Being 'value generators' instead of 'order takers'
A contractor turned college professor told Groundbreak attendees that they need to find solutions to customers' complex problems — even if they don’t ask.
AUSTIN, Texas — Low tech, archaic, outdated business model, wasteful, low productivity. These are the words associated with the construction industry, Barbara Jackson, director of the Franklin L. Burns School of Real Estate and Construction Management at Denver University, told attendees at Procore's Groundbreak 2018 conference Tuesday. But contractors must start innovating for customers with the help of technology, she added, before others do it for them.
“Clients say we want [contractors] to do more,” she said. “Then you ask the contractor, ‘why aren’t you doing more?’ and the contractor says ‘it’s because clients don’t ask for more.’ We need to prepare for providing the client more than they asked for.”
Innovation is associated with creating a plan and “working it better,” Jackson told several hundred people during a session at the annual conference. “But that’s not what our world looks like. We plan and then work the plan.”
Jackson, a former design-build company owner, said it’s time for the industry to change before “someone will change it for us.”
She noted that when Amazon bought organic grocery chain Whole Foods more than a year ago, the stock prices of grocery store chains and other food retailers, including big-box stores like Costco, dropped precipitously in anticipation of what Amazon could do for the then-struggling Whole Foods.
In the new collaborative economy, Jackson said companies like Uber, Facebook, Alibaba and Airbnb were not created by people involved those industries. “Why wasn’t it a taxi driver who created Uber?,” she asked.
So construction firms must be proactive, “working on this stuff whether your clients ask for it or not. Sure it costs something, but if you don’t do it, someone is going to” do it for you.
“We must shift from being order takers to being value generators,” Jackson told the audience. “We must create and innovate.”
A “value generator” for clients
Jackson said that construction firms must be value generators for their customers by:
- Exploring their questions.
- Addressing their challenges.
- Taking an optimist stance. “Don’t shy away from being overly optimistic.”
- Being proactive, not reactive. “Engage like you mean it.”
- Judging their organizations by the impact they have, not their intentions.
Even though they don’t ask, contractors must identify clients’ complex issues. And where are the solutions going to be found? In technology, Jackson said. However, the U.S. construction industry has a low adoption of technology. According to a McKinsey & Co. survey, construction’s tech adoption is ranked just above the agriculture and hunting sectors.
“Most of the industry has not even begun to adopt technology,” Jackson said. By contrast, Dubai has resolved to have 35% of its municipal buildings 3D-printed by 2030, she added.
"If you think we are going to convince people to get into the construction industry, it’s a fallacy.”
The big gaps: labor and leadership
One of construction’s “hard trends” is the shortage in labor, which Jackson said is never going to recover from the Great Recession. “When they left, they left for good and they aren’t coming back. If you think we are going to convince people to get into the construction industry, it’s a fallacy.”
Jackson said contractors should look to automation to fill the labor gaps.
But the college professor said the biggest gap the industry is facing is between “the leaders we have and the leaders we need.”
“When we talk about leadership, we are mostly talking about management,” she said. “[Management is] supposed to keep the status quo. Leaders are people with vision who change the status quo,” and they usually are the employees who embrace technology.
But leaders aren’t just younger workers, she noted; they also are senior “sparks” who have been “thorns in your side for a long time.”
Jackson concluded her presentation by saying that construction executives have to pilot cultural change or risk their firm’s extinction. She noted that the average lifespan of a U.S. company is 15 years; decades ago it was 60-plus years. Corporations are dying younger, she said, but that’s because they are not responsive to their customers.