker Summit on June 29.
It’s happening right now, Brody said, as we move through the COVID-19 pandemic, yet fail to see how it is connected to other “definable, repetitive, and predictable patterns” that have happened over the course of the last 300 years. By looking back to understand these patterns and their cadence, impact, and leadership opportunities, brokers can position themselves for a more successful and confident business life in a post-COVID-19 world.
What Does a Global Reset Look Like?
The first global reset occurred after the Industrial Revolution, said Brody, which was “the moment where technology and human nature merged for the first time at scale.” The result of this merge was a massive shift in almost every basic marker of humanity—from life expectancy and infant mortality to GDP growth and organized work. In the nearly 300 years since, we have witnessed a cyclical pattern of similar resets, including the Spanish Flu, the Great Recession, the Dotcom bubble, and multiple post-war eras.
While the world is ever-changing, Brody said a true rest occurs when there is a “30-35% shift in consumer behavior and how we communicate across the globe.” While political movements can cause significant local change, global resets occur from four primary causes: financial crises, war, technology advancements, and medical needs or advancements.
The Two Stages of a Global Reset
In each reset, there are two definable stages:
- The devaluation stage, which lasts for 9-18 months
- The growth stage, which lasts for 3-12 years
Because the devaluation stage is typically so jarring, companies tend to spend too much time there, Brody said. Even as there may be opportunities for them to reopen or reframe their businesses, they tend to deploy cost-cutting measures and keep a smaller labor force. In other words, they choose safety and survival even when they could be embracing opportunity and growth.
In the case of COVID-19, Brody says, “I’m a believer—and there is pretty good evidence—that the devaluation cycle has already occurred.” Instead of focusing on how to survive, then, today’s companies need to prepare for the inevitability of growth. A few corporations, Brody stresses, did this very early on in the pandemic and are already seeing colossal successes.
While many airlines cut down on their flights, for example, American Airlines began to open new routes to destinations with high resettlement rates, like Austin, Texas, Dallas-Fort Worth, and Miami. Their investment paid off and they are continuing to add even more routes in Austin as rates of business and personal travel continue to rise.
And Amazon’s conscious decision to focus on growth amidst the uncertainty is clear when you look at their employment numbers; more than 50% of their employees joined the company in the last 14 months, says Brody. (It’s important to note that this rate of new employees can also be partially attributed to the company’s high rate of turnover in 2020.)
What Permanent Changes Will Come From the COVID-19 Reset?
It may be tempting to say that the changes seen as a result of COVID-19 are unprecedented. Brody says, however, that “resets shine a light on the flaws and the solution. They tend to drag the solution forward.”
One example he gives is the rise of online consumption. While companies have long been buzzing about e-commerce, online buying as a percent of total purchases had grown from just 5% to 15% over the last decade, says Brody, but during COVID-19, online buying rose from 15% to 25% in just eight weeks. And that behavior is likely to stick. According to new data from McKinsey, 76% of Americans changed their buying behavior during COVID-19 and intend to continue using their new buying methods post-pandemic.
A second expected change is the office environment. Today’s typical office is modeled after the first-ever private office, opened by the East India Company in London in 1729—proving, says Brody, that our business environments have long been ripe for a reset. In the future, he posits that true and traditional work will occur at home, and a company’s office will be “a den of socialization and innovation,” or a place for social gatherings, brainstorms, and team-building.
The Potential Rise of Fractional Homeownership
Within real estate, the light that is being shone because of COVID-19 is not simply on the lack of inventory, but on the rising cost of land, materials, labor—and the ensuing lack of affordable housing for most Americans. Those in real estate and those who wish to own real estate would be smart to pay attention to blockchain technology, Brody says, which could lead to the rise of fractional homeownership.
There is an assumption among current consumers, Brody says, that they need to own 100% of their home. But there is another way, which would allow homeowners to buy full control of their home, without paying for 100% of the property.
Using a condo tower as an example, Brody says that 40% of all units could be sold to a blockchain group of investors who are free to trade their ownership stakes on their own market. Meanwhile, the occupiers of the individual units would pay for 60% of their unit, and have full day-to-day control of things like decor, repairs, and even the decision to buy or sell. Upon sale of the property, the occupant-owners would recoup 60% of the capital gain, and the other 40% would go to the blockchain investors.
This new form of homeownership “is going to drive affordability in the home going forward,” says Brody. And it could also create a new form of real estate investing, via “a residential real estate market that’s as liquid as the stock market itself.”
Leadership Lessons for Brokers Coming Out of COVID-19
Regardless of whether we ultimately see these trends come to fruition, it’s true that flaws in retail shopping, in-person officing, and homeownership affordability were visible well before COVID-19, and may be overdue for major disruption.
Quoting speculative author William Gibson, Brody reminded the audience, “The future is always here. It’s just unevenly distributed.”
By viewing COVID-19 not as an unprecedented event, but as part of a cyclical and historical pattern, brokers can embrace the uncertainty of this moment and lean into a bolder and more ambitious vision for their companies.