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Generation Next

Sunday, 02nd February 2014

Chris Duggan (left) and Daniel Linders

Here is what happened at the fourth and final Strata in Conversation luncheon.

Brett Kelly, Managing Director of the chartered accounting firm Kelly+Partners, quizzed Chris Duggan, New Business Director of Bright & Duggan, and Daniel Linders, Group Managing Director of Strata Choice, about the evolution of strata and what the future holds.  Stratalive was there scribbling away furiously to provide this illuminating, albeit edited, version of their lively discussion.TechnologyBrett Kelly: The internet is radically changing most businesses.  How is E-technology changing the strata industry.Chris Duggan : It's interesting because everyone looks at the younger generation and thinks we are going to be more astute about E-strategies and the like.  That's a fairly naive assumption because the uptake of technology across both our customer base and also our employees and people in business is fairly universal.  There is obviously a desire for the younger generations to almost exclusively correspond via E-communications and I think that we will see next year, as has been flagged by the state government, is a facilitation of much more E-communications.  Whether that be online representation at meetings or the delivery of documentation through the mediums.   And what it's going to mean is a very quick catch up period because don't think companies have appropriately invested in the infrastructure behind being able to  appropriately push information out in a timely and expected manner to our customers.  Consumers will be able to compare the technological performance of their strata company with that of the bank, and regular activities such a booking a hotel.  The E-communications side of the strata industry at the moment is sorely lacking due to lack of innovation and lack of investment.  But we are seeing companies changing.  Many have an extensive E-collaboration strategy to try to get ahead of that game.  Embracing technology will certainly become very important as the expectation from our customers grows.Daniel Linders: So true.  Take correspondence to our lot owners, as an example.  An annual general meeting package can run to 40 pages.  So, firstly, you have got ot get that into someone's mail box successfully without it being rejected.  And then you have to get owners to come along to the meetings.  So you have got to have people savvy on using iPads or any other type of means to scribble on them, write notes on them etc. It's not just getting the technology right and getting the information out there, it's also the useability sense.  I have just started using my IPad in meetings, and it's tough getting used to it.  Handwriting is much quicker, and much easier.  So maybe it's not so much the industry getting ready for technology it is the rest of the world as well.Brett Kelly: Technology is great for things like online surveys, and links where people can go and self-serve.  But the banking analogy is probably a good place to look in terms of how customers have changed over time.Social mediaBrett Kelly: To what extent do you think social media is being embraced across the strata industry, and is it making a significant impact for managers or lot owners?Daniel Linders: I don't actually have an example of a property that uses social media well.  We know of a couple of properties that have Facebook pages to communicate to customers, and they do that successfully.  Nothing too great.  But we toyed with the idea of having some type of noticeboard or feed or something on our website so owners could come on and keep in communication.  The hurdle that we reached was that, if you use another medium like Facebook, you have their privacy policies and their risk policies relation to defamation.  When you start to bring that in house, all of a sudden you become the publisher and you have issues over that.  So you get the moderation advantages, having your own proprietary software, except for Facebook.  But with Facebook you get the useability protection.Chris Duggan: We deal with a number of buildings with Facebook or with other building management software which, with or without a building manager gives them access to a number of communication portals.  Almost exclusively they have been driven by a 'champion' on the building, and I think it's important that as strata managers we don't become the web masters and the software integrators of all of those buildings.  So it's a very fine line between what buildings want and the actual practical implementation of someone moderating these forums.Brett Kelly: One of the interesting things I've heard is that the fastest growing group of users of Facebook is people over 50.  So the assumption that Facebook is the domain of 20 year olds is misguided.  There are 900 million, or more, people using Facebook.Cloud-based management systemsBrett Kelly:  What is your view on cloud based applications, and how might they change the strata business?Daniel Linders:  I think it is a broader issue than just for our industry: it's how cloud is affecting the world.  One area where we have see it impact is small set-ups.  It's much cheaper to get online quickly.  They don't have to buy servers and infrastructure anymore.  They can make application to Microsoft; I think it costs $12 per month to have their suite of products and you can get online.  A couple of data software companies now provide that cloud base as well.  So, basically, you just need an internet connection and you are online and ready to go. Chris Duggan:  I think our industry used to be the domain of those who invested quite heavily in their software packages where they could provide more bolt-on functionality.  But now with cloud based application you get a comparative service accessible anywhere in the world, managed remotely, providing the consumers with the same suite of products.  So it changes the landscape of what competition is and how dynamic companies can be.  Cloud application will reduce the cost pressures on businesses, and obviously the lighter and more nimble you can be the more effectively you can compete. Brett Kelly:  Can you see offshore strata managers working, using cloud based systems from overseas locations; the old call centre approach.Chris Duggan: I think so long as you have state-based licensing regimes and the Property, Stock and Business Agents Act you are still going to have to have an offshore presence.  But we will see more back-of-house, more resourcing, more outsourcing - particularly as the industry continues to face increasing costs pressures.  You will have to be looking at all of these options.Inter-generational changes and challengesBrett Kelly:  Over the past 30 years the strata management business has shifted from cottage industry to a profession, and there is a changing of the guard currently underway in many respects from baby boomers to the 'next generation'.  Do you see significant differences between the management style o the older generation and the new generation?Chris Duggan: I don't think it's managements style; I think it's the horizon with which you are looking at managing your business.  When you get different generations you get inter-generational tensions, whether they be within a business or within the industry.  People take differing views of where the industry is going, and where revenue is coming from.  They are viewing it through the prism of where they are at within their particular business cycle.  Daniel Linders: Agreed.  Older generations , say baby boomers. may be at middle or tail end of their careers.  They may be a little bit more adverse to debt, or additional risk, or making some major acquisition that could give them a high level of risk when they are tapering to exit the industry or hand the business on to somebody else.  Whereas this is not so much the case for new generations.  Both Chris and I come from a family business.  Out industry is unusual in the sense that it has such a high number of inter-generational parties and influences, whether they are active participants or external interested parties. Brett Kelly:  So what are the challenges for a family business?Daniel Linders:  I think succession.  It's something that you should take quite seriously and you should have well documented.  It makes everybody a lot clearer and able to be 'on the same page'. The major thing for our company and me personally would be the different level of risk one is open to take at certain periods of time because people are in different places in their lives.  We have regular meetings in a proper format and plans that look years ahead.  And also, exit and financial responsibility.  Everything is agreed and documented.  It's important to get an independent person such as an accountant to prepare these documents.Chris Duggan:  Yes.  It's about making sure you have that discussion about time lines and horizons.  Gain any stakeholder input because there are a number of factors of influence, apart from the people involved and what they may want to do.  There are other family issues; there are other stakeholders within businesses.  I think it's vitally important that everyone understands and, as Daniel said, documents plans so there are no surprises around a transitioning.  That's not to say that those plans can't change, and often they do due to extraneous circumstances.  As long as you have a 'backbone' or an understanding of how it is to work, I do think what we are going to see more topically will be tension between who has a different appetite for debt, for example, and who has a longer term horizon?  That's certainly going to create a need for the documentation of those strategies so that when opportunities arise you can act nimbly.  Without those documented regimes you are likely to be caught out and have to make decisions on the run which, inevitably, don't work out. Brett Kelly: We deal with a lot of private businesses and very few have a written succession plan.  In fact, many don't have a succession plan at all.  Most people think about their retirement when they reach 64, literally.  but you can't maximise the value of your business, nor the strategic options, if you are trying to do it on the hop.  It generally takes about two years to effectively sell a business.Love thy neighbourBrett Kelly: Love thy neighbour has been a key tenant of our society.  But back when that was written no one was living in strata communities.  What are some of the key issues arising in strata communities due to different age demographics living together?Chris Duggan: I think you need to change "love they neighbour" to just "respect thy neighbour".  It's naive to think that people are all going to love each other, and I think that mindset usually causes a lot of tension because it presupposes that you are all going to agree to something.  but if you have the core tenant of respect within a building and you respect the other person's view, while you may respectfully disagree certainly it goes a long way to dealing with the issues.  But that inter-generational conflict...we see it every day.  You take any standard strata scheme in Sydney and you get people with different horizons around their financial outcomes.  Younger generations who want to more immediately come in, make renovations to their property - sometimes they didn't comply with the by-laws - to capitalise on their investment and then move on.  Then you have older people who take a longer term view of their asset.  So those tensions exist every day.  If you have that core tenant of respect you can deal with a lot of issues.  But I think we are going to see increasingly that the inter-generational conflict is something that requires strata management involvement as part of broader mediation services to hopefully deliver outcomes that are acceptable.Age specific communities?Daniel Linders: I think this is a dangerous proposition.  When you put people together from the same economic class of the same sex or the same age bracket it leads them into a place where you get the group mentality thing happening.  When you have a mixture of demographics it broadens opinions and tempers down conflict.  Let's use an example of schoolies.  When they all get into an apartment building it's a disaster.  So you wouldn't want to have that in a strata scheme.  Going to the other end of the scale with more mature aged tenants or owner that could be a good thing if the facilities and the building have been created to serve that purpose.  Certainly some developments are doing this .  But I still believe you need a bit of mixture in each property.

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