THE NEXT GAME OF CONSTRUCTION: WHERE WE'RE PLAYING
7 ways we’re transforming the way we do business to meet customer and market needs
James Ewing & Samantha Thomas | April 12, ‘22 | 5 minute read
In 2020, McKinsey & Company published a 90-page, data-packed report, The Next Normal in Construction: How Disruption is Reshaping the World’s Largest Ecosystem. One might think that since the report was published prior to the peak of COVID-19, and most of its data collected pre-pandemic, that its findings may no longer be relevant. As it turns out, the article’s assessment of construction industry problems and trends, along with predictions of how COVID-19 would accelerate both, appear to be right on track.
“In the face of this transformation, companies all along the value chain need to review where they want to play.”
— McKinsey & Company
The Next Normal in Construction offers a powerful look into the future for emerging disruptions we need to know about so that we can move with the tides of change and transform the way we do business for the better. What follows highlights our most pressing industry problems, current and forecasted trends, where we’re choosing to play in this next phase of construction (pun intended), and how we invite you to join us.
Despite accounting for 13 percent of the world’s GDP, the construction industry has punched below its weight. Customer satisfaction, profitability, and productivity growth (think efficiency) are significantly lower than other industries, while risk, fragmentation, and complexity are high. Furthermore, the development of solutions to these challenges has been snail-paced. A good case in point - basic digitalization in construction remains lower than nearly every other industry. While the winds of change have been slowly shifting, COVID-19 burst onto the scene and quickly exposed many of these flaws that had been hiding behind favorable market conditions. Put simply, the industry has been ripe for disruption for a long time and the need for innovation has taken center stage as trends developing in response to changing market characteristics gain momentum.
According to McKinsey & Company, there are three major categories of changes in market characteristics: 1) customer demand, 2) construction inputs and characteristics, and 3) market rules and regulations. Cost pressures and affordability concerns are creating tighter budgets. Customers are getting more sophisticated with a growing need for adaptable structures, a focus on total cost of ownership, and desire for digitalized and simplified interactions. Projects are becoming more complex with a growing need to meet higher safety and sustainability requirements. Meanwhile, there is a scarcity of skilled labor, a shifting logistical picture, and increasing demand for modern methods of construction that align incentives and enable standardization.
These changes present challenges that will be viewed as exciting opportunities for disruption and expansion by those holding glasses half-full, and the trends emanating will dramatically reshape the construction industry. The new approach will feel more customer-centric, collaborative, and product-based (i.e., as opposed to project-based), with highly specialized groups producing project components that resemble well-designed widgets, enabling a more standardized, consolidated, and integrated construction process. Additionally, the value chain will continue to consolidate and internationalize, with more products sold through direct channels and digital marketplaces (i.e., disintermediation). Lean on-site construction and other efficiencies will accelerate with continued investment in products, processes, and systems along with technology, facilities, and human resources. Finally, data and analytics will be used for TCO optimization, feeding back into iterative, future designs.
While the need for change can bear heavy, we are choosing to embrace the adventure, viewing the circumstances as an opportunity to learn, grow, and become better. Although we are only one fish in a sea of many, we hope that by making positive changes in our respective field of lighting, others will be inspired to do the same in theirs. What follows are seven ways we are working to improve and expand the way we do business to meet the needs of our customers and the market as a whole:
1. Keeping an open mind
Reframing the way that we look at challenges of lighting in the construction industry, and noticing the opportunities for growth that they present.
2. Building awareness through didactic content
Sharing innovative solutions to the most common construction industry problems, and specifically those pertaining to lighting.
3. Breaking the rules in a productive way
Recognizing where old systems are no longer serving us, and having the foresight and courage to design and build new ones.
4. Working with trailblazers
Partnering with inspiring people doing inspiring things – owner/developers, designers, builders and manufacturers unafraid to cut new paths in the name of doing things better.
5. Creating accessibility
Making better lighting design and products more accessible by uncomplicating the process and eliminating unnecessary “value-engineering” resulting from skeletal industry problems (e.g., mysterious pricing, slow turnarounds, confusing systems, poor planning, ambiguous responsibilities, bad service, misaligned interests, etc.)
6. Investing in technology
Focusing on digitalization, data-driven products, and developing software that enables a more effective, collaborative experience. This includes our Spring 2022 release of our Experience Cloud, an online portal where our customers can interact with our team and relevant data organized in one place, updated in real-time (e.g., project details, documentation/communications for sales orders, shipments, billings, and cases). Future releases will address additional processes that are unnecessarily difficult and manual, like managing BOMs, finding the latest submittal, pricing products, follow-on orders, and much more.
7. Focusing on integration
Creating a more integrative approach to lighting supply and design, and to all the areas in which we conduct business.
As COVID-19 continues to expose deficits and vulnerabilities in the construction industry, the need for new players to step up to the plate is accentuated. Players who have not yet been jaded by the all-too-common challenges of construction. Players who have just enough naiveté to stride forward with optimism and zeal. Players who are willing to assist in revolutionizing the way we go about the construction business, and business altogether.
Today, we have an exciting opportunity to take what COVID-19 has swept out from under the rug and face it head on. To reframe our focus around old and new problems. To develop solutions that create real, lasting change. And to maybe even reinvent the wheel a little.
Truth be told, that’s what we are interested in. We’re interested in taking what’s good from our old systems, leaving what’s no longer serving us behind, and creating new systems that are more efficient, resilient, and better for everyone.
We’ve got an incredible foundation to work from. Now it’s time to build the structure we all want to live in. We invite you to join us.
Have a project you’re developing that we should know about? Reach out HERE.