The construction industry is at a cross-road. Construction owners, managers and contractors need to apply value, innovation and differentiation under a different business model to move forward.
Many of today’s industries were unknown a century ago. Cars, aviation, petrochemicals, health care and music recordings were un-thought of or just emerging.
Even in the past two decades, new industries such as mobile phones, genetics, snowboards and online entertainment have emerged.
Imagine the future. What as yet unknown industries will be commonplace in the next few decades?
Industries evolve or are re-created. The construction industry will not be immune to these changes.
Up until now, the focus has been on developing competitive strategies based on a war mentality, fighting over territory that is both finite and constant.
But the construction industry is not constant; it is evolving and primed for new possibilities in fields that as yet are uncontested.
Traditionally, when 80% of construction companies add ‘innovation’ they usually perform small improvements by tweaking at productivity or systems within an existing market to lower cost structure.
It’s only 20% who aim for uncontested market space.
With the majority of products and services offered by the construction industry being similar, the only differentiator is price, with shrinking profits for contractors being the result.
Brand loyalty, generally, is on the decline – so for contractors who expect clients to remain loyal while their product remains the same – they’re asking too much.
So how can the construction industry break out of a traditionally competitive space and create innovation through a systematic approach towards change and in the process deliver high performance?
1. Perform a Strategic Gap Analysis
Review existing products and services offered and compare against client needs, usability and functionality.
Identify traditional and non-traditional markets.
2. Map your buyer-experience from purchase to end-product/user, including execution, use, supplementary services, maintenance, functionality and form.
Map procedures, services, usability, process, control, maintenance and functionality against client experience (communication, value, convenience, risk, environment and image).
3. Create a value chain within these buyer-experiences.
Identify resource hurdles, motivational factors and role of influencers.
4. List buyer blockages
Price, location, environmental considerations, knowledge equity, service, lack of differentiation
5. List competitive factors of your products and services that affect buyer decision.
For example: Consider value against: utility, price corridor, cost structure, streamlining, customer productivity
6. Identify your current customers and non-customers against a needs structure and/or buyer blockages.
For example: fringe customers, alternative niche customers and not-applicable customers.
7. Consider which products or services your company could pioneer or forge into new territory with.
For example: in what ways can you reach beyond existing demand?
8. List products or services in your industry that are conformist – ie based on competitive benchmarking, imitation and price competition.
List long-held assumptions about your industry and ask ‘What if’ questions to break boundaries of conventional thinking.
9. Identify ways to bundle or package product offerings to add greater value.
What complimentary products and services does your client consume alongside your own?
10. Review emerging trends that will impact buyer decisions.
What political, economic and social factors could forge buyer demand on local and international levels?
Strategic moves are the only ways to measure performance – the decisions and actions taken to create a new business offering within a new market segment using value as the cornerstone and innovation as the practice.