Building a digital construction company
Even for firms actively investing in digital transformation, much work needs to be done while the target continues to move. We identified four core steps construction firms should take to maximize their chances of long-term success:
1. Focus on the long term
With stakeholders often looking for fast results, it can be tempting to focus on patching short-term issues rather than thinking big, especially when there’s so much uncertainty about what’s next. But firms cannot effectively leverage technology without a well-planned, long-term strategy.
To create a successful strategy that will maximize the chances of long-term success, you should first challenge your strategic direction, and then seek to define the future state of your organization based on the business models that will create lasting value.
The pressure to react to current challenges is heightened by the rise of newcomers with business models that could disrupt the industry. For example, a US company is acting as an end-to-end provider, from supply through to distribution — from sourcing component parts and assembling prefabricated modules in its own offsite factories, to shipping these to the site and performing all general construction activities, including project management, erection, and mechanical and electrical engineering. The company has effectively created their very own supply chain, allowing them to cut out the distribution profits in the building, control the schedule, and use technology to design, fabricate and install. This model makes it more productive, efficient and cheaper. However, this requires a significant capital investment, which drove them to raise over a billion dollars to date in third-party capital to invest in plant infrastructure.
Meanwhile, a construction company in China that also builds offsite and ships to site, has erected a 57-story modular building in just 19 days. Using a modular method, construction firms can significantly decrease build time and provide owners increased occupancy time, offer a consistent and quality-controlled lean manufacturing process, and reduce their carbon footprint.
Such examples of productivity and efficiency serve to highlight why it’s important to act fast to avoid disruption, but they also demonstrate why it’s essential for any strategy to focus on achieving maximum long-term flexibility. New technologies — and new competitors — are emerging so fast that a strategy that focuses on a single technological solution is a big risk. Instead, organizations should build digital into every aspect of their operations to achieve maximum data-driven insight, enabling them to identify new opportunities and threats across their value chains.