There are valuable lessons that the construction industry can learn from other industries in order to improve safety and quality outcomes through collaborative procurement.
In an endeavour to chase often exacting deadlines and performance targets, industry teams frequently overlook the need to actively manage their relationships with the same degree of diligence as they manage their operations on site. The 'opportunity cost' of this in terms of increased tensions with the team, duplication and associated inefficiencies was adroitly summarised by professional basketball coach John Wooden: 'If you don't have time to do it right, when will you have time to do it over?' In other words, a team should focus on getting it right first time.
This section describes how the construction industry can benefit from adopting lessons learnt from other industry sectors, with particular reference to specific recommendations in this guidance:
■ Lessons for early supply chain involvement that improves safety and reduces risks
McKinsey & Company studied how construction has learned or might learn from the responses of other industries to external disruptive influences. They describe how, as 'ship, aircraft, and car manufacturing shifted to assembly lines, the supply of critical components was increasingly important. In many cases, those components were the basis of differentiation: in car manufacturing, for example, the quality of engines could be a distinctive factor. Therefore, it was important to control the supply. Vertical integration or partnerships along the value chain were common in each industry. In commercial aircraft manufacturing, engines were, and are, produced by external suppliers but, in order to develop better-quality and more efficient engines than their competitors', manufacturers hold integrated partnerships in R&D and testing.'
■ Lessons for collaborative relationships that improve commitments and involve residents (1)
Google undertook studies to improve organisational and operational performance. 'Re:Work with Google' describes how 'much of the work done at Google, and in many organizations, is done collaboratively by teams. The team is the molecular unit where real production happens, where innovative ideas are conceived and tested, and where employees experience most of their work. But it's also where interpersonal issues, ill-suited skill sets, and unclear group goals can hinder productivity and cause friction.'
In 2012, Google launched 'Project Aristotle' to better understand what key factors contributed to effective team working. They identified the following five essential dynamics:
Psychological safety: 'Psychological safety refers to an individual's perception of the consequences of taking an interpersonal risk or a belief that a team is safe for risk taking in the face of being seen as ignorant, incompetent, negative, or disruptive.'
This is supported by Amy C. Edmondson in 'The Fearless Organization' (2019), where she illustrates how the concept of 'psychological safety"' is gaining significant traction in other industries, for example in healthcare and multi-media. She defines psychological safety as 'a belief that neither the formal nor informal consequences of interpersonal risks, like asking for help or admitting a failure, will be punitive. In psychologically safe environments, people believe that if they make a mistake or ask for help, others will not react badly. Instead candor is both allowed and expected'.
Re:Work with Google offers the following recommendations:
■ Establish a fundamental understanding of the principles behind psychological safety
■ Solicit input and opinions from the group.
■ Share information about personal and work style preferences and encourage others to do the same.
Dependability: 'On dependable teams, members reliably complete quality work on time (vs the opposite - shirking responsibilities).'
Re:Work with Google offers the following recommendations:
■ Clarify roles and responsibilities of team members.
■ Develop concrete project plans to provide transparency into every individual's work.
Structure and clarity: 'An individual's understanding of job expectations, the process for fulfilling these expectations, and the consequences of one's performance are important for team effectiveness. Goals can be set at the individual or group level, and must be specific, challenging, and attainable. Google often uses Objectives and Key Results (OKRs) to help set and communicate short and long term goals.'
Re:Work with Google offers the following recommendations:
■ Regularly communicate team goals and ensure team members understand the plan for achieving them.
■ Ensure team meetings have a clear agenda and designated leader.
■ Consider adopting Objectives & Key Results (OKRs) to organize the team's work.
Meaning: 'Finding a sense of purpose in either the work itself or the output is important for team effectiveness. The meaning of work is personal and can vary: financial security, supporting family, helping the team succeed, or self-expression for each individual, for example.'
Re:Work with Google offers the following recommendations:
■ Give team members positive feedback on something outstanding they are doing and offer to help them with something they struggle with.
■ Publicly express your gratitude for someone who helped you out.
Impact: 'The results of one's work, the subjective judgement that your work is making a difference, is important for teams. Seeing that one's work is contributing to the organization's goals can help reveal impact.'
Re:Work with Google offers the following recommendations:
■ Co-create a clear vision that reinforces how each team member's work directly contributes to the team's and broader organization's goals.
■ Reflect on the work you're doing and how it impacts users or clients and the organization.
■ Adopt a user-centred evaluation method and focus on the user.
■ Lessons for collaborative relationships that improve commitments and involve residents (2)
In 'Team of Teams' (2015), General Stanley McChrystal describes how the Joint Special Operations Task Force successfully eliminated siloed working in favour of effective collaborative working amongst a series of diverse teams, to produce superior results as opposed to more insular competitive or non- collaborative working. In a construction context, this principle illustrates how independent 'centres of excellence' or expertise, such as those within Client, adviser and supply chain organisations, can be maintained while at the same time encouraging highly effective collaboration and communication between them.
The Royal Air Force Aerobatic Team, the Red Arrows, place great emphasis on their debriefing sessions following each training or display sortie. Those sessions are conducted in a highly structured manner, where the sortie is analysed in detail with the purpose of confirming adherence to established operating procedures and also to identify opportunities for improvement. Each team member has an equal opportunity to comment (irrespective of rank) and all team members are expected to hold each other to account but in a constructive and non-judgemental way.
■ Lessons for collaborative relationships that improve commitments and involve residents (3)
Resident (customer)-centric relationships are vital, especially in the context of safety and effective engagement in relation to designs and specifications. McKinsey & Company describe how 'following specialisation in end-use segments, companies invested heavily to build strong brands within their market niches and segments. In car manufacturing, brands tell stories that are centred on the customers - and customers let the products shape their lifestyles. Given changes in how consumers acquire and use cars, automakers have emphasised their use of technology and innovation to enhance the customer experience.'
The Cleveland Clinic, one of the most innovative and forward-looking medical institutions in the USA is renowned for developing an approach that is patient-focused, more effective, more humane and more affordable. The 'Cleveland Way' is predicated on the active use of multi-speciality collaborative working to improve performance throughout all aspects of a patient's care and treatment. In 'The Cleveland Clinic Way' (2016), Toby Cosgrove describes how doctors are 'reorganising themselves to increase collaboration in dealing with specific patients and their illnesses" and how 'this collaboration is helping to produce breakthrough innovations in care'.
■ Lessons for systems that sustain and enhance a collaborative culture
In 'The Business of Excellence' (2016), former Red Arrows pilot Justin Hughes refers to the importance of adhering to 'world class basics'. Notwithstanding the highly complex and high-stress environment in which the Red Arrows operate, they nevertheless focus on doing simple things exceptionally well, such as expecting full and timely attendance at meetings (literally counting down to the prescribed start time) and being fully prepared to contribute.
The principle of striving for performance improvement is echoed in elite sport. For example, in his work with the British Cycling Team, Dave Brailsford popularised the phrase 'aggregation of marginal gains' and illustrated how improving each element of competing on a bike by only 1% led to a significant aggregated and measurable increase in performance.
■ Lessons for using strategic collaboration to embed economic, social and environmental value
In July 2020, McKinsey & Company surveyed 400 construction industry leaders for its report 'The next normal in construction: How disruption is reshaping the world's largest ecosystem'. Of those surveyed, a majority believe these nine disruptions will impact the industry within the next five years. McKinsey analysed shifts in four industries with similar attributes, namely shipbuilding, commercial aircraft manufacturing, agriculture and car manufacturing. By studying these industries, it identified a number of patterns of relevance to collaborative procurement in the construction industry:
■ Product-based approach: In shipbuilding, commercial aircraft manufacturing and car manufacturing, players shifted to a product-based approach for which production facilities became assembly sites. The most famous example is Ford's innovation of the assembly-line manufacturing process for its Model T. Most of the auto-manufacturing industry adopted the process within ten years. In this model, prefabricated and modularised subcomponents are inputs, and ships, airplanes and cars are outputs.
■ While the manufacturing process was significantly standardised, products remained customisable because subcomponents could take various forms and sizes within an industry-wide, standardised framework. When early movers boosted their productivity and profit margins, competitors adopted the innovation over time. Toyota's lean manufacturing and use of robotics, and further innovations in the assembly-line manufacturing process, boosted the company from a small player to one of the largest in the industry.
■ Specialisation: As industrialisation started to reform these industries and processes became standardised, companies targeted specific niches and segments (for example, tankers, freight ships, and cruise ships in shipbuilding and budget, luxury, and utility autos in car manufacturing). As a result of this specialisation, players created a competitive advantage by developing knowledge and scale in their market segment.
■ Value-chain control and integration with industrial-grade supply chains: As ship, aircraft and car manufacturing shifted to assembly lines, the supply of critical components was increasingly important. In many cases, those components were the basis of differentiation: in car manufacturing, for example, the quality of engines could be a distinctive factor. Therefore, it was important to control the supply. Vertical integration or partnerships along the value chain were common in each industry.
■ In commercial aircraft manufacturing, engines were, and are, produced by external suppliers but, in order to develop better-quality and more efficient engines than their competitors', manufacturers hold integrated partnerships in R&D and testing. Also, Boeing recently decided to build the 777X wing internally (formerly outsourced) and also set up an internal avionics division to reduce reliance on suppliers of navigation, flight controls and information systems.
■ Investment in technologies and facilities: Industrialisation created the need to invest in technology and facilities: manufacturing plants needed to be built, machinery needed to be acquired. Product and manufacturing innovation became important sources of competitive advantage, which led players to boost R&D spending significantly. In the four comparable industries, greater R&D spending led to short-term gains and advantages for the companies, while customers have benefited over the long term. Consider that the current cost of a car or airplane has changed little in the past ten to 20 years, but both cars and airplanes have significantly more value-adding technologies and other features.
■ The trend has continued with investments by original-equipment manufacturers in the electric-vehicle-battery market - from R&D and packaging to cell production. Volkswagen recently invested in a battery-cell factory that it is developing in partnership with SK Innovation in Germany. It has also struck major supply deals with LG Chem, Samsung and Chinese battery maker CAT. Overall, the company's ratio of R&D spending to total revenues is now close to 6% compared with an average across the construction sector of less than 2%.
■ Volkswagen alone invested more than $13 billion in R&D in 2019 - equivalent to the combined amount invested by the 25 largest construction and building materials players, according to the 2019 EU Industrial R&D Investment Scoreboard. That level of R&D spending contributes to a current automotive-sector average of almost 5%, which represents a significantly higher commitment to R&D than is typical in construction. Across multiple industries, winners continue to heavily invest in technology, many with a focus on digitalisation and data-driven products and services.
■ Investment in human resources:
Employee attraction and retention became a priority when industrialisation affected the four comparable industries at scale. Firstly, players built up their technical knowledge in order to create a competitive advantage. Secondly, improved production processes have, over time, resulted in a need for constant retraining of the workforce.
■ Sustainability: The growing global emphasis on sustainability is being felt across all industries. Most notably, automotive has already embarked on a material transformation toward zero-emission vehicles. In Norway, airport operator Avinor and Wideroe Airlines vowed to fully electrify all domestic flights by 2040.