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
How Rebel Concept Harnesses AI as a Design Tool to Improve the DFMA Process
“The complexity of projects and the size of project are so large, and the technology is so complicated that AI would do it so much faster than we are,” says Kris Droszcz, CEO at Rebel Concept. “Everybody’s struggling to control the manufacturing processes according to the design. And I think that’s what AI will do.”
One Answer from AI Can Provide Innumerable Opportunities, says Stack Modular’s Jim Dunn
The Stack AI Engine is not fully functional yet, but it offers an unlimited number of productivity benefits. Currently, the company is using AI for cost estimates, most recently for a project out in California.
GrayWolf: Building the Future of Modular Data Centers to Power the AI Revolution
The growth of artificial intelligence (AI) and cloud-based applications has created an urgent need for data centers capable of managing massive amounts of data. As businesses across industries increasingly rely on digital infrastructure to power their AI tools, the demand for data centers has skyrocketed.
Artificial Intelligence: Yes, it is a Construction Game-Changer
Much like other sectors of the economy, AI is reshaping construction, revolutionizing how projects are planned and executed across the country. While it is obvious that AI cannot do certain things by itself, like laying bricks, paving roads, or shingling roofs, its impact stands to be both massive and positive.
The Potential and Possibilities of AI for Offsite
AI is everywhere. Many industries have incorporated AI into business as usual with new organizational structures and new dependencies to be more efficient and to automate repetitive tasks. Offsite construction will not be immune to AI’s ubiquity. The technology offers unique benefits to the offsite building process.
Moving from AI Hype to an AI Advantage
Learning about AI will help you see past the overinflated hype and identify the opportunities specific to your own business. Learning about AI is like peeling an onion – each layer reveals something new, and occasionally it might make your eyes water. But in the end, you’ll have all the ingredients you need to cook up some real innovation in your organization.
The Blueprint for Smart and Ethical AI Integration in Your Business
The journey toward smart and ethical AI integration involves crafting a strategic vision that aligns AI’s transformative potential with your organizational goals. True success with AI is measured by its capacity to enhance human capabilities, foster sustainable growth, and generate value for all stakeholders while actively avoiding ethical pitfalls and harmful risks.
Five Factors for Success When Shifting Your Business to Modular
As labor, competitive and cost factors push more contractors and developers to embrace the opportunity to go modular as a first choice and not a last resort, it’s become clear that adopting this new model requires more than just a willingness to make it happen. Here are five factors to consider as your company moves to a modular construction model:
UniCool-Edge: Optimized Cooling Solutions for Modular and Edge Data Centers
In an industry where efficiency, scalability, and security are crucial, the UniCool-Edge™ system is a revolutionary solution for modular data center manufacturers. By offering external mounting for maximum space utilization, energy-efficient cooling, and pre-commissioned reliability, UniCool-Edge helps manufacturers stay ahead in the rapidly evolving AI-driven data center market. As edge data centers continue to expand, solutions like UniCool-Edge will play a vital role in supporting the next generation of modular data centers and their data center infrastructure.
Building Skills in a Virtual World: Immersive Training for the Modern Workforce
As both the hardware and software for developing and deploying XR applications continue to become more affordable, the investment in this technology as a training tool is increasingly appealing. XR also offers several other benefits, including performing potentially hazardous tasks in a safe environment and acquiring new skills without the immediate need for physical materials.