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FMI Quarterly/December 2013/December 1, 2013

Building Innovation

businesscharacter1_imageMany construction companies operate profitably and successfully as smaller firms. These tight-knit organizations can be held together by strong leadership. They can continue to succeed as long as the top-level leader can touch the day-to-day operations directly. In many ways, there is nowhere to hide lack of competence. Many departments are single points of accountability. If anything was to go wrong, the team would be let down and accountability decided by quick process of elimination. At an individual level, the effect of day-to-day decisions can be seen quickly across the company. The information web or feedback loop between decisions and results is tightly woven and quick to confirm results.

Companies with small, “close-in” operations more readily identify impacts arising from inefficiencies. As companies grow and their operational footprint expands, this tight-knit feedback loop shifts. It evolves past a point of equilibrium. New members join the team and direct operational control is more difficult. Often we push the limits of our operating abilities, which results in managers being less aware of their influence on the company’s ecosystem and how their day-to-day decisions affect other functional areas. Leaders effectively manage this growth by making it a priority to ensure managers are aware of the tie-in and continually reinforcing the effects the team has across the company. Best practices, metrics and meetings replace the intuitive feel and rapid feedback on performance that once existed.

Many companies struggling with the markets and enduring this transition look toward innovation as a potential solution. Unfortunately, innovation is not a strategy. It is not an operating system. It is a culture that acts as a catalyst for both operations and strategy.

Innovation can be described best as feedback loops across company tactics (means and methods), operations and strategy. Metrics often identify the status of each of these and help communicate and track progress. In other words, attempts to improve field productivity may involve tactical and operational loops. At a crew level, we will want to measure productivity (the amount of ductwork installed per man-hour). This metric, shared across the team, allows it to continue looping back and attempting new means and methods until it sees improvement or reaches its goal.

At an operational level, field productivity can be improved with new software to track work complete, a prefabrication technique or having a full-time project manager assigned to the job and on-site. The metrics help measure progress and rapidly provide feedback for continued adjustments. They also serve to communicate across these loops. A higher production rate of trenching may allow us to take on different work or compete in hard-bid DOT markets. This example of tactical innovation giving a strategic advantage sounds simple, but the true value lies in the speed of action. Rather than shifting strategy rapidly, most companies would wait until the end of the year to recognize the tactical improvement. Or worse, jump into a new market without confirming their ability to perform at that level. Most of us use these tools intuitively, but often do not share the right information, take advantage of the “quick turnaround” information (tight loops) or engage those involved to generate new ideas.

Leaders should strive to build companies with a shared sense of innovation rather than just one innovative leader. Bottom-up innovation for construction companies is definitely most effective. We can look at Apple and Google as the most prominent examples. To date, there are many questions about Apple’s ability to innovate as well as they did with Steve Jobs at the helm. On the other side of this spectrum is the culture of innovation that Google created. The sudden departure of any one leader would be a loss, but would do little to slow the pace of innovation at Google.

Creating a culture of innovation yields great benefits. Like most initiatives, it takes great effort to get great results. Some innovation can happen by bringing together a variety of skills and disciplines to solve a common problem. A longer-term method includes adjusting hiring practices to create teams with diversity in background and skill sets. These fresh perspectives help to identify creative solutions to long-standing problems.

Some ideas currently in use around the industry to satisfy the need for innovation include the A3 problem-solving method, OODA (Observe, Orient, Decide, Act) and post-job reviews.

PROBLEM SOLVING USING A3

At an operational level, some companies use an A3 best practice (as borrowed from the TOYOTA and LEAN disciplines). The title of this process comes from the size of an A3 sheet of paper. The goal is to keep the analysis simple and on one page. In some cases, it may require a sheet as large as 11” x 17”. Keeping the analysis and recommendations simple makes it easier to share the idea around the company. As operators and middle management recognize problems or run into an obstacle, the A3 method gets them directly involved using a well-defined report format. While these vary from company to company, the questions asked often are designed to develop problem-solving skills across the company:

  • What is the purpose or concern of the challenge?
  • Discuss the background or information needed to understand the situation.
  • Clearly sketch the current situation and cloud the area of concern. Use a flow chart if a physical sketch does not apply
  • List answers to the “5 Whys” to identify the root cause of the problem.
  • Diagram or draw the new or proposed process.
  • What is the action plan to implement the change? Who is responsible and by when will these actions be completed?
  • How will we measure the impact and improvement?

OBSERVE, ORIENT, DECIDE, ACT (OODA)

Another common practice used initially by the military used the OODA Loop, which was developed by military strategist and U.S. Air Force Col. John Boyd. By observing the situation, orienting properly to the challenges and opportunities in that situation, deciding on the best course of action and acting, this process attempts to drive rapid decisions and continual adjustments. This cycle creates a process of continual improvement and correctly done, brings fresh ideas. One of the innovative elements of this process is the orientation step. Great ideas come from various perspectives. Each company can tailor the orientation steps to help inform a new perspective where “that’s how we’ve always done it” is the norm.

Examples of questions used during workshops to help give companies new perspectives in solving common problems include:

  • What is the company SOP?
  • What information is available to make this decision (online)?
  • How do other companies execute this task?
  • What ideas do our vendors have to substitute materials?
  • What thoughts do our equipment contractors have to substitute unique rental equipment to perform this task?
  • What is the goal of the customer?
  • Have we consulted a (different) design engineer?

These questions can help stir some views on the problem different from “the only way to do it” and create new perspectives from which to make a decision and act on creative solutions.

POST-JOB REVIEWS

Post-job reviews are the best opportunity for companies to talk through project approaches, think through new methods and conduct training and mentoring across the project team. Unfortunately, not every company that performs post-job reviews for good jobs and bad uses them as an opportunity to innovate, which can be a brainstorming session for new ideas, means and methods, and materials. Seldom is there a better time or opportunity to motivate change than after a successful or challenging project. The project team is present and typically willing to take on initiatives for the benefit of improved efficiency. This should take form at the end of the project-specific discussion. Led properly, the meeting facilitator can key in on some details and comments and tap into those passionate about the topic for help to improve things.

In much the same approach, division and company leaders should conduct a post-job quarterly review. Many companies conduct a quarterly strategic review meeting with the company leadership team. Incorporating innovation is a natural progression. Often during these meetings, some companies bring “outside” information in. Some companies have a policy that any of the leadership team who attended external training or association events must return and conduct a five- to 10- minute debriefing during the quarterly meeting. Other companies will bring outside experts in to demonstrate a new tool, technology or time-saver. Stirring the pot of ideas, pushing the creativity of the leadership team, and appointing pilot projects or action officers to test new ideas often creates a culture of continual improvement.

MAKING GREAT MUSIC

A room of superintendents from some top-performing contractors was asked what they thought about change and how they should manage the “set-in-their-ways,” 35-year veterans in the workforce who do not even want to use a laptop.

The group was shocked at this question and responded fiercely, “Change is here. The old-school mentality does not work. If you are not willing to change, you cannot play the game anymore!” Field leaders expect change as they recognize they must continue to innovate to remain competitive. It is their job to build a culture of innovation.

Many architects will attest that some of the finer architectural schools teach a structure for creativity. For most of us used to a more concrete way of thinking, a structure for becoming creative appears to be a contradiction. In the same light, it makes sense for company leaders to understand how to create some disharmony and challenge the status quo. Uprooting the company completely may lead to mayhem, but, like a jazz quartet, any individual instrument played solo may sound off-key. However, when combined together, some of the best music ever created results. The disharmony when blended together creates a greater good. Most jazz musicians will attest that some of their best ideas came about by “messin’ around.” With the right controls in place, it makes good sense to “mess around” with many small initiatives and question the way we have been doing business. Organizationally, we must efficiently harvest this conflict and lead the company to a new level. Done correctly, innovation will become cultural and bring great benefits to transforming the company.


THE “5 WHYS”

The “5 Whys” is a simple problem-solving technique to help get to the root of a problem fast. It was made popular in the 1970s by the Toyota Production System. To identify the root cause of the problem, ask, “Why did we have a delay on the project?” An answer may be labor cost overruns. Then ask, “Why did we have labor cost overruns?” An answer may be due to higher amounts of overtime. Ask, “Why did we have higher overtime hours on this job?” and continue this process to arrive at a root cause of the problem.

 

 

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