Innovation in construction is being reshaped by global issues like climate change, economic uncertainty, supply chain disruptions, geopolitics, housing affordability and major technological disruptions at pace and at scale.
Disruption will continue
A McKinsey report in 2020 surveying 400 global construction firms found 75% agreed disruption will continue, while only 9% felt confident about leveraging it to create new opportunities. McKinsey quantified the opportunities globally at US$265 billion of profit per annum.
How, then, could innovation enable Aotearoa New Zealand’s construction businesses to target new opportunities to create consistent, scalable and sustainable growth in these rapidly shifting markets?
Think global from day one
Aotearoa’s construction sector is a key driver of economic growth as the fifth largest sector employing 10% of the workforce and contributing 7.6% to GDP. Globally, construction is the largest industry sector accounting for 13% of the world’s GDP.
That’s a huge market for innovation and ripe for commercialisation, with greater return on R&D and innovation investment.
It is worth analysing these aspects:
- Where else is there the same need?
- Is there a market for that need – would the target market size be worthwhile?
- What are the competitive, regulatory and compliance landscapes in those markets?
- What pathways to those markets could be deemed viable?
- How could the innovation investment target both local and international markets with the same solutions?
Disrupt versus being disrupted
Construction is being influenced by new disruptive technologies. These include:
- digital construction – artificial intelligence and machine learning, building information modelling and Internet of Things sensors
- prefabrication/off-site manufacturing – Industry 4.0 and concrete 3D printing
- sustainable construction – smart materials and composites, biomaterials, renewable energy, thermal efficiency, low-carbon products and waste-to-value.
These create opportunities for businesses to build new capabilities in the sector that are future-proofed while disrupting themselves and the markets they operate in.
A great place to innovate
Aotearoa’s size, ease of doing business – first in the world – and its ability to innovate and collaborate to resolve challenges provide a faster pathway to try and test disruptive innovation that targets both local and global opportunities.
Business model innovation
The sector is complex and historically prone to boom-and-bust cycles, making it harder for businesses to innovate consistently and to grow their long-term innovation capabilities. A research-based business model innovation framework enables more commercial value creation and for businesses to be more scalable in delivering sustainable growth and environmental and social impacts.
A mission-led approach
The current Construction Sector Transformation Plan 2022–2025 is a partnership between government, businesses, industry associations, research organisations and academia to address pressing issues in the sector while identifying significant opportunities on the horizon.
It aligns to government, societal, Māori and business priorities, encompassing residential, vertical and horizontal construction. With innovation a key feature of this plan, it enables a collective effort to both improve the current state of the sector and to transform it for the future.
Despite many barriers in the sector, there are significant opportunities for businesses willing to innovate to create significant commercial value and impact.