The Curse of Experience, the Real Estate Edition

I was recently at a real estate conference for a major brand watching a panel discussion. I’m leaving names out because it’s not important to the question/point I’m making and don’t want the distraction.

The panel was a younger moderator (in his 40s) and two industry executives who have 40+ years of experience each. These are gentlemen who have seen it all. They saw the rise of Remax, saw the rise of Keller Williams, saw down markets, up markets, saw Microsoft’s foray into real estate, saw all kinds of banks and insurance companies (Merrill Lynch, Prudential, etc.) come in and out of real estate, saw double-digit interest rates, lived through the Bubble and its collapse, the dotcom revolution… and between the two of them, they have seen, experienced, and lived through just about everything real estate.

Something I noticed as the panel was discussing a variety of topics in real estate was how easily these experienced veterans were able to dismiss potential threats.

The flow of capital into real estate? They’ve seen it before from Sears, Merrill Lynch, Prudential — and all of those companies just lost their ass and got out because they didn’t understand some of the fundamentals of real estate.

Technology as disruption? They’ve seen that before over and over again, from Microsoft to Zillow, and have seen over the years that technology that aids agents succeeds, while technology that tries to displace the agent falls flat.

The massive antitrust lawsuit against NAR? They’ve seen dozens of lawsuits come and go, antitrust suits filed by dozens of lawyers who are after a payday, and have seen them dismissed, fail, and adjudicated in the industry’s favor time and again.

The long and short of it was that we have very little to worry about, because real estate has always been, is today, and will forever be about emotions and relationships. The real estate transaction is highly emotional, and buyers and sellers want a personal relationship with an agent they like and trust. Nothing will ever replace that human connection. The phrase “belly to belly” did come up, yes.

The key to success, then, in real estate is to recruit and retain the best agents who have the best relationships with as many consumers as possible.

It’s a very compelling story. There is real wisdom in experience that simply cannot be ignored. Experience after all is the best teacher, if the most expensive as well. With but a fraction of the experience that these two gentlemen have had, it’s impossible for me to gainsay them. I will have to defer to their knowledge and hard-won wisdom.

At the same time… I can’t help but wonder if that experience, that expertise, comes with a curse. That curse is that people with deep experience and expertise might be more vulnerable to real disruption that goes completely outside of what they have experienced over the years, or real disruption that looks a lot like things they have seen before… but is not.

The Value of Shoshin

In thinking about the idea that experience and expertise are wonderful and critical, except that there is the danger of underestimating disruption, I did some simple research. Apparently, companies have thought about this as well. One such company is Deloitte, the global consulting company. I found an article on Deloitte Insights called “Can CEO’s Be Un-Disruptable?” They interviewed the CEOs of “24 massive, complex, global organizations in industries spanning banking, pharma, technology, natural resources, food processing, health-care delivery, retail, and manufacturing.”

One of the things Deloitte found was the value of cultivating a “beginner’s mindset” — the word “shoshin” is a Zen Buddhist concept meaning “a beginner’s mind.” Deloitte writes:

In the words of Shunryu Suzuki, “In the beginner’s mind there are many possibilities, but in the expert’s there are few.” This captures one challenge CEOs consistently raised: seeing the world from the perspective of someone who does not know much about it. It’s not what’s traditionally expected of them—nor what CEOs may expect of themselves. But rather than trying to be the “smartest” person in the room, our respondents repeatedly stressed the importance of having the “eyes” of someone who does not know everything. They found greater comfort and far better outcomes in asking questions and being genuinely inquisitive (even about things they do know).

One tech company CEO is quoted in the article:

“Among some other CEOs I know, I’m struck by a few who are actually suppressed by their know-how. And they don’t know how to understand the things they don’t know. They automatically look at it and say “we’ll do it this way or that because that’s how we do it.”

That struck a nerve with me, because I do run across a lot of very smart, very wise, very experienced leaders in real estate who are suppressed by their know-how, by their experience, by what they have seen and experienced and know. These are incredible leaders, but they have spent 30 years in the industry, and in their expert’s mind, there are but a few possibilities, to quote Shunryu Suzuki.

Example: the iBuyer Issue

The best example I can think of is how everyone with deep experience in real estate dismisses iBuyer as a “we’ve seen this before time and again.” I’ve written enough over the past year on that topic so I won’t even bother getting into it. All I can say is that’s the case of there being few possibilities in the expert’s mind.

The iBuyers themselves keep telling us what they’re doing, and it isn’t flipping houses. But real estate agents, brokers, company CEOs, and leaders who have deep experience, deep knowledge, deep wisdom, and have seen it all before keep thinking of them as house flippers. I think it’s because iBuyer looks a whole lot like home flippers and it’s very difficult for experts to see them differently.

Those experts may very well be right; that’s the thing about experience. The value is difficult to estimate, difficult to quantify, but it’s there. At the same time, it may be that they’re more likely to get blindsided because their deep expertise and experience prevents them from seeing what beginners and novices see.

Cultivating Ignorance

One thing that the Deloitte article mentions, and I think it’s smart practice for real estate leaders to do, is to actively cultivate that beginner’s mind, that ignorance. Trying to forget what you know, what you’ve seen, so that you can look at things with a fresh perspective. Here’s Deloitte, quoting Marc Benioff, the CEO of Salesforce:

As we considered this concept, we were reminded of efforts taken by Salesforce CEO Marc Benioff to remind his employees to stay nimble and not expect the current state of affairs to remain. “I respect the spirit of innovation,” Benioff says. “Sometimes that spirit is going through me and sometimes it’s going to come through someone else … I try to cultivate a beginner’s mind; I try to let go of all the other things that have ever happened so far in our industry (which is a lot of stuff) and go, ‘Okay, what’s going to happen right now?’ and then I listen. Deeply listen. To myself, or really to others, or maybe great companies that I see, to the great innovators in the companies we bought, the organic innovators who have been in our company.” [Emphasis added]

Deloitte talks about how Benioff takes time off to consider “profoundly new ideas” and tries to imagine “disruptive ideas from whole cloth” in order to be more ready for disruption, then writes, “Central to the notion of beginner’s mind-set are the willingness and ability to replace the confidence that comes with experience with the curiosity that comes from naiveté.”

I think the real estate industry really could use a healthy dose of Benioff’s methods.

Chances Are, Experience Wins… But…

The way I’m seeing it now, I think it’s always safer to bet on experience and learned wisdom. The enthusiasm of youth and innovators is often overhyped, while the wisdom of grizzled veterans who learned what they learned through hard experience are often not appreciated enough. So bet on experience on the whole.

But… the curse of experience is that blind spot that could develop simply because the expert, the veteran, the experienced leader has seen similar things time and time again, so they miss the crucial difference that could make all the difference in the world.

For example, while I side with the voice of experience that real estate has seen Wall Street and VC’s pour hundreds of millions into disrupting real estate before, the one critical difference today is that investors are pouring money into companies and products and services that are attempting to change the transaction itself. They’re not trying to disintermediate agents, or improve search, or whatever — they’re trying to change the actual way we buy and sell homes. That’s a key difference, and it is one that might make all the difference.

Similarly, lawsuits have come and gone for decades. But maybe the fact that the lawyers this time around are well-funded, experienced corporate class-action litigators who are after not just a payday but a ginormous multi-billion dollar payday could make a difference. Maybe it won’t, and I’d bet on the voice of experience. But it’s worth at least cultivating ignorance, at least trying to forget what one has seen and experienced over the years, to make certain that you’re not overlooking something important.

One solid suggestion I might make: the next time your company or your MLS or your Association is having a strategy planning session, think about inviting a couple of rank novices who don’t know diddly squat about real estate, how it works, why things are the way they are, etc. Lay out all of the disruption or potential disruption you’re concerned about. Then listen to them. Deeply listen.

-rsh