What do Customers Want? Construction Edition
Author: Diana Fisler
There is a common thought experiment in building materials innovation: imagine you buy a car.
In the real world, you go to a dealer’s lot and test drive several finished cars with advanced features, backup cameras, heated seats, and the mileage posted on the window.
Imagine an alternate world in which you order the car, and a pile of sheet metal and rivets shows up on your driveway. A month later, a welder arrives and assembles the frame. Another month passes, and a heating and cooling technician shows up and assembles that part. And so on. In the middle, you request that the doors be moved back ½”.
This is how we construct buildings in the US today.
Is modular construction the solution?
Offsite manufacturing is one way to address this inefficient process. Manufacturing a wall panel, roof component, or module in a controlled factory environment can allow for better quality, as well as more energy-efficient and resource-efficient construction. For building materials companies, this can pose a significant opportunity for product innovation. From simple changes, like product length and packaging, to new materials and treatments, this space will increasingly offer inspiration.
But in some ways offsite construction is a challenging way to deliver buildings. Shipping can be difficult. Offsite and modular are still a small fraction of the construction market, and projects require a lot of upfront planning. Some builders prefer to be able to customize on-site, and offsite fabricators cannot carry inventory (and capital) in slow times. While offsite and modular is growing in maturity in the US, building material companies can still innovate by delivering additional functions and components while maintaining flexibility in building practices.
Modular approach to products
Let me offer a few examples of products within the construction industry that are delivering more than a single piece of material and taking advantage of prefabrication to deliver more value. Let’s consider that there are additional opportunities for pre-fabrication to offer value even short of modular construction.
HVAC. A manufacturer doesn’t ship a pile of sheet metal and coils to someone’s house and have a skilled tradesman build a furnace on site. A fully functional heating and cooling system is a basic expectation, and it is built in a factory under careful quality standards. Prefabricated HVAC closets and skids for retrofit are being researched and demonstrated today. What additional integration and parts could be delivered pre-packaged with that HVAC unit?
Pre-taped seam roofing. Instead of delivering a roll of roofing membrane and a bucket of adhesive, single-ply roofing manufacturers asked how they could deliver more of the roof covering. They introduced roof membranes with pre-taped seams. This moved some of the assembly and manufacturing to a controlled environment and delighted customers. How much further could roofing manufacturers go in delivering a system to hard-working roofers?
Windows. In the U.S. today, windows typically come pre-hung rather than as a package of glazing and frame components. In parts of the world, windows are still built on site with mixed quality. In some cases, even here in the US, contractors prefer to control the manufacture of window on their site. What is the correct unit that meets the customer’s needs? Could a small, finished wall unit be built and delivered, flashed, and sealed?
Multifunctional wood sheathing. Everyone who has driven by a house under construction has seen wood sheathing which later gets covered by house wrap. Huber started to change this by introducing the ZIP system, which combined the air and water barrier with the structural sheathing to reduce labor on site. They additionally combined continuous insulation to further add function to products delivered to the customer. Is this the correct level of factory fabrication for a residential wall or is there additional value to be offered from built-in functionality?
There are many other examples of building materials companies offering systems and modules to meet the customer need for function rather than product. Determining the appropriate system unit to deliver to the job site is important and offers exciting opportunities for innovation. But I would like to take it one step further and argue componentizing is not enough. The building materials producers must investigate the true needs of their customers, either in the factory or in the field.
I was offered this puzzle several years ago: Who is the primary competition for United Airlines business travel?
If you named other airlines, you are thinking about what United sells rather than what business travelers buy. I propose to you that business travelers buy the ability to close a deal. United’s competition is seamless and effective business communication. Business travelers do not love to sit on airplanes. What they love (and pay for) is doing business. If Cisco or Zoom (with virtual reality!) becomes just as good at filling that need as air travel, it wins the majority of the market.
Let’s apply the same question to building materials.
Why do customers buy fiberglass? To control the loss of energy.
Why do customers hire roofers? To protect their belongings.
Investigating the answer to these questions opens the door to small and large innovations. It leads to the possibility that the customer’s needs may be met in a completely different way. In the first example, the case for fiberglass evaporates when energy is free, and so on with each product.
If legacy companies do not think about what their customers really need, they are ripe for disruption.
Building materials companies can win long term and avoid being disrupted by thinking about two things.
1. What is the customer’s true need?
2. Has it changed?
At the intersection of these questions lies an opportunity to innovate.