Eight building industry disruptors to watch and react to

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Disruptors—another corporate buzzword that came back to the surface during the pandemic—have been turning their focus to the building industry. While not so apparent as a Netflix, Uber, or Airbnb disruptor, the building industry has entered a need for change thanks to the pressure cooker of the pandemic and global initiatives. Challenging the mindset of “the way we’ve always done it,” a favorite of the building industry, it’s essential to remember industry disruptors are not out to disrespect the “traditional” way of business but simply reframe what already exists. 

There is not one party or trendy start-up to blame for forcing the industry to adapt, leaving a moving target for what trends to incorporate into practice. Instead, staying engaged and open to adapting will define the next generation of successful businesses in the built environment. The following presents the most impactful disruptors we see progressing in the building industry and our suggested reactions in company perspective and operations to navigate the changing landscape of the built environment business. 

1. More informed customers and attention to the total cost of ownership

Customers are more informed than ever—is your company? According to McKinsey & Company, a global management consulting firm, today’s customers are starting to invest in “smart buildings, energy, operational efficiency, and the flexibility and adaptability of structures.”  A higher expectation for “simple, digital interactions” will also determine a customer’s investment.  

Reaction: Future customers will have more understanding of the total cost of ownership in energy savings and durability down the line. Shifting your message to include energy and cost-saving data will prepare your company to respond to the “Total Cost of Ownership” mindset. 

2. Skilled labor and investment in human resources

We are all feeling the labor squeeze and the National Association of Home Builders has been ringing the labor warning bell for years now. About 41% of the current building industry workforce is expected to retire by 2031 according to the National Center for Construction Education & Research. Talk about a disruptor! 

Reaction: Invest in your human resources. Employee attraction and retention have already become a priority in the market shift. Give your team, and henceforth the company, the competitive advantage by building their technical knowledge. Get “boots on the ground” recommendations in conversations involving improving processes. 

3. Sustainability becoming the new standard

Many of the once innovative and “ground-breaking” energy-saving and “green” builder products are now standard practice and mandatory across the industry and jurisdictions, but that was just the tip of the spear. Updates and regulations for even more sustainable construction materials and processes are becoming stricter in an effort to achieve the White House’s “Net Zero Emissions economy by no later than 2050”.

Reaction: The issue of climate change and sustainability will continue to be a driving force behind construction decisions. Companies will need to consider the environmental impact of materials sourcing, manufacturing, and supply chains as well as resilience.  Stay connected with your local trades organization as they are a great resource for tracking legislative changes, incentives, and their impact on your industry.

4. Off-site production and prefab

The investment in offsite manufacturing facilities is a disruptor that will influence costs and a company’s ability to compete with others embracing the prefab opportunity. Though hard to admit, an industry overhaul is on the horizon. As stated in McKinsey & Company’s study, it is possible a large share of construction projects will be built using “customizable, modularized elements and components produced using standardized processes in off-site factories.”

Reaction:  This change is not going to happen overnight but as you develop your 10-20-30 year plan, be prepared for this disruptor. 

5. New materials

With sustainability pressures on one hand and material shortages on the other, construction products are changing quickly. With the desire for lightweight material, timber and steel alternatives, and more energy-efficient glass, available sustainable material will impact your cost and logistics. 

Reaction: Keep your team educated and maintain contact with your vendors to be aware of market trends. Some of the new material disruptors will fill in the gap presented by other challenges, such as sustainability and affordability pressures. 

6. Wider impact of the digital revolution

A big disruptor, especially for the building industry, which is slow to change, is the higher demand for simplified and digital interactions. Operations will not go back to the ways of paper and siloed spreadsheets. 

Reaction: Improve your onsite collaboration, reduce costly rework, and create efficiency at every stage of construction and production by implementing automation and embracing technology. Don’t go it alone—Illumine8 can help bring perspective and business solutions to your systems and revenue operations with proven and up-to-date methods. Dive deeper into your digital potential with a business review.

7. Higher expectation of branding

Today’s consumers are more attuned to a company’s values in conjunction with their digital interactions with the brand. As a result, a customer is now paying a premium for products or services if their values are shared and the user experience is positive.

Reaction: Intensify your customer focus. As addressed in The RevOps Revolution, revenue follows when you create a customer-centric organization. By incorporating the voice of your customer in product design and message, you will face this disruptor easily.

8. Persistent cost pressure from affordable housing concerns

As disruptors often cause domino effects, the consumer demand for technology (disruptor #1) and the increased regulations on sustainable products and practices (disruptor #3) will significantly affect affordable housing. 

Reaction: As the housing market is the “crystal ball” as an indicator of a healthy economy, affordable housing concerns will be something the nation as a whole will have to contend with. Framing your messaging and listening to your customer’s concerns will help you determine how you can create opportunities. Consider getting customer feedback with a Net Promoter Score, a survey Illumine8 can help your team develop.

So, what can you do to emerge as a winner in the next age of construction? How can you adjust your mindset to keep your company relevant and healthy in the next 5,10, and 20 years? Illumine8 can help! Bringing an unbiased and informed perspective to help you start preparing for the change of tomorrow today.

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