Strategic Planning Idea ExchangeStrategic Planning Idea ExchangeNational Association of REALTORS® 2011 Anaheim

WELCOMEWELCOME

Bob Kulick2011 Strategic Planning Chair

Shannon Williams-King2012 Strategic Planning Vice Chair

Elizabeth Mendenhall

2012 Strategic Planning Chair

Today’s ObjectivesToday’s Objectives

• Exchange IDEAS – Gather thoughts on the future course for our industry

• EXPOSE Leaders to the Strategic Plan• Cultivate the development of GAME-

CHANGING Ideas! – Think beyond the Usual

• Involve MORE Members in the Strategic Planning Process

Game Changing IdeasGame Changing Ideas

What “game-changing” events will impact the real estate industry in the next 5 years?

NAR Strategic ThoughtsNAR Strategic Thoughts

Game-Changing IdeasGame-Changing Ideas

The best way to have a good idea is to have a lot of ideas.

Linus Pauling

NAR Strategic PlanningNAR Strategic Planning

• Consumer Focus Groups

• REALTOR® Focus Groups

• Outside Experts• Committee of your

Peers and Staff

The Art of the Long ViewThe Art of the Long View

• Scenario Planning• Challenging our “Mental

Models”• Lifting the “Blinders that Limit

our Mind”• Move Beyond Forecasting the

Future to Preparing for it!

ScenariosScenarios

• Demographics• Organizational Structure• Technology• Value Proposition

Small Group Report onDEMOGRAPHICS

Small Group Report onDEMOGRAPHICS

Generations in Brief Generations in Brief

Baby Boomers(1943-60)• 78 million• Social• Optimistic• Career oriented• Loyal• Most

REALTORS®

Gen X(1960-80)• 50 million• Independent• Problem

solvers• Portable career• Not easily

awed by authority

• Desire freedom at work

Gen Y(1980-00)• 80 million• Self-confident• Civic-oriented• Career with a

conscience• Respect for

authority• Thrive on

structure

Issues and Challenges With Multiple Generations

Issues and Challenges With Multiple Generations

• One size does not fit all– Each generation communicates, does business and

thrives as an association member in different ways• Knowledge is power

– Baby boomer REALTORS® need to understand Gen X and Gen Y as they come to dominate the market

• Selling the value of a REALTOR®

– Younger buyers and sellers will be reluctant to work with a real estate professionals who cannot meet their needs for advice and council (they already have the data).

• Opening up leadership opportunities– Associations need to create attractive opportunities

for X’s and Y’s and shorten the time to climb the leadership ladder

Scenario 1: Organized real estate is hot, hot, hot

Scenario 1: Organized real estate is hot, hot, hot

REALTOR® Organization takes the lead by:

– Educating members about the views and values of younger generations as consumers and sales agents/brokers

– Encouraging mentorship to integrate X’s and Y’s into the business

– Segmenting benefits and services to each member

– Streamlining the leadership structure

REALTORS® and the industry embrace X’s and Y’s by:

– Showing they understand their needs

– Providing superior and appealing technology

– Offering a variety of work arrangements

– Developing entrepreneurial opportunities

Probability: 42%

Scenario 2: Why won’t they listen to us?

Scenario 2: Why won’t they listen to us?

REALTOR® Organization has done the right things:

– By opening up channels of communication with younger members

– By promoting volunteerism that is important to Y’s

– By providing more involvement in governance by X’s and Y’s

– But still see membership decline as boomers exit the business and X’s and Y’s become increasingly productive using technology

REALTORS® and the industry stick with the status quo and:

– Assume boomer values will continue to rule the market

– Retain business and operational models that have worked in the past and assume will continue to work with X’s and Y’s

– See numbers dwindle as business moves toward fewer companies that recognize the changes occurring

Probability: 18%

Scenario 3: We don’t need no stinking badges?

Scenario 3: We don’t need no stinking badges?

REALTOR® Organization has made little progress in adjusting to realities and

– Retains the same leadership structure

– Has a one size fits all view– Fails to listen to younger

members– See influence and relevance

decline

REALTORS® and the industry adapt by:

– Using many forms of information and communication technology that appeal to X’s and Y’s as REALTORS® and consumers

– Becoming the first choice of younger consumers in a transaction by providing the “right” mix of services

– Becoming increasingly productive with fewer members conducting more businessProbability:

28%

Scenario 4: Will the last one out the door turn off the lights?

Scenario 4: Will the last one out the door turn off the lights?

REALTOR® Organization has resisted change and

– Has a structure that is not appealing to X’s and Y’s

– Sees a membership of mostly aging boomers

– Is unable to attract successful younger practitioners as members

REALTORS® are vanishing because– Many X and Y consumers find

it easier and cheaper to conduct a transaction themselves or work with a younger non-REALTOR® agent

– Fewer X’s and Y’s are attracted to the business and see little value in being a REALTOR®

Probability: 12%

DiscussionDiscussion

• In the context of empowered consumers, do REALTORS® and the Association have the most complete understanding of the forces that will shape preferences of real estate consumers during the next decade

• To what extent are baby boomer generation REALTORS® able to successfully meet the needs of a diverse, and often younger, clientele

• What will be necessary to draw the next generation of future REALTORS® to the business and ensure engagement in the Association

Game Changing IdeasGame Changing Ideas

In light of the changing demographics…

What “game-changing” public policy might be introduced, changed or repealed to position the industry for long-term success?

Small Group Report onORGANIZATION

STRUCTURE

Issues and Challenges for the REALTOR®

Organization• Younger generations see less value in belonging to

“The Club”• Value of membership unclear for some members• Disconnect between impressions and attitudes of

governing members and the rest of the membership• Organization is viewed as one of several providers of

services, although advocacy efforts remain highly valued

• Organization tries to be all things to all members even if many members do not recognize value of services

• Competition from outside means that associations that are financially dependent on MLS are vulnerable

Scenario 1: National takes charge

NAR leads a restructuring of the REALTOR® organization

– Eventual consolidation of locals and MLSs to no smaller than a metro area or regional market area

– Focus on key constituencies to include brokers, emerging leaders, successful REALTORS® and others

– Streamline leadership path to open more opportunities for Gen X and Y in governance

– Create a new membership organization of property owners

– Lead industry in adapting to newer and better business models and technology

Result is a more nimble, targeted and effective REALTOR® organization

Scenario 2:It’s too late baby!

NAR has seen the competitive wave coming, but– Changes are slow in developing and endlessly debated

given a disconnect between decision makers, members and governance structures

– Leadership path remains long and discourages younger members from participating

– Firms offer more and more services and members begin to withdraw from REALTOR® organization

– MLSs and local associations become less viable as outside competition increases

– Three-way agreement at risk

Result is a much smaller REALTOR® organization with diminishing influence

Discussion

• Who are the vital constituencies of the organization?

• What is necessary to make the organization “younger”?

• How should messages and services be targeted?

• What is the proper relationship of the organization with property owners?

• What is the appropriate organization structure for the future?

Small Group Report onTECHNOLOGY

Small Group Report onTECHNOLOGY

The Technology EnvironmentThe Technology Environment

1. Speed– Over the planning horizon speed of technology may increase as

much as four fold.

2. Power– Constant connectivity, large volumes of data and greater

customization of information to accelerate

3. Competition– Declining price of tech allows anyone to be their own business and

compete with the largest players

4. Responsiveness– Increasing speed leads to higher expectations of responsiveness by

consumers

5. Robustness– Consumers demand actionable, accurate, reliable information

Challenges to the IndustryChallenges to the Industry

• Information Challenge– Expectation of constantly updated local

information about properties– Consumers growing expectation of continuously

updated consumer feedback including agent ratings

– Peer advice through social media – peers become the “experts”

– Determining the value proposition for consumers when data is freely available

Challenges to the IndustryChallenges to the Industry

• Speed to Market Challenge– Instantaneous information transmission in all areas of

business, among consumers and thru social media– Availability of better decision tools requiring relevant and

accurate data– Increasing premium on being the first point of contact

• Organization Challenge– Technology often transcends geography in organizations– Direct contact with and between members outside 3 levels

of REALTOR® organization more easily accomplished today– May require tailored messages to many separate segments

of consumers and REALTORS®

Threats and OpportunitiesThreats and Opportunities

• Someone will do it better• Growing tech gap between

consumers and REALTORS®

• New tech standards for display of property information

• Diminished value of MLS• REALTOR® organization

relevance diminishes• Consumers use social

networking to form own advocacy groups

• REALTORS® use tech to enhance consumer experience

• Creation of a global real estate market operated by REALTORS®

• Increased REALTOR® productivity• Segmentation of messages to

member subgroups• NAR becomes a technology leader• Attract consumers to NAR• REALTOR® organization leverages

technology benefits

Threats Opportunities

Scenario 1: We are the drum majors of the real estate market

Scenario 1: We are the drum majors of the real estate market

REALTOR® Organization builds on opportunities created by technology to:

– Use size and scale to garner benefits and pass benefits along to members

– Adopt technology that increases speed and quality of communications with members

REALTORS® embrace use of advanced technology to:

– Offer the public the most accurate, complete and instantaneously available information about property

– Reach the next generation of younger consumers

– Attract younger people to the industry as a first career

Probability: 42%

Scenario 2: The orchestra plays on

but the conductor is out to lunch

Scenario 2: The orchestra plays on

but the conductor is out to lunchREALTOR® Organization fails to lead in technology and

– Offers little or no guidance to members on technology issues

– Relies on increasingly ineffective mass appeals to organize political action

– Members look outside the organization as relevance declines

REALTORS® embrace technology and

– Are forced to compete with tech-savvy competitors from outside the industry

– Are leaders in the presentation of property information buttressed by the accuracy of MLS data

– Offer compelling services to consumers who look to them as experts

Probability: 18%

Scenario 3: Why can’t I get these guys to play together?

Scenario 3: Why can’t I get these guys to play together?

REALTOR® Organization adopts long view, embracing technology and

– Revamps communication channels by segmenting messages and communicating directly with members

– Sets up R&D function to prepare members for outside tech driven competition

– Provides compelling tech tools to members

REALTORS® unwilling to change, leading to

– Increasing disintermediation as consumers turn to tech driven companies

– Resistance to changes among older members while few younger members join, leading to falling membership

– Small number of “survivors” around which the association re-groups

Probability: 28%

Scenario 4: The stage is dark and the curtain falls

Scenario 4: The stage is dark and the curtain falls

REALTOR® Organization remains largely unchanged with

– Growing emphasis on “club house” status

– Fewer and older members participating and volunteering

– Diminished effectiveness in advocacy

REALTORS® continue to conduct business as usual and

– Fall behind in use of technology expected by consumers

– See income and influence decline

– A small group of REALTORS® exploit technology profitably and abandon the association

Probability: 12%

ObservationsObservations

• Technology provides consumers with new opportunities to gather information and make decisions independent of real estate professionals changing the Value Proposition between REALTORS® and consumers

• Increasingly powerful business-oriented technologies may alter the relationship between REALTORS® and the REALTOR® Organization as the three-level hierarchy diminishes in importance

• Technology will influence the REALTOR® organization – especially local associations and MLSs – as the barriers to the availability of real estate information are reduced

Small Group Report onThe VALUE PROPOSITION

What is the Real Estate Value Proposition?REALTORS® and Consumers• Value is highly personalized

– Consumers expect individualized service and attention to their needs

• REALTORS® must connect with individual needs– Consumers drive the transaction and

expect to have their needs met• The value proposition varies over time

– Consumers’ view of value changes along with technology and generational dynamics

• The value proposition is the balance between costs and benefits– Consumers expect to receive a benefit

greater than the cost they pay.

What is the Real Estate Value Proposition?REALTORS® and the REALTOR® Organization

• Information and communication– The organization supports the MLS,

networking, business development, and the gathering and creation of information to serve consumers

• Representation– The organization provides legislative and

regulatory advocacy• Business tools

– The organization provides information on, access to and training in tools to help REALTORS® serve clients

Challenges to the Value PropositionREALTORS® and Consumers

• Maintaining long-term relationships with consumers– REALTORS® need to touch consumers

through a variety of channels– If the relationship is unsatisfactory,

consumers will go elsewhere• Efficiency of the transaction

– REALTORS® need to understand the consumer’s needs, set expectations, customize services, but not waste their client’s time

Challenges to the Value PropositionREALTORS® and the REALTOR® Organization• Increase member awareness of value of

goods and services– Organization services and communications

need to be customized and targeted to a segmented member base through many channels

• Put money in members’ pockets– Organization should craft its goods and

services to provide value and meet evolving needs of members’ businesses

– Organization should communicate value of services to members

• Examine membership pricing– Dues model (e.g. country club pricing) may not

offer the best value proposition to member

Scenario 1: That’s my REALTOR®; That’s my Association

REALTOR® Organization makes membership invaluable by:

– Being a technology leader and providing information and training

– Engaging in advocacy effectively

– Raising public awareness among consumers

– Providing information that defines the REALTOR® as an expert

– Offering discounts on business tools and services

REALTORS® engage the consumer by:

– Making them the center of the transaction

– Customizing services– Providing client feedback

and ratings– Having a command of

technology– Communicating and

listening

Probability: 33%

Scenario 2: I’m terrific in my business, but its no thanks to that REALTOR® organization

REALTOR® Organization fails to lead and

– Relies on the status quo of the three-way agreement

– The governing members are closed to new ideas and do not encourage member involvement

– Sees advocacy ceded to large firms and franchises

– Firms become the primary source of member value

– Membership drops

REALTORS® have become the market experts by:

– Effectively using information and technology to serve consumers

– Customizing their practice to the individual client

– Developing a positive image in the community as trusted resources

Probability: 33%

Scenario 3: Why aren’t these people listening?

REALTOR® Organization embraces change and

– Makes business easier and more profitable for members

– Offers benefit packages to members that are highly personalized

– Increases participation in advocacy efforts with targeted member communication

– Raises the esteem the public has for REALTORS®

REALTORS® unwilling to change and continue to believe that they:

– Are the focus of the transaction, not consumers

– Know better than consumers because of their knowledge and experience

– Are the gatekeepers of information

– Need not be active in the association

Probability: 18%

Scenario 4: Rearranging the deck chairs

REALTOR® Organization has resisted change and

– Continues to operate as it always has

– Fails to help its members adapt to new competitive forces

– Retains fewer, older, less productive members who value the social club

REALTORS® are unwilling to focus on the consumer and

– Lose their place in the transaction

– Fail to adopt “smart” technology consumers expect

– Are replaced by salaried sales people paid a fixed per transaction fee by a national firm

Probability: 18%

Discussion

• Already armed with freely accessible information, consumers expectation about what professionals add to the transaction has evolved.

• The value proposition is influenced by generational dynamics – younger do-it-yourself consumers want a different set of services than other generations willing to let an expert take charge.

• With growing competition to the REALTOR® organization from outside entities as well as large firms what does it take to cause practitioners to join voluntarily? How should this value be communicated to members?

Game Changing IdeasGame Changing Ideas

If you weren’t afraid of failure or you weren’t afraid of the word “no”…

What are your “game-changing” ideas to position the REALTOR® to provide maximum value to our clients?

NAR Future PlanningNAR Future Planning

REALTOR.org ResourcesREALTOR.org Resources

• Field Guide to Strategic Planning• RARE – REALTOR® Association

Resource Exchange• Research Data - Industry, State, City

REALTOR.org ResourcesREALTOR.org Resources

• Buyers and Sellers Profile – Most Popular Research Piece

• Member Survey • Contact Research for

custom numbers

2012Listen to Your Heart

2012Listen to Your Heart

• Move Beyond Forecasting the Future to Preparing for it!

• The best way to have a good idea is to have a lot of ideas!

• Involve More!• Courage to Act!

The Future…Starts TodayThe Future…Starts Today

• 2012 Minds Focused on the Future in 2012

• 12 Forums - Gathering Ideas, Charting the Course and Working Together

• Maximizing our Members and encouraging MORE!

• Stay tuned for more information to sign up.

“Tomorrow belongs to the people who prepare for it today”

Thank YouThank You