Deliver value through innovation

The recent high profile collapses of Connaught and ROK act as a reminder that a policy of lowest price is a dangerous one. If your company has the lowest cost it might be successful, otherwise you are courting disaster. With today’s tough market conditions there will be many companies who have priced and won work on unsustainable margins and as they finish these jobs they, like Connaught, will be finding that they have suffered damaging losses.

So, when the government is telling contractors that it wants to see a 40% cut in the cost of construction programmes like the school renewals, how to survive and make a profit? The answer is to adopt an innovative approach which delivers value to your clients while allowing you to operate on an acceptable margin.

Delivering value to your client in its simplest form can mean reducing price– providing the same for less cost. But the clever companies achieve it by delivering extra benefits to their clients. These benefits have to be real and worthwhile and include saving money in other areas; less time on site, reduced scaffolding hire, a single point of contact for several packages, minimal disruption, liaising with building occupants. All of these ideas have been used by contractors to deliver value to their clients.

The chances are that the obvious ways of delivering value, like the examples above, have already been claimed. So you need to adopt an innovative approach. The recent winners at the AIS Best Practice Awards are two good examples of how innovation delivers value to the client and competitive advantage to the supplier.

Mediwall is a panelised partition system from Swift Horsman, incorporating wiring and plumbing, made from previously unusable plastic waste. It is easy to clean and completely recyclable at the end of its life. As such it ticks all the boxes for a modern construction material. It will be quick to install and the type of material specifiers are looking for to meet today’s requirements for Modern Methods of Construction and Sustainability. It provides value for the client and the contractor.

As a material, glass continues to be popular with designers who want panes to be as large as possible. This presents installation problems for the contractor and Astec have addressed this issue. In developing MOGLI (Mobile Glass Installer) they have a piece of kit which allows them to handle glass in restricted conditions safely without the need for multiple handling. Less handling means a safer working environment and less chance of breaking glass. Replacing large pieces of specialist glass tends to have long lead times with consequent disruption. Astec are delivering value by reducing installation cost, removing Health & Safety hazards and minimising the chance of delays on site.

Swift Horsman and Astec will be able to build on the success of these products in a number of ways:

• The products themselves will allow cost savings when bidding for projects. For Swift Horsman that means their product will be selected in preference to competitor products, bringing down the cost of construction. For Astec the saving will be when they use MOGLI for installations, making them more competitive when tendering for work.
• Many clients now want their buildings to be rated BREAM Outstanding or Excellent. One of the means of achieving this is to use high levels of recycled materials, Mediwall does this and will be specified as a result.
• Another key issue for the industry and top of the list for main contractors is Health & Safety. In developing MOGLI Astec have demonstrated that they are a company with a focus on minimising the risk of injury for their staff. This will make them stand out when bids are being evaluated.
• Effective handling of glass is always an issue. Astec have demonstrated an understanding of this and a professionalism in their approach.
• Although Mediwall was developed for the health sector, I’m sure the people at Swift Horsman are now developing other markets where it will have equal appeal.
• Both companies have demonstrated that they are organisations capable of thinking outside the box. Main contractors addressing the need to reduce costs will be looking for companies who can help them with this challenge. Organisations that can develop new and innovative solutions will make ideal partners.

As the two examples above have shown, innovation is not just for the big companies. So how does your organisation become more innovative?

The first step is to encourage a free flow of ideas from every part of your organisation and your customers. This can be formalised by talking to people about how they use your products or deliver your services. Find out what they find difficult or awkward, or what they really like about your products. Market research is a useful tool for gathering this information.

Brainstorming can be used to generate ideas and build on those that you already have. It must take place in an environment that encourages free thinking and does not kill whacky ideas. Often it is the off-the-wall idea which can be developed into a real winner – although the final result may be very different from the first suggestion. You might come up with a completely new and revolutionary concept, but it is more likely to be an improvement or development to an existing product or service. These are the better option as they cost less to develop and there is less risk of failure.

Having got an idea it is important to test market it before committing further time and money. Talk to some clients who you think might benefit. What do they think, how could it be improved? Or use market research to cover a larger group. You can then refine the idea before turning it into reality.

Finally don’t expect clients to recognise your innovative approach or the value it brings. You need to spell it out to them in your promotional material and your proposals. Not once but repeatedly, focusing on the real benefits that it brings to them.

Chris Ashworth is founder of Competitive Advantage Consultancy which specialises in strategy, market research and training for the construction industry. He is also a member of the organising committee for CIMCIG, the Chartered Institute of Marketing’s Construction Industry Group (www.cimcig.org). First published: November 2010 AIS Interiors Insight View Original Article Return to Articles