The new radicals

Most of today’s contractors have concerns over ultimate profitability, providing shareholder returns and the need to achieve lower costs to be competitive. So, it seems entirely reasonable that their focus is on cost reduction and operational efficiencies in products and processes, rather than geared towards major innovations.

When presented with a case for innovation, most executives say the timing is wrong, and that there’s no harm in relying on a ‘stick with what you know works well’ approach. However, there is a law of diminishing returns with traditional cost-cutting regimes and you can be sure that all your competitors are following a similar path. The real issue is that some companies may not have the resources or the framework in place to consider more radical product options.

As companies grow, they often find it harder to include really innovative practices and thinking. Managers can often become divorced from innovation.

Importantly, some of the cost-cutting has seen organisations honed to a day-do-day staffing level, but under-skilled for additional product or project requirements such as new product assessment or identifying products to suit specific or specialist projects.

While staff within major companies are sometimes put into ‘innovation teams’, the smaller to mid-sized companies often struggle along, preserving the status quo of using fitting and fixing designs that haven’t changed for over 50 years.

But where are the proactive suppliers, with the ability not only to provide the right products, but also some radical proposals to achieve major shifts in working practices and profitability?

While there are many companies with good skills and ideas, the industry hasn’t always been supportive of their development.

A purely cost-based purchasing policy does not allow suppliers to invest time and expense in identifying, testing and stocking innovative products. If the requirement is for the least expensive product, using an existing design, or copying that of a competitor, will always be quicker and cheaper than looking at the overall requirement then working back to propose the optimum solution.

Also, with mergers and organisational changes, many suppliers have found that their business relationships have changed greatly and that they have to work harder to establish new relationships and contacts, often needing to prove themselves again to a large contracting group that has reorganised itself.

The time for innovation is now, but making this achievable requires more emphasis on value, not cost-based, transactions.

The time for innovation is now, but making this achievable requires more emphasis on value rather than cost-based transactions.

Ideas on how to improve overall efficiency, alleviate problems caused by low skills and save time are eventually more rewarding than a quest for the lowest cost single item, opening up the opportunity of a radical leap forward, not just a tiny percentage cost saving.

Companies also have to recognise the role of innovation in a way that allows managers to consider other options.

The construction sector actually has well-defined processes, yet many of the tests and trials carried out to explore areas of improvement are ignored. Historically, a good profit level masked the detrimental effect some agricultural approaches to practices and products used.

To successfully innovate, you have to ask the ‘basic’ questions that nobody else has asked.

Most products are produced to the supplier’s standard form, but just how many applications are standard?

A good example of this is the case of strut and studding, where manufacturers were essentially just making what they wanted to supply. So we researched what our customers did with the product after we delivered it in its standard length form. We discovered that they usually cut it down to assemble supports and props for cable management and pipework. Further investigation showed that a range of different lengths cut for these applications were common to most projects, as opposed to a standard length. Based on our findings, we invested in these different lengths in sufficient quantities to nullify any price premium over the standard length product. This approach saved time and reduced the need for on-site skills and fabrication. Wastage was also reduced.

Innovation not only helps to raise profits in the short term, it is also a crucial step in providing the end contractor with high quality finished construction projects that are consistently good, each and every day.