Approximately 75% of MLSs are owned by Associations today. With the history of being launched as a for profit arm of trade associations, MLSs naturally adopted the governance models and board make-up of their parent companies.

Here’s why I believe that approach is no longer valid.

 

Lack of Depth of Strategic, Technical, and Corporate Experience

First, technology moves at the speed of light. AI is creating yet another wave of innovation that is going to make the invention of the Internet look like a walk in the park. It’s impossible to keep up with it unless that is your primary focus. Today, most MLSs have agents, brokers and appraisers who are just trying to adapt to all of the market changes, deal with sellers who won’t sell, buyers who believe they will get a better deal if they wait and mortgage rates that just won’t come down.  The latest in Block Chain innovations just does not hit the top of their list, for good reason. They are just out there trying to make a living.

 

Lack of Technical Training and Interest

Many MLS board leaders have not completed even the training for the technologies available from the MLS. Some are not even aware of the suite of tools offered by the MLS.  As leaders they need to embrace the core value proposition of the MLS organization for their own business. How can a board have sound discussions about technology decisions and directions without engaging in the technology themselves?

Lack of Corporate Management Skills

Tech companies outside of the MLS have a board of directors that act as strategic advisors. They come armed with deep expertise in marketing, technology, cybersecurity, HR, finance and financing and other skills needed to run a multi-million dollar technology company. They create longevity and continuity with their board members so board conversations have context and a deep understanding of the unique position the tech company holds within its competitive landscape.

Conflicts of Interest

Most, if not all leaders in traditional tech companies do not engage in the business of the tech company to avoid any potential conflicts of interest. There is no highly successful tech company I know that has ONLY customers on the board of directors. In real estate, we have competitors sitting at the table. I have seen discussions go south many times when someone at the table is driving a decision for the best interests of their company, not the good of the real estate market and the consumers it serves.

Lack of Board Longevity

Most MLS leadership teams trade out every 12 months. By the time they start to figure out the MLS buzzwords and the key players in the industry their time is up. How do we expect to create true long-term strategy when the board leader trades out every 12 months?

Lack of Control over Directors Placement

True tech companies carefully curate the skill sets on their board of directors to create opportunities for rich, multi-perspective conversations and advice.  They are in complete control of who sits on the board, how long they sit on the board and what skills they call on from them.  Many MLSs are “handed” their board of directors by their Shareholder Associations. Sometimes it works out great, but it’s a crap shoot.  Even when the board is collaborative and cohesive, the depth of technology acumen and financial management depth is not always there.

I welcome your commentary and feedback on the topics I have outlined above. If you need help thinking through your governance and management approach, I would love to help you. MLSs survival depends on it.