Part I: Valuing Levels of Innovation
Valuing Levels of Innovation in the Modular Construction Industry
Heather Wallace is the Director of Communications and Project Manager at the Momentum Innovations Group.
What Exactly is Innovation?
One of the best ways to determine whether or not something is innovative is if it creates new value. Innovation is when a product, service, or knowledge is renewed, modernized, or improved by the application of new processes, the introduction of new techniques, or establishing successful ideas…to create new value in the market. And there are multiple levels of innovation.
Incremental innovation creates feature improvements on an existing product or service. It requires continuous improvement - something that must be built into the culture of a company where employees at all levels feel empowered and equipped to explore and share new ideas.
Site-built stick framing has been incrementally improving over many decades - from timber framing to platform framing - including an improvement of tools and some materials - from plywood to OSB to MDF and fire-rated wood. But images of framing from 100 years ago look eerily similar to images of framing today.
Adjacent innovation utilizes existing knowledge with the application of technology to gain new audiences.
The Modular Mobilization Coalition is a good example of adjacent innovation. When Covid-19 patients began filling-up healthcare facilities around the country, sixteen independent modular companies banded together to help solve this challenge. All of the companies had an existing knowledge of modular construction - they were all building somewhat similar products for the residential, commercial, and educational spaces. The adjacent innovation happened when all of these companies agreed to manufacture a standardized healthcare product based on a modular platform that allowed the emergency healthcare product to be moved and then converted to permanent residential units when the emergency ended.
Although MMC never got to fully deploy their standardized and configurable modular platform, the concept spawned a number of new initiatives.
Disruptive innovation is the most exciting type of innovation. It shakes up an industry and has the potential to take over market share of existing business from larger, legacy companies. Many times this type of innovation is fueled by the desire to solve a nagging specific industry challenge.
Back in 2007 the founders of Airbnb, Brian Chesky and Joe Gebbia, were living in San Francisco with no money and rented out air mattresses in their apartment to conference attendees because they could not find a hotel. A study from the National Bureau of Economic Research found that in 10 US cities with the largest Airbnb market share, “the entry of Airbnb resulted in 1.3 percent fewer hotel nights booked and a 1.5 percent loss in hotel revenue”. Airbnb not only disrupted the hospitality sector, but the travel sector, as well. They democratized the travel industry - creating more affordable or diverse options for everyone.
3D printing buildings in the construction industry has the potential to be both an adjacent and disruptive innovation. Companies like Mighty Buildings and ICON are utilizing an existing building material - concrete - albeit in a slightly different format, and combining it with a technology already being successfully used in other industries. Creating buildings using 3D printing technology still has a ways to go but does have the potential to offer end users an alternative building method and take business from traditional site built construction.
Why is There So Much Failure?
Only a small amount of innovative ideas actually become successful in the marketplace. Why is it so difficult for companies to innovate successfully?
First and foremost, most legacy companies actively resist innovation, this is especially true in the fragmented construction industry. This is a major challenge as there are hundreds of thousands of independent trades, builders, distributors, and building material companies who work hard but generally maintain the status quo. It’s often said people are scared of change, but a more nuanced perspective is they fear loss, whether it is profits, time or familiarity.
Secondly, early traction and scaling is important but this is very difficult in our industry, exacerbated by combative contracts, little transparency and low-bid transactional relationships. Innovating one part of the process or within a particular geographical area often does not result in another area of the industry moving any faster.
One of the most famous disruptive innovators in the construction industry was Katerra. Whatever your viewpoint of Katerra was, their goals of mass manufacturing + technology positioned them to create efficiencies rarely seen in the construction industry. Their problems were rooted in unrealistic growth and forgetting they were a manufacturing company. Although their failure was highly public and predicted by many, it does not change the fact that they had the potential to be disruptive.
It is unfortunate that hard-tech construction innovation requires a 10+ year commercialization timeline but this means that patient capital is essential for success.
Ultimately, meaningful innovation creates new value whether it’s through incremental, adjacent or disruptive innovation. And we can (hopefully) all agree we need more!
Stay tuned for Part II of this series in a future issue of Modular Advantage as we dive deeper into the topic of innovation.
More from Modular Advantage
From Model to Machine: Why Modular Scale Is Becoming a Software Problem, not a Material One
For modular manufacturers that have already secured demand and repeatable volume, the next major constraint may no longer be forming capacity itself. Increasingly, it is the continuity of the information feeding that capacity.
Who Will Define Modular Products for AI?
Artificial intelligence is making building configurators easier and less expensive to create. This makes urgent manufacturers’ need portable product definitions, stable identities, and shared interfaces regardless of how others’ software is produced.
From BIM to Robotic Production: A Digital Workflow for Customized Components in Volumetric Modular Construction
For volumetric modular manufacturers, the value of this workflow is not simply the use of robotics. Its real value is continuity.
Helping Build a Common Framework for Modular Construction in Canada
Canada’s modular construction sector continues to gain momentum, but scaling it successfully will depend on shared expectations across design, manufacturing, approvals, and project delivery. CSA Z251 helps provide that common foundation.
Edges, Exits & Equipment: A Modular Builder’s Guide to Rooftop Access
Rooftop access belongs in the factory design. Before the modules ship, the project team should identify each route’s users, confirm applicable requirements, coordinate with the roof system and structure, and assign responsibility.
When Timber Production and Modular Construction Share One System
As demand for multifamily and workforce housing continues to outpace what conventional construction timelines can deliver, models that reduce the number of handoffs between structural fabrication and modular assembly are likely to draw more attention.
Your AI Strategy Is an Enablement Strategy
Tools will change. Teaching employees only the steps in one platform creates a narrow capability. Involving them in problem definition, process mapping, data assessment, controls, and measurement gives the organization a way to improve its systems as technology evolves.
By-Right Permitting: The Missing Lever for Scaling Modular Multifamily
Modular has already proven it can outperform traditional building methods on speed and cost per unit. The next frontier is outside the factory in the front end of the process, where projects either clear a path to construction or get stuck in review.
Remote Inspections and The Future of Factory Oversight
Remote inspection is becoming a practical part of modular construction oversight. Its value is greatest when it is used selectively, governed by clear procedures, and supported by complete traceability.
Reimagining Dry-In: How a Temporary-to-Permanent Roofing Strategy Mitigates Risk Between Modular Installation and Final Roof Construction
As volumetric modular projects continue to increase in scale and complexity, the Temporary-to-Permanent FiberTite Roof System represents an example of how traditional trade scopes can be reimagined through Design for Manufacturing and Assembly (DfMA) principles.