Innovation – What’s in a Name?

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Monday, December 23rd, 2013
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The construction industry doesn’t talk about ‘Research and Development’ much any more. Perhaps the constant reminders that we spend noticeably less on R & D than most other sectors have made us altogether too depressed to talk about it, never mind do anything.

Instead we’ve resorted to the more comforting and certainly less confronting notion of ‘innovation.’

I suspect the currency the word ‘innovation’ has gained in the last few years reflects the discomfiture too many people and organisations in this industry, and others, feel when faced with the stark reality of R & D spending by our major international trading partners. We are regularly outspent by Japan and many of the Europeans, and increasingly (again) the US. And it shows, I think, whenever we see some firm or other win a project or a part of it, at what industry gossip tells us is too low a price.

There are two issues involved here. The first is the unwillingness of an organisation to concede that one of its competitors may have won the job by being cleverer, by genuinely learning and applying a better way of doing things. The second, the flip side of the first, is that it is easy to blame losing on having gone in at “about the ‘right’ price.”

The notion that there is some ‘right’ price or range for construction projects defies their very nature. Each is unique. Each should embody and reflect a clearly defined understanding of client need, expressed through well crafted design and construction. The response clients are increasingly looking for is one expressed not through drawings or specifications, but with concise statements of the functions which a solution will deliver.

They want answers, not monuments.

Successful and profitable construction is increasingly not about materials and labour. It’s about having the learning, experience and skill to help the prospective client understand and articulate real need, and having the knowledge to meet the need better than anyone else.

The sea changes in role of the now disbanded public works agencies around Australia are a current and vivid example of the point. The old departments of state designed and constructed for tied government clients, employing considerable numbers of designers and constructors. Now the most highly prized skills in what remains of those agencies are those which assist the client develop needs analyses and preliminary funding proposals.

Peter Drucker in his book Post-capitalist Society captures the paradigm change succinctly:

“Knowledge is the only meaningful resource today. The traditional factors of production – land, labour, capital – have not disappeared, but they have become secondary. They can be obtained, and obtained easily, providing there is knowledge,” he wrote.

Research and development, particularly research, has come to be perceived as somehow inappropriate for the construction industry. Innovation, with its connotation of almost accidental discovery of something new which may be useful, is rather easier to accommodate.

Creaking along with the old skills, old knowledge, old approaches, won’t cut the mustard for much longer. We can see that in the ownership of the largest constructors in Australia, which are often either foreign-controlled or getting out of the game. At the specialist contractor end of the market, the same realisation that the financial and intellectual capital base needs to be substantial just to survive, never mind prosper, seems only just to be dawning.

The capital problem is easy fixed – get big, go niche, or get out. Only the foolish client or head contractor will take a risk with a weak or over-stretched balance sheet, or financial management skills which don’t match the size and complexity of the project.

The intellectual or knowledge base is much harder to deal with. It requires making the time to reflect on what might be rather than what has been, dissatisfaction with the present, curiosity, and determination to change. Above all else, it requires the insight and patience to realise that knowledge at the edge, real breakthrough learning, won’t come by accident.

That requires research and the application of research to produce tangible, practical products or processes. And that in turn calls for time and money.

Innovation in the construction industry has come to suggest accidental breakthrough, which is preposterous. It is and can be no substitute for building enterprise and industry cultures which recognise and reward sustained commitment to gaining new knowledge, to genuinely find new and valuable ways to meet client needs.

Research and development might make us feel uncomfortable, but at least it throws down an honest challenge.

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