Many of today’s contractors are striving to become more innovative, particularly since it can help streamline workflows, enhance efficiency, and improve profitability. Many challenges stand in the way, however, which are preventing contractors—and the construction industry as a whole—from fully embracing the many innovations currently available in the marketplace.
Some of these challenges are under their control and can be fixed with a bit of grit and perseverance, while others—like a complex ecosystem and the fact that no two projects are ever alike—are not. Put together, this can leave contractors with an unclear path forward, which would help explain why construction has not been seen as an innovation leader and has even struggled to show significant productivity gains on the same scale as other industries.
Columbia Business School’s Center on Global Brand Leadership, with support from Trimble, recently explored the innovation challenges that are holding contractors back and offered up solutions that are designed to drive their innovation goals forward. Below are a few key findings from the report, “Innovation Growth in the Lynchpin Industries,” all directly applicable to today’s contractors.
What barriers exist for construction innovation?
- Unique projects within a complex ecosystem. In construction, no two projects are alike, leaving project managers to tackle each one differently based on varying on-site conditions, making successful approaches difficult to scale. The construction ecosystem is also incredibly complex, with an emphasis on upfront planning and subcontracting, as well as optimized timelines and lowered costs. This can deflate the risk-reward equation for new technical innovations, making them difficult to implement across projects or throughout business operations.
- Varying regulations. Construction is heavily regulated for good reason: The industry is complex and dangerous, with one wrong move leading to a lost limb or a lost life. Although necessary, regulations can also depress new innovations because they not only need to have a viable proof of concept, but they must also meet strict regulatory requirements, which vary by state, region, and country. This can slow innovation implementation due to the imbalance between risk and reward.
- An aging workforce. An aging population is another innovation challenge for the construction industry. Although an experienced workforce has many inherent benefits, it can also stifle new ideas by creating a reliance on fixed thinking, as workers are typically more comfortable doing things as they’ve always done them versus trying something new.
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.
What can advance construction innovation?
- Interoperability. Siloed data has been another huge barrier to innovation as contractors often have data in various locations and unconnected to one another, leaving contractors unsure of the state of a project or the business at large. Construction stakeholders also typically have different software preferences, which can slow projects as everyone isn’t working off the same information in real time.
Interoperability—or the ability for data from different software systems to automatically connect with one another—is an innovation opportunity as it enables stakeholders to use their software of choice so long as it is connected to other software solutions, enabling stakeholders to more easily share data across and between systems. This creates a single source of truth, helping contractors run their projects more efficiently and effectively. - Government investments. Many governments across the world have stepped up their interest and commitment toward helping lynchpin industries implement new innovation practices because they understand the potential economic advantages that can come from it. The passage of the Infrastructure Investment and Jobs Act (IIJA) is just one example of this being put into motion here in the United States.
Government intervention is increasingly happening in response to shifting economic trends and the impacts of climate change, causing governments to recognize the need to function as partners in promoting innovation. Contractors should work hand-in-hand with government entities to analyze site and community needs, as well as involve other local and national stakeholders to push projects forward that will most effectively use public resources. A balance between common needs with low variability, alongside high-priority and site-specific projects can create the greatest impact. - Venture capital. Venture capital has become a big innovation driver for many industries, but that’s not been the case for construction despite the fact that it makes up roughly 4% of the U.S. GDP. Although it has historically not been a big recipient of venture capital funding, that’s changing as venture capital money has ramped up from the finance industry and from the construction industry itself. This includes Trimble Ventures, which is Trimble’s corporate venture capital fund that invests in early and growth-stage innovative companies that align with the company’s mission of transforming the industries it serves.
Venture capital has the added bonus of enticing younger demographics into construction by demonstrating the industry’s commitment to innovation. This can help drive talent recruitment among both traditional and non-traditional audiences.
The construction industry can become more innovative if contractors are willing to overcome common challenges and embrace innovations that can help their companies become more efficient, productive, and profitable. But they must first understand what’s holding them back and then put new solutions into place that can help them individually and collectively.
Contractors can 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 whitepaper, “Innovation Growth in the Lynchpin Industries,” along with additional challenges and solutions that apply to a broader subset of industries.
