let’s restrict the discussion to the Indian market, though the case studies can be from external markets, to have a comparative analysis. In this post, we will understand the meaning of DTECH, current status of construction sector, impact of DTECH on the feeder industries/ sectors and possibility of implementation.
Disruption refers to interruption to the standard trend/ pattern through the Technology. For example, the traditional business of brick-and-mortar shops/ outlets faces the challenge of E-commerce; it is a disruptive technique to serve the client/ customer. These are the two faces of the same coin. Opposite to each other, both have their own relevance and challenges. A generation ago, people (core of the business) were extrovert/ dynamic enough to bargain and strike a deal, from a loaf of bread to supply of resources for the project. Now, data is digital and structured, people (3 parties: next paragraph) are online extroverts/static and prefer to wait for the BigBillionDay/ the bigger fish to make the move and follow the queue.
Disruptive Technology should not be limited to the science of it, but we have to realise it as a philosophy and an inevitable part of the business cycle. Earlier in business/ project cycle, there were two parties/ supports involved; client and the contractor / supplier. Clients were ignorant and the contractors were foolhardy. If the project was supposed to be simply supported at the ends, outcome would be an “under stress” cantilever. Similar to a triangle, the most stable truss came in the consultant/ architect. In today's’ context, these 3 fundamental parties/ members are equally responsible to reap the fruits/positive risk of DTECH.
The current practise in industry resembles that of a herd of sheep. DTECH is part of Organisational learning, as Peter Senge stated in an interview that a learning organisation is a group of people working together collectively to enhance their capacities to create results they really care about.
In the Indian context, the complete transition from mud blocks to red bricks occurred during the British occupation. Organisations must understand that DTECH can be a competitive advantage optimising earnings, time and quality. As of now, concrete blocks are being overtaken by the DTECH we know as AAC blocks, Rapid Wall Panels, Carbon printing and many more. Out of these, in India most are in R&D phase (touch-me-not yet!)/ Not readily available/ acceptable in the market. Organisations still believe the larger number of projects they handle, shall be sufficient to sustain competition/ float a positive balance sheet, academic institutions still believe the civil engineers they churn out are more capable than a diploma holder/ a supervisor with 3 years of experience! On the top of that, construction firms have more bureaucracy than in other firms.
Speaking on facts, out of the top 10 most sought after construction contractors in India, 1 has a functional R&D facility. Possible argument is R&D exists and has a different tag, but shouldn’t that be displayed as a company USP as practised in other sectors! Comparing it to the global trend, leading global construction firms have well established R&D for construction equipment and as mentioned, they have a global presence and they lead. Going by the Indian nature, we believe in Joint family. We trust in conglomerates. Such factors are a roadblock to DTECH which has stressed projects’ earned value. Moreover, construction sector lacks the repute to attract the best talent because of perceived notion of lack of prospective for an individual.
We all know the intent of data digitisation; it is structured, easy to interpret and analyse. Construction professionals will agree with its reach in every project. Nonetheless, the projects in developing markets (such as in India) are on delay and even though have a “go ahead” on paper. Projects/ amendments can be disruptive to other projects. Example, the initiation of Sagarmala Project might lead to cargo tariff erosion for the available means of transport. As investment will be done on waterways, similar investment pattern will be induced on the property market along the waterways. It starts with the business district, once established it will encourage sustainable habitation and leisure. It is bound to shake up the inland transportation market. Disruptive Technology is inevitable, either the firms have to initiate or they will be compelled to do so. If the later occurs, disarray and chaos is bound to inflow, it will challenge current practises and encourage new approach to a project.
So we are through the definition and significance of DTECH, current practises in the industry and considered the case of Sagarmala Project which will have domino effect on the feeder/ parallel sectors. But how does a firm exercise DTECH?
From the firms’ perspective: It is evident that the standard Organisation structure should be tailored to encourage DTECH. It is important to specialise in core capabilities and assess scope of R&D. It is important to mould the culture as wealth of the firm. As we have been preached/ taught, to have competitive advantage, a firm should practise #VIRO
V- Vital/ Valuable for the client (Strategic and Healthy Partnership)
I-Imitation should be costly for others (DTECH encouraged by Organisation Culture)
R- Rare contribution to market (DTECH through R&D)
O- Non- Substitute (DTECH becomes a Core Competency)
A huge conglomerate can never have a core competency. Example, consider the top Indian MNC brands, they do have a presence from salt manufacturing to ship building, but do they have a core competency? Even if they do in one vertical, as a whole will come bundled with 10x more laggards. This drags down the brand, the margins and eventually makes the company sour for the best talent.
Going micro to the academics, the reason civil engineering job offers is lacklustre now because of the lack of a USP. It is important to realise the work breakdown in a project. The construction manager coordinates; the engineer inspects and delegates the execution. There should be no overlap of these responsibilities and these should be their specialisation.
One level up, consider the R factor. Example- BG Shirke group of companies, the home page says, “Total industrialisation of civil engineering”. It is disruptive; they strive to be the pioneer in the sector and mend the future of the sector to their business strategy. Such a statement/ vision act as a telescope for the firm through which they envision the sectors’ future.
Intangible assets can’t be stolen/ imitated hence are valuable. A project driven firm always stays reactive in nature. A pro-active firm has the capability to create projects. A client knows what the needs are and the other 2 parties must provide the means to fulfil them. Disruptive technology has to be the solution. Mitigation of risk should be done on multiple parallels. A Firm (all of the 3 parties) should establish its core competency; the academia should be able to cater such requirements, students capable to exercise modern tools and techniques.
At the end, a customer driven market tests the calibre of a competent firm. A client respects high returns on expectation. If DTECH leads to completion of a project in 15 months (24 months under conventional), total accountability of work with controlled wastage, planned risk delegation on site, earlier take over and commissioning, environmental friendly structure hence tax benefits to client, standardised quality of work; such value addition is what today’s clients look for. The client cannot cut down the cost by lowering the standards, but can only do so by smart and adaptive consultants and contractors.
A long term strategy demands innovation, becomes a disruption if it enhances the needs of the client. It is important to realise that DTECH is not the only way, but a long term solution to the highly fragmented Indian Construction industry.
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