When was the last time you really thought about your operational efficiencies? Like many builders, contractors and small business owners, you're probably caught up in the day-to-day of running a business.
But according to Moris Pilla, partner with the enterprise practice of KPMG, ignoring the big picture isn't an option. His motto? "Innovate or die."
That may sound extreme, but with 2009 as one of the toughest years in the construction industry, now is the time to focus on increasing your productivity, strengthening margins and optimizing performance, in good times and in bad. And the way to do that is through innovation.
"Innovation has proven to be a very successful way for people to develop niches to differentiate themselves from others in a market that's always very competitive," says Pierre Boucher, chief operating officer of the Canadian Construction Association. "If you innovate and you prove to be successful, you're just opening new markets for yourself."
"We tend to think of innovation as a scientific discipline but the reality is, it's fundamentally just an improvement on the way things have been done previously," says Guy Champagne, senior partner, BC and Yukon, BDC Consulting with the Business Development Bank of Canada. "It's a different way of executing a particular business process... it's figuring out what's possible."
Innovation can mean anything from choosing cost-estimating or project management software to deciding whether to integrate engineering services and become a design-build company. Projects may be big or small and can relate to streamlining a company's technological capabilities, human resources, business processes or financial management.
The bottom line is, there's no one-size-fits-all approach to innovation.
"The notion of innovation is very contextual," says Champagne. "It's relative to the stage of the business it's being done in. What may be innovative for one company isn't necessarily innovative for another."
The first step is to figure out what's not working. That can mean analyzing your cost structure or simply asking the question, what if we did things differently?
For example, perhaps you're seen as a banking risk because your record keeping isn't up to snuff or maybe you're creating excess waste because of miscalculated material requirements. Or it could be that you're spending money on equipment that would be better leased than purchased or losing opportunities because your customer relationship management system is lacking.
Whatever your need, once you figure out what you could do (and critically assess if you have the capacity or ability to change) then you look at the cost-benefit of doing so.
"The decision about whether you do something really revolves around the payback of the ideas," says Champagne. And that often comes down to cash. If the start-up costs are too high or the time to implement is too long, maybe it's just not worth doing.
That's where a third-party consultant can help - by providing objective advice on the viability of a particular innovation.
And although there is an upfront cost to innovation, government financing such as the Scientific Research and Experimental Development Tax Incentive Program can help. Just don't assume innovation is going to be prohibitively expensive.
"Exploring the ways you can innovate ought to be the first step, and then when you have a portfolio of ideas, you can tease out which ones are affordable and which ones aren't," says Champagne.
For example, a good data management system that enables you to compare one job to the next and learn from your experiences and design problems will foster a better corporate memory and increase your overall efficiencies. Even moving toward a digital-based approach - using email, digital cameras and text messaging in the field - can allow your team to work faster without incurring additional expense to manage the process.
That said, innovating is not without its challenges. The key to being successful is having buy-in from all staff and that takes creating a "culture of innovation" in which employees feel they can contribute new ideas and suggestions. It's also about staying open and being receptive to new approaches.
"You always need a good mix of older and younger-older people with all the real experience and younger people who are ready to implement change," says Pilla. "When you get the two of them working together, it can be a very powerful source [for change]."