Are You Friction or Grease?

Does the Net Level the Playing Field? ... Business guru Gary Hamel recently wrote, "The hard truth is that most companies owe a good portion of their profits to friction. Friction inflates prices. Friction reduces competitive rivalry. Friction protects profit margins. ... For many companies, customer ignorance has long been a source of profit." And he goes on to describe how new Internet services are attacking this friction. (Wall Street Journal, June 6, 2000) ... Uh-oh, does that spell trouble for real estate intermediaries?

Well, yes, if all that these intermediaries have done is simply to hoard information. But what if, as I believe, these intermediaries actually lubricate the real estate process? What if it turns out that real estate transactions are so complex that you'll always need human judgment to filter, interpret and communicate complex data? Then the question is, How do you combine information systems and personal service to make decisions most efficiently and wisely? And that's what's really exciting about watching the industry currently transform itself.

Just read the Social Life of Information by Brown and Duguid, who argue that no information exists outside of a social context. Here's an intriguing example. How can you repair copying machines efficiently? Well, Xerox found that manuals alone could not make their repair technicians effective. Rather the social interaction of technicians over lunch was a necessary component to solving complex problems. So if you can't build a manual to repair a copying machine, how can you design an information system to replicate a real estate process? It's not gonna happen. ... Now before you beat me up too badly for being naïve, yes, I do believe that we'll see dramatically new business models, and I'll write about that next week. So stay tuned...

PikeNet Expo... "Building the Real Estate eMarketplace." ... The Expo will feature a series of Pike's Parades covering a variety of themes, for example aggregators, research services, telecom providers. Each participant will have ten minutes to speak about his or her product or service, which should provide a terrific way for you to quickly understand the business model of dozens of real estate dot-coms. Hey, I'll be as interested in listening as you will! ... Check out the latest information on the Expo at the New York Hilton, Oct 23-24, 2000 www.pikenet.com/expo2000.

--Peter