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RT243 – Enhancing Innovation in the Construction Industry Implementation Session.
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Transcript of RT243 – Enhancing Innovation in the Construction Industry Implementation Session.
RT243 – Enhancing Innovation in the Construction Industry
Implementation Session
The Panel
• Paul Chinowsky – University of Colorado• Howard Irwin – AMEC• John Strickland – CH2M-Hill• Mauricio Rodriguez – Smithsonian Institution
Agenda
Introduction to innovationImportance of innovation
Paul
Status of innovation in EPC today Howard
Insights from economics JohnMaturity model Interactive questions
Mauricio
How you can get thereHow you can help
Paul
Q&A Panel
Innovation – Why?
• Advantage: Admired ~ Innovative
• Adaptability: Shape Your Future, Rapid Change
• Add Value: Strategic, Process
• Attracting Personnel: Get ahead of the cycle
Questions
• Are you ready to change your way of looking at the industry and at your organization?
• Does your organization have what it takes to adapt and ride the wave? – Processes– Culture– Leadership– Resources
Innovation – An Industry Perspective
Presented by: Howard IrwinAMEC
How We Studied Innovation
• Looked both within and outside of the EPC industry
• Extensive literature review– Articles, books, web sources– Reviewed parallel study
• Interviews
• Surveys
EPC Industry Perception: Key Findings
• How innovative is the EPC Industry?– 74% say Neutral to Highly Non-Innovative
• Satisfaction with innovation within the company?– 55% Neutral to Highly Dissatisfied
• Where does innovation most easily occur?– 71% Individual Projects
• Where is innovation most needed?– 85% Department or Organization-wide practices
How the EPC Industry makes Decisions related to Innovation
• 59% feel comfortable proposing innovations• 45% of leaders articulate an innovation vision• 40% funded from corporate or customer
budgets• 29% of organizations have a methodical or
quantitative process
What if innovation became a priority?
Differentiating Innovative EPC Firms
• Innovative firms had statistically significant differences in– Repeatable processes– Culture– Risk perspective– Staffing and resources
• Example survey question– “My firm has personnel explicitly tasked with
promoting and facilitating innovation within the firm.”– Innovative firm = 3.1 versus non-innovative firm = 2.3
(p=0.006)
Perceived Barriers to Innovation
• Schedules and budgets are too tight to take a chance on something new
• Lack of resources including staff time
• Lack of a firm strategy for innovation
• Owners do not recognize the value
Provocative Questions
• How many EPC firms made Fortune’s top 20 most admired and innovative list in 2008?
• Is our industry today like the American Ship Building industry?
• Will CII firms still be industry leaders in 2033?• What competitors are sneaking up on you?
Innovation Economics
Presented by: John StricklandCH2M HILL Construction Program Manager
Innovation Economics
• Current Situation– Innovation occurs most easily at the project level, but
is most needed at the corporate level– Innovations are funded at the project level – Difficult to spread risk beyond
project and firm– Mechanisms to spread
learning are limited
Insights From Economic Modeling: PM’s View
• Innovations with positive expected values may be rejected if:– The worst case, although unlikely, is catastrophic – The innovation requires learning and multiple iterations– The project bears all of the risk and cost, but others stand
to capture the gains• Which mouse puts the bell on the cat?
• Current structure of the “game” doesn’t support innovation very well
Economic Models of Risk Behavior
SINGLE PROJECT : RISK BASED APPROACH
MULTIPLE PROJECTS: EXPECTED VALUE APPROACH
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The Effect of “Single Event” Approach
• Illustrating a key factor – Imagine an expert golfer with a 6-foot putt– Golfer knows he will make the putt 6 times out
of 10– Offer the following deal
• Make the putt: win $1 million • Miss the putt: lose $500,000
• And this is money he doesn’t have – Any takers?
Changing the Game to Promote Innovation
• Suppose any of the following:– Five golfers get together and spread
the risk – Golfer gets five tries – Golfer gets to practice– Golfer gets to see somebody try same
putt– Golfer has a deep-pocket sponsor
Risk Management as a Source of Profit
The casino approach• Start with slightly
favorable odds• Spread risk over many
“projects” • Encourage lots of small
bets• Avoid accepting “break
the house” risks • Avoid being the
individual gambler
Isolation Within Supply Chain
• Many organizations within supply chain, each trying to maximize the profit within their “box”
• Limited vision of entire chain • Contracts inhibit
“big picture” thinking
• “It’s not my problem”
may be the biggest
problem.
Economist’s View of Enhancing Innovation
• Shift from “single event” thinking– Indemnify project managers by creating a “syndicate”
• Company wide• Industry wide
– Experiment and learn frequently – increase the “cycles of learning” and share effectively
– Create alliances focused on delivering value to end customer
• Create a Model for Assessing Innovation
The Innovation Maturity ModelPresented by: Mauricio RodriguezSmithsonian Institution
Maturity Model
• Overview of the Model
•Evaluates an organization’s innovation maturity
•Based on user responses to 60 questions
•Outlines key aspects of innovation
•Helps assess strengths and weaknesses
• Scoring Process
•Similar to PDRI
Innovation Maturity Model
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Leadership
Resources
Processes
Culture
Risk Perspective
Collaboration
Customer Focus
Learning
1 = Initial (ad hoc)2 = Repeatable Process3 = Defined4 = Managed5 = Organized
Maturity Model Score Your Company
• Where do you think your company is today?
Maturity Model Questions - Sample
Maturity Model Analysis
Maturity Model Recommendations
• Where would you like your company to be?
Maturity Model Recommendations - Sample
Are You Ready to Use an Innovation?
30
1. Push green arrow button to wake up the clicker if asleep
2. Push the number corresponding to your answer
3. Push the green arrow button to send your answer
Sample Question for CULTURE
• Employees at all levels are encouraged to challenge current processes in order to continuously improve them.
• 1 = strongly disagree• 2 = slightly disagree• 3 = I am neutral• 4 = slightly agree• 5 = strongly agree
Sample Question for RESOURCES
• Funding for innovation is available from corporate sources, not just project budgets.
• 1 = strongly disagree• 2 = slightly disagree• 3 = I am neutral• 4 = slightly agree• 5 = strongly agree
Sample Question for RISK TAKING
• Risk-taking is recognized as a necessary part of encouraging and implementing new ideas.
• 1 = strongly disagree• 2 = slightly disagree• 3 = I am neutral• 4 = slightly agree• 5 = strongly agree
Sample Question for COLLABORATION
• Our organization actively integrates supply chain partners to enhance long term performance.
• 1 = strongly disagree• 2 = slightly disagree• 3 = I am neutral• 4 = slightly agree• 5 = strongly agree
How to Get on the Road to Maturity in Innovation
Understand where you are today
Define where you want to be: Determine your short and long term goals
Develop a plan, structure, and process
Measure regularly where you are in your maturity and against your plan
We Need Your Help
• Phase 2 – Pilot Studies– Objectives: Improve your organization’s innovation
capabilities and improve CII research model– Benefits: Evaluation and roadmap– Time-frame: 6 months– Commitments needed: Desire and Participants
• Contacts:– Paul Chinowsky ([email protected])– Mike Toole ([email protected])
Summary and Q&A
Thank you for coming to our session!
• Please leave the Clicker where you are sitting
• Please leave your business card if you – Would like to have us email you the maturity model
tool– Might be willing to participate in Phase 2