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EP_19.jpg Sept/Oct 2005
Cover Story
Oregon Timber
Lafarge Group

Paul Hague shares some of his thoughts on the lack of real innovation in construction and outlines how research can help signpost the way to succes.


index.jpg A failure to innovate is very often the reason for the demise of a company or decline in an industry. Having kick-started the industrial revolution, British industry has slipped from being a leader in inventions to being a sad follower. Not every industry is the same. The electronics industry leads patent applications, but the construction industry trails behind.

Just think of any substantial innovations in the construction industry over the last 50 years. You might mention the rise of plastic often used in place of copper pipe in plumbing, wood in window frames, steel in rainwater goods and slate in roofing. You might mention better insulation, reduced fire hazards, lighter materials and improvements to electrical standards. However, comparing the advances made over less than 20 years in electronics, where early Amstrads have morphed into the modern Dells, the construction industry has merely been tinkering at the edges.

Houses are still built by men who stick one brick on top of another in a very similar way to our Phoenician cousins of 3000 years ago. They are heated by boiler systems, which are clearly more advanced than those developed by the Romans but which still work on similar principles. In short, the construction industry has produced few innovations that are conceptually new; most are simply modifications to existing products.

Why have we not seen serious innovation in the construction industry? There are three reasons: regulation, conservatism and poor understanding of end user needs. Regulations determine the performance of materials used by the industry and in turn, this limits the opportunity for innovation. Building regulations incorporate a high margin for error; they err on the conservative and traditional side and they require proof of performance over many years before they can be approved.

The second reason for the lack of innovation is that we, the public, are conservative in our demands of the construction industry. As long as we want to live in houses that are built of brick, with oak beams and slate tiled roofs, that is what we will get. This conservatism is largely cultural, but has been reinforced by experience. Post war prefabs, high alumina cement and high-rise redevelopments were all innovations in their day that failed to deliver the expected benefits, hence people retreat to the comfort of the familiar.

The third reason, for the lack of innovation is poor understanding of the needs of the market. This is partly because of the extended supply chain. Brick manufacturers don’t sell to the public – they sell to merchants who sell to builders who then sell to the public after the intervention of an architect. This is a convoluted line of communication – from the manufacturer to the people who drive the market. This means that there is very little incentive to innovate. Most manufacturers of construction materials ask themselves the question ‘why do something different unless you have to?’

If a company does take an initiative, do things differently, and innovate, it can steal a march. Take Kingspan, for example. It has spent time looking at new opportunities rather than resorting to ‘taking the easy route’. Kingspan has risen to the challenge of offering new and innovative products instead of using traditional building practices and materials. And it has profited as a result, growing in size and dominating the sectors in which it plays.

How does a company become innovative? First, it needs to have a mind-set to be bold and to be different. Moreover, it needs to listen and learn. Customers are a fertile source of new ideas. They are the users of products. It is they that suffer their inadequacies, often to the point where they make their own modifications to improve them. Regular contact with customers, especially feedback from trained sales engineers, is an excellent source of new ideas.

A product improvement developed jointly with the customer has the added advantage of locking the customer in, as the two companies work together and a specification is drawn up which favours the entrenched supplier. The use of sales engineers in generating new product ideas will only work if it is given the constant encouragement of management. It will not work as a one off exercise for, as already stated a company needs to have a culture of being innovative and doing things differently. Innovation is not the sort of thing that can be flagged up as this month’s good idea – it must be there for the long term.

It can be helpful to have impartial third party assistance. Research companies can help because they are objective and systematic. This can help draw out the underlying issues and new ideas that have real value. Without assistance, groups of sales engineers can be good at developing range extensions or product modification, but these don’t always have a high commercial value.

Competitors too, can stimulate new product ideas. Companies so often fall into a routine, producing designs and using production methods, which are seldom challenged. The examination of competitors’ products and internal questioning by the technicians who strip the products down and analyze them may produce new ideas. It is important that the technicians have an open mind and are prepared to criticise, accepting that there is almost certainly a better way of making their product.

Focus groups with architects or tradesmen can flush out un-met needs and can be used to test concepts or prototype products before they get to market. Their cost is inconsequential in the total context of a new product development programme and it ensures that what ever is created is in line with market needs.

Focus groups generally comprise eight or nine people recruited to discuss a subject because they are key buyers or specifiers of a product. Comments from one correspondent spark off thought’s in another that wouldn’t arise in a one-to-one interview. This brainstorm effect is ideal for collecting or evaluating new ideas.

Where focus group targets are scattered geographically, or where participants may be coy about discussing issues or new ways of working in front of competitors, the one-to-one interview is more appropriate. These have the advantage of offering a more in depth insight. When budgeting for focus groups think about £10,000 for two focus groups (having two groups provides confirmation that each is thinking the same way). In-depth interviews with around 15 respondents would cost a similar amount.

Construction is a dynamic and challenging industry. It can recapture the can-do spirit of the Victorians if it embraces innovation in technology, in distribution and in communication. The next decade will present many challenges: global warming, pressures on energy and material resources, the effects of changing demographics and demand for affordable housing.

Information is a key element in turning challenge to opportunity – all wealth stems from having knowledge that others do not. Research is an important key to this knowledge that forms the framework by which the industry can innovate to develop new products, develop new distribution systems and understand how to communicate more effectively internally and with eventual end users.  CT-E

Paul Hague is managing director and founder of industrial market research specialist, B2B International. For further information contact Paul Hague, B2B International Ltd, Tel. 0161 440 6000 Fax. 0161 440 6006, E-mail: paulh@b2binternational.com Web: www.b2binternational.com

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