Digital Technology in Strata: Building a Resilient Business Model During COVID-19

The advancement of technology has changed the way businesses operate across jurisdictions, industries and professions. This transformation has commonly been referred to as the Fourth Industrial Revolution.1

In the face of COVID-19, we have seen this revolution progress at an even more accelerated pace. The message for many businesses has been clear: Adapt or die. The Strata Industry in Queensland has not been immune to the impacts of COVID-19. The requirements for quorum at meetings, the necessity for electronic voting to have been approved at a general meeting, as well as the impact Queensland Health Directions have had on body corporate facilities have caused much disruption. Certainly, strata management companies (SMCs) that have not embraced digital technology into their business model have their schemes at a disadvantage. This essay will argue that SMCs should be looking to embrace digital technology in order to create a more resilient business model, and sequentially, more resilient bodies corporate. First, the transition to more digitally based businesses models will be examined. Second, examples of advantages enjoyed by bodies corporate who have engaged an SMC that has built in digital services will be highlighted. Finally, comments will be made encouraging the reader to consider the use of technology in developing a business that is more resilient to disruption.

Evidence of a digital transformation

The Fourth Industrial Revolution is an attempt to explain the changes in human development, concerned with the influence technologies have. Some of the main technologies include automation, digital data exchange, cloud base services and artificial intelligence.2

Examples given evidencing a Fourth Industrial Revolution are compelling. Susskind and Susskind, who argue that digital technology will bring fundamental change to how professionals will deliver their services, highlights Harvard University’s online courses have had more people sign up in one year than have physically attended the university in its 377 years.3

The example of Ebay’s online dispute resolution tool resolving three times the amount of lawsuits that are filed in the whole of the US is also given.4In the US, the IRS has reported that in 2018, over 87% of tax returns were e-filed, with around 70% of those self-prepared without the use of an accountant.5

Susskind has also warned that, at least for those in the legal profession, those that refuse to adapt will be left behind.6

The COVID-19 pandemic has certainly changed the way we live. While those in the medical and scientific groups in our community work for a cure and prevention of physical harm, those in the economic and business community similarly need to focus on a cure to the economic harm caused. Here in Queensland, the Health Directions have, at points, directed many businesses to close and restricted the movement of members of the public.7

A study by the ABS in April 2020 showed that 72% of businesses were experiencing reduced cash-flow through the pandemic,8 with 38% altering or changing their business model, including to on-line based services.9 While we are still in the pandemic, the full economic impact of COVID-19 is not yet clear. Nevertheless, there are commentaries in the public domain expressing the view that COVID-19 has fast-tracked the digital transformation for many businesses.10

The impact of COVID-19 on bodies corporate – at a glance

The impact of COVID-19 on bodies corporate has also been significant, and it might be reasonable to say that COVID-19 will have brought the benefits of technology in strata management to the forefront for many owners.

SMCs that have already built digital technology into how they deliver their services will have provided their clients with a significant advantage during these times. For example, the ability for AGMs to be held over Zoom still allows for important discussion between owners. Those embracive SMCs will have usually already flagged to their clients in previous years that a motion to allow for electronic voting needed to be put up at a general meeting – again negating an obstacle many schemes will be facing.

Another major issue is the impact Queensland Health Directions have had on facilities such as pools and gyms. Again, technology can be of great use to bodies corporate here. The requirement that user details be stored for 56 days may be burdensome for most, particularly where there is no on-site caretaker. The thankless task of record keeping could fall onto an owner, or the body corporate could risk a significant fine. An SMC well-versed in technology would be aware of the benefit of QR code signage and secure data storage options.

As owners adapt to the new post-COVID-19 normal, the advantages experienced by those schemes that have benefitted from an SMC with a digitally-based business model will be clearer. The industry may find that the market will shift towards those more innovative SMCs. To echo the sentiments of Susskind in the legal industry – those SMCs that do not embrace change and update their business model could be left behind.

Looking to the future

When looking to the future, it is beneficial to look to the past. The Innovators Dilemma11 considered the underlying causes that saw large and successful companies completely displaced in the face of technological change. It was here that the terms sustaining technologies (technologies that enhance current business models) and disruptive technologies (technologies that displace and disrupt) were coined.

In the present property industry, we can draw on the disrupting example of Airbnb. This technology-based platform has displaced property agents in its model. Nevertheless, there has still been great opportunity for those property managers who embraced the technology and offered to integrate their work with the Airbnb platform.

Noting the rapid change that is the Fourth Industrial Revolution, the resilience of schemes through COVID-19 where their SMC has a more digital model, and looking at the current disruptive technologies we have seen in property, SMCs should be considering what disruption technology could bring, and how they can embrace it to build more resilient business models.

1 Schwab, Klaus The Fourth Industrial Revolution (2016).
2 Schwab, Klaus Shaping the Fourth Industrial Revolution (2018).
3 Susskind, Richard & Susskind, Daniel The Future of the Professions (2015).
4 Ibid.
5 IRS, ‘Filing Season Statistics for Week Ending November 23, 2018’ (2018) .
6 Susskind, Richard Tomorrow’s Lawyers (2013).
7 See, for example, past versions of the Restrictions on Businesses, Activities and Undertakings Directions <>.
8 Australian Bureau of Statistics, ‘Anticipated adverse business impacts due to COVID-19’ (2020) <>
9 Ibid.
10 See, for example, Karr, John, Loh, Katherine and San Andres, Emmanuel (2020) ‘COVID-19, 4IR and The Future of Work’, AOEC POLICY Support Unit Policy brief No 34; KPMG ‘COVID-19: A time for transformation and thinking for the future’ (2020) <>.
11 Christensen, Clayton The Innovators Dilemma (1997).
12 See, for example, google search results for ‘Airbnb property management’.

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