New Trimble and Columbia Business School white paper explores barriers and opportunities for construction innovation
While construction is considered a ‘lynchpin industry' because of its economic impact and role in supporting a stable society, it has never been an innovation leader and has even struggled to show significant productivity gains on the same scale as other industries.
With the support of industry technology leader Trimble, Columbia Business School's Center on Global Brand Leadership recently published a white paper investigating innovation challenges and potential solutions for helping companies within the lynchpin industries — which includes construction — become more innovative, efficient and successful. Below are some of the key findings from the report, all directly applicable to today's contractors.
Construction innovation barriers
An aging workforce
Many already realize that the construction workforce is growing older. However, while an experienced workforce has many benefits, it can also stifle new ideas and create a reliance on 'fixed thinking' that can hamper an industry from embracing innovation.
As the workforce ages and the struggle to attract new talent continues, transitioning to more integrated digital systems and physical automation can help firms do as much (or more) than before. It can also inspire younger generations to consider a job in construction as they see the industry as more aligned with their career expectations.
A heavy regulatory regime
Construction is heavily regulated due to the industry's inherent dangers, which can have the offhand effect of depressing innovation as any new practice has to get to a working "proof of concept," and it must also be able to meet strict regulatory requirements, which vary locally, nationally, and globally. This creates an imbalance of the risk/reward trade-offs in committing to novel approaches, slowing down the approach to innovation.
Project uniqueness and ecosystem complexity
In construction each project is unique, so plans must be constantly adjusted due to changing on-site conditions, making successful approaches challenging to scale. The ecosystem in which construction operates is also very complex, with an emphasis on upfront planning and subcontracting, which can deflate the risk-reward equation for new ideas. Instead, they're often more focused on optimized timelines and costs than implementing new technical innovations that could potentially unlock big rewards.
Innovation barrier turned innovation opportunity
Siloed data/Interoperability
Siloed data is another innovation barrier, as many contractors are still manually importing and exporting data between the field and the office and across various platforms and systems. Contractors, subs, and project owners also typically have different software preferences, which can cause a disconnect in data, slowing down progress as everyone isn't working off the same information in real time.
However, this is also an innovation opportunity as several leading technology providers — including Trimble — are connecting data across their solutions and with other technology providers so that stakeholders can more easily share data across and between systems. Data connection, also called ‘interoperability,' can help simplify workflows by creating a single source of truth, helping contractors run their projects more efficiently.
Innovation opportunities
Growth of venture capital
While venture capital has been steadily growing across a range of industries, it has not kept pace with the overall growth of the construction industry, which currently makes up roughly 4% of the US GDP. Thankfully, that's changing as more money is being poured into the industry, not just from the world of finance but also from established firms within the industry itself. This includes Trimble Ventures, which is Trimble's corporate venture capital fund focused on investing in early and growth-stage innovative companies that align with the company's mission of transforming the industries it serves.
Beyond the development of innovative ideas, venture capital investments can also entice younger demographics into construction by showcasing a start-up ecosystem and the industry's commitment to innovation. This can help drive talent recruitment among both traditional and non-traditional audiences.
Government investment and commitment
While government actions vary across regions and countries, there is a growing interest in driving innovation within lynchpin sectors across the globe. This is being propelled by the potential of widespread economic advantages that can come from infrastructure improvements, with the passage of the Infrastructure Investment and Jobs Act as just one example.
Due to shifting regional and global economic trends and climate change effects, government entities recognize the need to function as partners in promoting innovation. Governments and firms should ideally work together to take the time to analyze site and community needs, and involve other local and national stakeholders to push projects forward that will most effectively use any public resource. A balance between common needs with low-variability, alongside high-priority and site-specific projects can create the greatest impact.
Sustainability and climate change
Finally, construction is under increasing pressure to find ways to reduce greenhouse gas emissions. The construction industry recognizes this and has begun to see that improving one's environmental impact can also provide a competitive advantage.
While sustainability efforts were once only thought of as a financial burden, technology and new innovations, combined with government support, have provided efficiencies and long-term cost reductions that demonstrate that continued sustainability innovations can drive positive financial, organizational, and environmental impacts worldwide.
However, sustainability is a systems-change effort. Small, incremental efforts will not have a deep enough impact to affect the global climate. Innovating or developing best practices around the use of sensors, batteries, environmental modeling, etc., can be even larger if there is consideration from the start of each sustainability-driven innovation to consider cross-industry uses.
Looking ahead
Despite the perception of construction as a non-innovator, there is a clear desire to shift this image and mindset. Understanding the challenges holding contractors back and the tools and techniques they can implement to become more innovative will not only be helpful for them, but also for the larger ecosystem in which they operate.
Contractors should use this report to review their own organization's strategies and look for starting points to help break through any roadblocks they face, whether strategic, tactical or managerial.
Further context is provided in the white paper, along with additional challenges and solutions that apply to a broader subset of industries, all of which are accessible here: https://www.trimble.com/en/our-company/resource-center/innovation-growth-in-the-lynchpin-industries.
Mark Schwartz is the senior vice president of Construction Enterprise Solutions at Trimble, a technology company with core technologies in positioning, modelling, and data analytics that connect the digital and physical worlds to improve customers' productivity, quality, safety, transparency, and sustainability.
