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NEW CONSTRUCTION
STRATEGIES ARTICLES
Southeast
Construction Magazine: August 2004 Issue
Innovation: The Path to Greater
Profits - Part 2
By Ted Garrison
In
Part 1 of this article in the July issue of Southeast
Construction it was explained why innovation is critical
to a company’s success. During this issue and
the next five issues, the author will explore 12 critical
traits of the successful innovative company. These traits
will allow readers to benchmark their company’s
innovative activities against what is needed.
1)Remain close
to your customers – they will provide ideas:
This
trait is the driving force of the entire innovation
process, because innovation is about offering the customer
greater value. The best way to learn how to add value
for the customer is to ask them. Therefore, you need
to educate your project managers and other jobsite representatives
who are responsible for dealing with building owners
to understand they are responsible for acting as the
company’s rainmakers.
Yet,
too many companies do just the opposite. When I ask
project managers what’s the first question their
boss asks them, they usually respond, “How is
the job coming with regard to schedule and budget.”
This should be no surprise since most construction industry
executives admit they start by asking something similar.
The problem it is the absolute wrong question!
The
question should be: “What have you done for the
customer this week?” This is at the heart of finding
out how to deliver greater value to the customer. The
schedule and budget are important, but these two items
are only the starting point in adding greater value.
Contractors
and designers must focus on how they can provide greater
value through innovation – instead of merely focusing
on their own company’s success. One of the definitions
of a client is “someone under the protection of”.
How long would you keep your attorney, financial planner,
or accountant if you didn’t think they were protecting
you? Well, why should buyers of construction services
keep contractors or designers who don’t protect
them?
Most
people accept that this approach is absolutely necessary
in a negotiated environment. Doubts occur for some in
the highly competitive bid environment. However, while
the contractor has less flexibility in the bid environment,
there are still many inexpensive innovations that the
contractor can uncover and employ to add value.
2) Seek competitive advantage
in all areas of the organization –
not just the major areas:
Obviously,
you need to seek innovation in all the major areas of
your business. But in today’s highly competitive
environment this isn’t enough. We need to seek
every advantage we can.
Also,
many of your competitors will only focus on their major
areas of service. This may make it difficult for your
company to differentiation itself from your competitors
in these areas. Therefore, by focusing on other areas
of the business you can still differentiate your company.
For
example, many subcontractors say, “Your ideas
are interesting but they tend to focus on the general
contractor because they have direct contact with the
building owner while we are isolated.” I point
out that while their situation is more complicated they
need to find creative ways to build relationships with
their customers.
Two
simple approaches are to provide maintenance services
and extended warranties. These two services provide
the contractor access to the building owner while offering
a chance to build credibility and develop a strong relationship.
These interactions give the contractor the ability to
ask questions and observe the customer’s operations.
This process can provide the contractor the opportunity
to offer innovative solutions to the customer’s
problems that increase the value to the customer and
help differentiate them from the competition.
In
Part 3 of this article in the next issue of Southeast
Construction the traits that will be discussed will
include becoming a value-driven company and why consistent
and incremental improvement is needed.
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THE END *
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Ted
Garrison, the author ofStrategic Planning
for Contractors, works with businesses
in the construction industry. He can be reached
at
Growing@TedGarrison.com
