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FMI Quarterly/March 2012/March 1, 2012

Innovation: Fostering Creativity in the Construction Industry

Companies that are excellent in operations tend to implement innovative ideas more effectively.

Creating a company that can continuously innovate is increasingly difficult in this demanding market. Our culture does not readily accept “Star Trek” vision discussions of flying unmanned aerial dozers, moving from project to project with remote controls. Few in our industry have appreciation for that “Idea-Prolific project manager” that interferes with the project constantly by introducing shiny new ideas that cause rework and much frustration. In fact, most contractors are struggling to execute the small-scale work that they have on their agendas with the little resources they have remaining that are stretched thin.

Despite the deep-rooted challenges mentioned above, some contractors have created a culture of innovation and are reaping the benefits during an otherwise brutal market. In these firms, no longer do you hear, “But that’s how we’ve always done it” justifications for a business-as-usual environment. No longer is there an overwhelming sense that if you are not incurring labor costs on a project, you truly are not working. The companies that have been able to implement creative and innovative cultures and procedures are the same companies that have been able to succeed during these difficult periods. Creativity and innovation allow companies to be flexible as they adjust to their environments and the challenges that they face.

2012q1_foster_creativity_ex1A national civil contractor suggested, “There are no changes or improvements in this industry. The companies are using the same equipment and techniques as they always have since the plow and steamer.” In fact, quite the opposite is true — in the same sector of our industry, huge productivity advancements in telematics and auto-grade features have revolutionized pushing dirt to an almost manufacturing-like precision. While none of it is perfect technology, many contractors are enjoying huge productivity gains because of early and effective adoption of these powerful tools. Improvising tools and procedures as well as understanding their value is essential for companies to be able to succeed. Tools can only be useful when contractors understand the benefit from three major levels of innovation (see Exhibit 1):

  • Strategic innovation includes a contractor’s relationship to the market through business development innovation. Innovative products and services often position contractors differently in the market, propelling them away from the gravity of commoditization.
  • Operational innovation includes a company’s initiatives to embrace new technologies and systems. Some companies have adopted GPS technologies, productivity improvement, BIM systems, prefabrication, software or new training initiatives to improve facets of getting or doing work.
  • Tactical innovation focuses on the technical details around project means and methods innovation. Depending on the sector of work, field managers and technicians spend time identifying the best methods to reduce labor or equipment needed to accomplish the same tasks. For an equipment contractor, it may include equipment positioning, sizing or skill sets.

If contractors are able to overcome some of their institutional biases against change, they become much more able to penetrate new markets and find new customers, while adapting to the market and creating a distinct value proposition. Avoiding competition in the commoditized world should be every contractor’s New Year’s resolution. Few of us have a natural instinct to experiment like former Dallas Cowboys’ coach Tom Landry on the football field, when he perfected the groundbreaking flex defense and then later came up with multiple offense schemes to attack those very flex defenses. His ability to innovate and consider new approaches to an established set of practices resulted in many victories.

2012q1_foster_creativity_ex2In the same light, we see contractors building success through innovation using four tools. These tools (see Exhibit 2) create a practical approach to implement innovation and add value and include:

  • Skills
  • Systems
  • Strategic Awareness
  • Style

Combined, these tools can help change the trajectory of the company and create an evolutionary company that encourages and implements creativity and innovation successfully.

SKILLS

A great amount of discussion is given to training in the industry, yet training is often simply a series of one-hour lectures, inconsistently presented, with little follow-up or reinforcement. Skills are the applied result of effectively integrated training programs. Developing and expanding skills can take many forms and may include online learning, external colleges, internal experts as trainers, etc. While each position in a construction operation has hard and soft skills, the list below focuses primarily on the soft (leadership/communication) skills needed to build an effective culture of innovation. Despite many arguments about great innovators being born, (i.e., creative mind-sets and artistic personalities have a predisposition to innovation) we have found that most of these skills can be taught and led by example.

The business leader establishes the company’s operating methods and procedures. He or she sets the direction for others to follow and helps build relevance around the vision. This distinct position truly sets the tone for how the company regards innovative activities but requires action to implement an innovative culture effectively within the company. Having a broad understanding and vision of where the company is going and effectively (and often) communicating it are key skills that often can be learned with some executive coaching. Knowing how to lead this cultural transition takes patience and process.

Key leaders and managers must be able to encourage pushback from their subordinates. This requires a different approach to leading. Typically, contractors are ripe with biting sarcasm and high control methods. Leaders must understand how to attain results differently. Finding a true balance between allowing new ideas and questioning how things are done, while maintaining a foot on the accelerator and ensuring success, takes mature individuals and often, new skill sets. Building trust in subordinates is crucial and can be trained over time. Learning how to ask open-ended questions or getting feedback from peers in a 360-degree assessment are tools that can help leaders and managers obtain skills necessary in this transition between old (top-down) and new (participative innovation).

Operators, technicians and foremen probably face the most significant change in their thinking. As trade and technical experts, they focus on “how things are done”. They are hard- wired in trade knowledge and skills to execute assignment completion effectively. In their development over the years, they have built a muscle memory that the industry requires in order to be successful under great stresses. On certain occasions, this can be a barrier to considering new methods since it encourages business-as-usual thought. They must be able to balance getting things done with consideration for new and better ways to execute (See Exhibit 3.)

2012q1_foster_creativity_ex3In the 1980s, Brickman Group, a national landscape maintenance firm, shifted from an install-only, new-construction model to a maintenance, contract-based business. This fundamental transformation in the organization happened during a downturn and was successful because of the leadership of the founders. Skill training led the way in the transformation. Operating leaders went through thorough sales and financial training to get to know their customers and understand the cost of operations. Brickman built off its high-quality customer orientation and reinforced these company fundamentals with training. Due largely to this focus on new skill training and implementation, Brickman grew from a geographical focus in Chicago to successful operations with small business units and branches concentrated on customer service in more than 22 states.

SYSTEMS

Many contractors find that systems actually create more room for great ideas. This seems contradictory. Effective systems force managers and leaders to regularly step back from a “here’s how it is done” mentality and see the company from a different perspective. Senior leaders should try to draw parallels and demonstrate insight from the valuable outside perspectives. As work is done following these systematic discussions, senior leaders can look for applicable ideas in-house, strengthening the “gain” from the sessions.

One simple example performed by most contractors includes pre-job planning and post-job reviews. Often these meetings are held and companies “check the box” rather than using these meetings as a learning opportunity to share good ideas. The organized time spent preparing for and following up after projects is key to thinking through more innovative methods of executing work. Leaders must set conditions for success at the meeting and allow experienced superintendents the opportunity to share their successes and challenges on projects. Done well, this approach allows the project teams to see themselves more clearly and their performance from a nearby hilltop, rather than just in-the-trees-daily, there’s-one- way-to-do-it execution.

Many innovative contractors have developed common systems to help facilitate ongoing learning and association of new ideas. Some of these examples include:

  • Quarterly meetings to identify and invest in new strategic and operational ideas.
  • A template or gate system to allow these opportunities to flourish, while keeping the potential loss at a minimum.
  • Task forces of junior managers who regularly stand and deliver on the status of new opportunities.
  • Partnering programs to create an employee exchange with the industry to include IT, manufacturing or the military, to bring in fresh ideas.
  • Identifying customer-training programs and getting senior leaders involved (this often works with manufacturing and Lean training.)
  • Collaborative methods to handle operational challenges and even safety problems.
  • Obtaining Generation Y intern feedback after the first 90 days, as if these interns were consultants conducting an evaluation of the company’s efficiencies. This should be done with advance notice to the interns at the beginning of the period, not as a pop-quiz at the end of the term.
  • Knowing customers’ pain points, which often rely on systems (SRMs, CRMs, Sales Meetings, etc.)
  • Best-in-class operational policies and procedures that are researched, implemented and expanded as the situation shifts.
  • Regular external education programs, with projects assigned to attendees for follow through with stand-and-deliver sessions.

Some of these systems are commonplace and simple to implement, but require a frequent forum to focus on innovation. Most effective companies integrate these ideas seamlessly in their day-to-day operations. While taken for granted, ensuring the company has best practices and systems to execute flawlessly and consistently is essential to executing new ideas. Without ability and expertise in great operations, even the best ideas will fail. Excellent execution is a precondition to implementing innovative ideas.

A large electrical contractor emphasizes quality control to such high standards that it has ingrained these rigorous quality control procedures into every project. It then continues this initiative with the development of a senior leader as full- time quality control supervisor whose permanent role is to inspect, train and coach division managers on proper and effective implementation of these standards. The contractor holds regular sessions for company leadership to catch trends and look for new and improved methods, which constantly improves the quality motto of the company in the eyes of its customers. Over time, it even made its customers aware of the quality control standards, deficiency reports and corrective actions. Such candidness is not normally expected when working directly with general contractors on private projects; yet this approach has advanced their reputation and profitability. Even more so, it creates a thorough dialogue with the customers that allows for creative brainstorming and additional value engineering for future projects. This systematic process serves as a systematic tool towards innovation.

Routine perspectives brought in from outside industries generate stimulation that drives innovation. Contractors that perform work in manufacturing plants can learn firsthand the value of ISO 9001 and Lean processes in a manufacturing setting. Many have taken the same principles and found benefits to their own business. Some contractors have gone so far as to certify ISO 9001 annually for their own advantage, not because it is mandated by some agency or customer. Other outside perspectives and business practices found within the IT community and the Department of Defense can provide contractors with benefits from innovation when adapted properly to their own businesses. Many companies have adopted safety standards and best practices imposed by the Corps of Engineers in their commercial or private work.

A large mechanical contractor was one of the first to adopt building information modeling (BIM). It started as a test case with minimal investment and quickly grew into an effective way to reduce costs and communicate effectively from design to the fabrication shop. The tools surrounding prefabrication and BIM created an environment where even line operators could make suggestions for innovation. The company has systemized incentives, programs and processes to continue improving this proficiency.

STRATEGIC AWARENESS

Executive leaders within any organization need to be concerned primarily with the overarching decisions that affect the company’s foundation. This strategic awareness ensures that the company is following the appropriate course and is flexible enough to persevere through unexpected challenges. A long-view approach is the essence of leadership. While senior leaders spend more time focused on this information and these decisions, it is important that managers share in some of the long-term implications of situational understanding.

Many companies have found over the past three years that a number of employees and managers do not understand or manage budgets appropriately for such a tough market. While many senior leaders beat the recession drum, after hearing it once or twice, employees tend to gloss over and just assume new cost-cutting initiatives are beginning. Improved results can be reached when specific details are discussed and updated, such as sharing information about new rules and regulations in health care, environmental regulations and building codes and how they may impact the company. Other discussions can cover changes in customer budgets, initiatives and needs. Generally, sessions like this should complement regular company updates that share information about backlog, initiatives and applaud company success stories. The idea is to make all employees more aware of their surroundings. With this effort, they are more able to sense change and provide information to key leaders about the changes they are seeing at their level. It is akin to having scouts out on a mission. These valuable scouts help refine the plan’s intelligence when the environment or direction is uncertain. Scouts must know both what they are looking for and at in order for them to return with vital information.

In creating a strategic awareness throughout the company, leaders facilitate an environment that sensitizes employees at all levels to their customers and the market. All employees can then focus on customer needs and think through how to add value. Rather than just renovating another storefront, superintendents are more keyed into the customer’s world and specific needs. This allows them to build relationships directly and become more aware of value as perceived by the customer. This information, collected across the market and shared, becomes vital to help the business leaders make strategic decisions about customers, markets, services and future plans.

Another benefit from ensuring the company has a shared vision is that it enables a strong and unified culture within the organization. The company’s overall goals and aspirations are more reachable through each employee’s individual performance towards the shared vision. Shared visions are important because they help motivate and inspire the entire organization. Many companies without a shared vision reflect the volatility and uncertainty of this economy, and their managers find it difficult to lead effectively. A shared vision allows employees to rely on at least one certainty amid the flood of media information they absorb each day. The organization gains higher levels of dedication by allowing its employees to persevere with a common purpose through difficult situations.

Implementing a shared vision means developing buy-in throughout the company. The leader must be able to influence the employees’ dedication to the company and its goals. The company needs to be able to appeal to the employees’ aspirations by reinforcing the importance of each employee’s individual performance. Being able to show how each employee’s aims and ambitions relate to the company’s shared vision begins sparking the creative and innovative juices as the employees develop passion for the company’s progress. A shared vision connects the company with the workforce and encourages individual contributions. These methods are important to achieve successful buy-in throughout the company.

Top firms targeting work in the health care sector, for example, find success with the development of account managers. Persons filling this role study the customer needs, markets, budgets and industry in order to know the company’s customers better than the customers know themselves. This expert manages the relationship between the two businesses and ensures the contractor’s best foot is forward. Often he or she orchestrates and manages the zippered relationships between companies. The deliberate pairing of functional areas between contractor and client creates a series of relationships that combined, allows for improved business development. An example pairing may involve estimators developing relationships with facility management staff; a CEO, with the board of directors; the superintendent and project manager, with the inspection staff; and CFOs, with accounting staff. Such zippered relationships provide no value if the contractor does not debrief each party regularly and share information learned about new spending programs, budget changes or renovation needs. The structure developed with the account manager effectively creates a strategic awareness about the customer that allows for creative problem solving to benefit both the contractor and client.

A national general contractor adopts strategic awareness through an integrated strategic planning process. Young project managers often shoulder the load to understand market insights and research that then is presented to senior leaders during the build-up to the planning sessions. They get valuable insight into senior-leader-level thinking because of their hard work and gain exposure to help shape their own futures. The sentiment the contractor follows is that in 20 years, the junior leaders will have to live with their decisions and will provide the best recommendations possible. As a result, the company gains better developed junior leaders, creates a shared awareness of its markets that fosters better cost control of its projects and in some cases, brings new perspectives to the table.

STYLE

Often the development of skills, systems and strategic awareness creates a gradual change in behavior across the company, resulting in an improved culture. Done well, these tools create a culture of an excuseless environment where junior managers feel as though they can control their future. The integration of these three items creates momentum that must be continually fostered by senior leaders. Over time, the culture of the company shifts and otherwise hardened veterans more readily share great ideas.

In some ways, most companies have these instincts already operating at the project team level. Since many companies allow project managers and superintendents to run projects autonomously, many adapt best practices based on what they have seen from other companies. Most adopt ideas and systems that simplify work needed to attain success. These individual “pockets of creativity” across the business can result in every project site having a different “best practice” or great set of ideas. Leaders must foster that innovation and expand those efforts. At the same time, a collective application of those best ideas across the entire organization will improve output and quality, rather than letting them reside in a fractured manner. The new culture must be a bigger movement of sharing what does and does not work across all projects. This shared awareness and regular acknowledgement of different methods can become a heated conversation, yet leaders who encourage and control this ongoing debate improve the entire company based on that dynamic tension.

Changing culture takes time for most contractors. It is similar to turning a large ship and requires much leadership. Its importance cannot be understated since it is a success multiplier. The workplace culture directly affects the employees’ motivation, dedication and commitment to the company.

While building and reinforcing an innovative style can be done with the building blocks mentioned above (Systems, Skills, Strategic Awareness), it makes sense also to work on the company style. Most companies were formed in the image and mirror the personality of their founders and leading influencers. Much like conducting a leadership 360 assessment to learn what others perceive of your leadership skills and abilities, it is crucial to face the music and get an assessment of the current company posture and perspective on innovation. If the leader of the business has a “not invented here, so we won’t implement it here” mentality, it will be quite difficult to create this culture. This introspective look at the personalities of leaders is an effective starting point on the path to awareness. This introspection should filter future decisions on hiring and promotions if an innovative style is a priority within the company.

Examples of style in practice often can be found in some larger companies. Take one national contractor as an example. Headquarters was known for creating paperwork, adding requirements and relentlessly saying no to every request or suggested exception. The nickname the field has for the headquarters is the “Noquarters.” Staff functions are similarly labeled behind their backs. This stuck-in-their-ways attitude pervades some cultures and serves as a perfect example of what not to be.

Take Hilti Corporation as a great example of a culture that has successfully accepted innovation focused on the customer. Adopting the personality of the founder, the company grew by always putting the customer first. Rather than being only a great tool manufacturer, Hilti focused on understanding customer needs. To this day, “Customer” is the first of its three core values. This supports its strategy as the company continues to get closer to its customers and develop refined tools to solve its problems. This customer-focused strategy separated it from its competition and created great value in the Hilti name as an innovative provider of value-added solutions. It has translated into a corporate structure that includes local sales representatives, and, not surprisingly, at the top of the organizational chart is the customer.

CONCLUSION

In the past, many fixed mentalities have limited contractors from considering creative approaches. Innovation has a valuable place in the construction industry and the contracting organization. It can add value not only to the customer approach and market positioning, but also in both operations and tactical applications on the ground. Creativity and innovation flourish when the employees are committed to the company and its direction. Companies that are excellent in operations tend to implement innovative ideas more effectively. The workplace culture must be led to encourage employee buy-in. It cannot be commanded through a memorandum or rousing company speech.

Instead, organizations have found success using an appropriate combination of tools to include skills development, creating a strategic awareness across the company and developing regular systems as well as active development of a company style. The change does not happen quickly, but is well worth the investment, resulting in improved execution, better market positioning and increased profitability.

 

 

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