The old corporate giants of the industrial revolution such as General Motors and Walmart now appear burdened, slow-moving and inflexible alongside the likes of Amazon, Uber, Airbnb and Ebay
Physical things are losing their appeal. We prefer to watch Netflix rather than buy DVDs, listen to Spotify rather than own CDs and order an Uber rather than drive our own cars. In our homes, cramped cupboards and overflowing storage units are becoming a thing of the distant past as we embrace the minimalism of the digital age.
Similar shifts are taking place in business. The old corporate giants of the industrial revolution such as General Motors and Walmart now appear burdened, slow-moving and inflexible alongside the likes of Amazon, Uber, Airbnb and Ebay. These firms have leveraged their customers’ assets – our cars, homes and wifi connections – in order to cut down on their own. With multiple sector leaders now championing the case for asset-light business models, have assets become the corporate equivalent of a cupboard full of unwanted DVDs?
Fortunately, the case for focusing on certain asset-heavy businesses still stands in the digital era, as the old-phrase “safe as houses” maintains its strong foundations. “The difference in risk is huge. When you factor in the return and risk associated with buying property and shares, property wins hands down,” says investor, university lecturer and author Peter Koulizos. Indeed, the demand for housing shows no signs of slowing in the coming years, with long-term demographic trends including urbanisation, population growth and decreasing average household sizes continuing to increase the demand for housing on a global scale.
The main argument leveraged against asset-heavy businesses is the challenge of scale. While asset light companies have the flexibility to expand their reach to a new location at the simple click-of-a-button, and achieve scalability with minimal incremental costs, asset-heavy businesses have no such luxury. However, while scalability is inevitably more expensive and time-consuming for asset-heavy businesses, lessons from digital business models can be still be applied to the housing sector. Chototel, for example, is using IOT technology to enable hotels to be managed remotely from anywhere in the world. In this way, crucial operational costs do not have to multiply as the business expands. In addition, standardisation means our affordable housing model is suited to a range of locations and can be easily replicated across the globe, without significant additional investments into R&D. Using technological innovations, asset-heavy businesses can too achieve the scale and reach of their digital counterparts.
Investing in the latest and the most advanced technology holds the key to effective scalability, for both asset-heavy and asset-light businesses. The success of today’s businesses is less determined by the value of assets they own, but rather by their ability to embrace the latest advances in technology to achieve scale. With 1.6 billion people predicted to occupy unsafe or inadequate housing by 2025, achieving scale in the housing sector is needed now more than ever. Standardisation and IOT technology are just two of the ways in which Chototel is reducing our costs of expansion to achieve global scale, and one that is reliably backed up by bricks and mortar.