Digital transformation is more important than ever. Data and analytics change how architecture, engineering, and construction (AEC) firms operate. But some changes are invisible to the eye: transformation of business models. To avoid commoditization, some companies are moving fast to adopt digital platforms to run their business. They add new services to their existing portfolio and they build new partnerships. We see the emergence of new roles (chief data officer, chief digital officer, chief transformation officer, chief analytics officer, chief partnership officer), new activities (that focus on data capture and usage), and new tools (to make business decisions and develop insights based on data). As a consequence, entirely new ecosystems are emerging: the originators, the providers, the aggregators, the controllers, and the consumers. This article explores in more detail the various aspects of this new Construction 4.0 scene.
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New Business Models and Digital Platforms in Construction 4.0
An Invisible Revolution
All pioneer AEC firms try to reinvent themselves: they collect data, they build their own digital platforms, they operate them with new business models, and they offer new services to their ecosystem. This is an Invisible Revolution because things look unchanged. The most essential changes are changes in the way the industry is structured, not in the way buildings are built.
The Nature of Innovation Has Changed
The AEC industry is changing in the very way it is structured and its services are rendered. Technology is just a puzzle piece. True and sustainable innovation does not come from technology alone; it comes from new business models.
The Nature of Disruption Is Changing
Companies conquer new markets, and they disrupt their competitors by creating digital platforms and by running their business with new business models.
AEC Has Already Entered the Platform Economy
Disruption already changed how the telecom, media, retail, transportation, music, and hospitality industries are structured. AEC is no exception. Companies deliver value and capture value by orchestrating networks. The AEC industry is a platform industry already.
Culture Is Central to This Transformation
Construction tends to be a late adopter to change. So, for the AEC industry, this new wave of transformation is also a cultural one. Moving to more data-centricity is an huge cultural challenge.
Digital Platforms, Business Models, and Culture
All of this is what we call the Arc of Transformation. It is also the name of a program we created to help some of our clients with their strategic initiatives, to help them address these key topics: capitalize on information, orchestrate your network, and improve your performance.
Large AEC Players Are Moving Faster than It Seems
Large AEC players all launch strategic initiatives to improve their current market position, to build their future competitive advantage, and to prepare for the next wave of transformation. Most of the time, these strategic plans are kept confidential and are unknown to the general public. We tend to describe this industry as slow and not so innovative. It's actually the exact opposite. Many great things are happening. The largest players are taking their destiny into their hands.
These large companies play defense and play offense as well. There is a big difference between playing defense, working on your bottom-line agenda, and playing offense, working on your top-line agenda. When you play offense, you need to rethink your priorities and your efforts. What happens is that incumbent firms are conflicted. Their efforts lack focus and prioritization. They suffer because they need to play offense and to play defense at the same time. Yet, there is no opposition between playing defense and playing offense. You have to execute both plays at the same time.
Typically, companies put their efforts in three domains:
1) Test, develop, implement, and scale digital solutions to solve major pain points.
2) Adapt and modernize processes and workflows.
3) Use, learn from, and build their own digital platforms.
The most advanced launch strategic initiatives related to industrialized construction and Design for Manufacture and Assembly (DfMA). These firms have developed their own prefabrication delivery capability and embrace modular construction. Companies such as Boldt, Clark, DPR, Mortenson, Balfour Beatty, BAM, Mace, and NCC are examples here. They manage these new businesses in various ways, sometimes through subsidiaries or spin-offs. Industrialized construction is the beginning of a radical transformation journey for these firms.
Related: Reaching New Heights with Modular Construction with Greg Thompson
The Future of Construction: Construction 4.0
These moves impact the way the whole industry is structured. The Future of Construction is a topic already explored in two initiatives I was part of: the book Construction 4.0: An Innovation Platform for the Built Environment and ENCORD foresight work.
The Shape of Things to Come
Based on our observations, here is what we can predict:
- Boundaries between silos and categories we know will progressively disappear.
- Hybrid players will gain importance.
- Diversification of business models will be the new normal.
The terms we use now are outdated. In the future, we will be looking at this: an industry made of companies called originators, providers, aggregators, controllers, and consumers. This will better reflect the work actually done by these companies. First, let's look at today's sequential and fragmented value chain:
Progressively, we should expect to see the emergence of new types of players and ecosystems:
- The originators will be firms gathering land and financial resources. They will create data by defining the built assets.
- The providers will provide the design, the raw material, the building products, the workforce (whether it is humans or robots), the equipment, and, most of all, the data.
- The aggregators will be like the general contractors of today. They will orchestrate the projects and manage the flows of data: they will run, supervise, and monitor.
- The consumers will be like the facility managers of today, in charge of the maintenance and the operations. They will use the data created by the other players to run the built assets.
- Finally, the controllers will control the finished work (the “as-built”). They will make sure the quality of the data and the processes are enforced.
It's not a question of 'if' your company should take on digital transformation, but 'how.' It's about doing the right things, at the right time.
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Olivier Lépinoy belongs to the Autodesk Business Development team for the AEC industry. He is building and developing the conditions for Autodesk to be part of its clients’ strategic initiatives. Olivier is an expert in strategies to help firms pivot and grow new businesses. He took part in multiple digital platform initiatives for the largest firms worldwide. His current focus is on helping firms explore and build new business models. With past experiences in architecture, at VINCI, at Accenture, and at IBM, Olivier has built an unparalleled career path across disciplines and business ecosystems. He is one of the co-authors of the acclaimed book, Construction 4.0: An Innovation Platform for the Built Environment. Olivier Lépinoy holds two master’s degrees: in Civil Engineering (Ecole Spéciale des Travaux Publics, Paris) and in Earthquake Engineering (UCLA, USA). He is also a licensed architect and an urban designer (Ecole d'Architecture de Versailles).