Organizational Agility in the Construction Sector

We name Organizational Agility to the organization capacity for quickly detecting and responding to market, by means of adding value to the customer in a continuous way.

Innovations in a sector don´t always come from the more visible and positioned agents. All the sectors face new launches, sometimes pushed by companies that, a priori aren’t considered as primary leads of that economy.

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In previous weeks Airbnb, a company that wasn’t considered a competitor in the building market, has made and announcement which didn’t let CEOs indifferent from traditional building and promoting companies. Joe Gebbia, cofounder and responsible for new products’ development in the company has announced that Airbnb next service would be have to do with architecture and urban planning. They want to be not only the reference in the temporal lodgment service, but also they want to become an agent that builds and promotes the real housing.

The Airbnb´s new project is named «Backyard», and it is an effort to design and prototype new ways of building sharing homes. The main advantage from Airbnb to face this initiative is its digital platform. The knowledge shared by its big community that keeps researching in a practical way how the use of the houses is: preferences, ways, and types of application from the spaces destined to temporary renting of living areas.

Thanks to this direct contact with the user through their platform, they are the first to access to this valuable information: “Backyard investigates how buildings could utilize sophisticated manufacturing techniques, smart-home technologies, and to obtain a new and wider vision from the Airbnb community to thoughtfully respond to landlords and guests changing needs along the time,” says Gebbia.

The tendency is growing in a temporary renting marketing form house spaces. Even if each time there is more common construction with common spaces or sharing spaces, co-living, as the Yoshino Cedar house, that was very first building that Airbnb built for its own, adapting ti to its hiring business model of hiring-for-use. New users’ changing needs reconfigure the future housing in a way that we aren’t used to.

Backyard name could seem a reference to the living prefab module development to be installed in your own backyard. Projects for secondarily small constructions for guests or temporary renting. Nevertheless they are not going to prefab small modules. The project is more complex as could be expected in a pre-industrialized housing model. Gebbia states: “Backyard is not a house, it is an initiative to rethink the housing. Houses are complex, and we are adopting a wide focus, not only designing a thing, but a system that could make many things”.

We always felt as if we were in the backyard of Airbnb, physically and conceptually, and we began to refer to the project that way.

Backyard vision is to give an answer to the needs and changing ways from a real estate market each time more dynamic and with more complex and adaptable habitational solutions. It will be more a system that can adapt itself to particular contexts depending on each need, more than a perfectly pre-industrialized or prefab construction.

This is the model many related-to-innovation startups are in. Backyard born as a business unit in the “back side” of Airbnb, in its backyard, from where it gets its name. “The project was born in an office outside the Airbnb headquarters”, says Gebbia. “We always felt as if we were in the backyard of Airbnb, fiscally and conceptually, so we started to call the project that way”.

Backyard-Airb&bOther companies whose businesses models are not straight to building are developing projects that hit this market in the same way. IKEA has developed the Building Blocks project together with two architecture students to rise a open source house to its prefab, packaging and installation way. This open-to-everyone design has been elaborated so the house could rise in a flexible way in different regions around the world in an economic and versatile manner.

We will have to get used to the presence of new and more technological agents and get used to the agility of the market. The technology, the digital revolution and the construction 4.0 building model are transforming the real estate market, which respect to its business model and productive processes, and to its adaptation to new and more demanding clients’s requests, be more informed and with increased power to participate in the decision-taking thanks to technology.

Building Blocks, IkeaWe are conscious about the digital revolution, the construction 4.0 building model and the possibilities that they offer to the building sector. But I’m not quite sure that we could visualize the impact that technology will have in the cultural, social and business processes. Companies like Airbnb, that were born as a digital product could have more vision in the sense of a sector that historically has shown tough to changes, as a reflex of materiality and the weight of the bricks with which we build.

The change is inevitable, and it could come from many sources, like the rising of new competitors, the development of technologies which are rapidly affecting to the industry, or sudden changes in general terms of the market. Keeping a high degree of adaptability and agility assures a capability to react with success to the unexpected challenges.

Organizational Agility

We name Organizational Agility to the organization ability to detect and respond faster to changes in the market, adding value to the client in a continuous way. This is not a tendency that we could consider in the future. The number of new initiatives and solution launches has been increasing in the last twenty years in a 5 per cent rate, as shown in the Decision Latency Theory by Jim Johnson.

Neither is a scale problem, because all organizations, whether are small local SMEs or big multinationals they need people who understand the value of agility for the business’ success. The majority of the business’ executives believe that organizational agility is a basis for entrepreneurial success. In addition, the Agility level in an organization could be the more influential factor in the general success than the project’s focus.

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Aligned with this, the Project Management Institute, PMI has produced an “Pulse of the Profession In-Depth report: Organizational Agility” about how agility is impacting the entrepreneurial success and to increase that capacity. Those organizations that declared an increase in the launches success of new projects and product in the market they achieve it thanks to higher flexibility conditions, converting them in better competitors.

The role of Organizational Agility as support to competitivity its gather too in a survey made by McKinsey consultancy firm. Nine up to ten executives from all the regions and manufacturing sectors they considering organizational agility as one of the factors that are increasingly critical to the business success.

In addition, 90 per cent of respondent executives by The Economist Intelligent Unit graded the organizational agility as vital to the entrepreneurial success. Half of the whole CEOs and CIOs match in that the decision-making and its more quickly resulting implementation are more important to the competitive position of a company results.

Organizational Agility not only keeps the competitivity, but it straightly affects the income statement. The Masschusetts Technological Institute (MIT) suggests that the much agile companies increase their incomes up to 37 per cent faster and they generate a 30 per cent more revenue than less agile companies.agilidad organizacional, agility organzational

In addition to economical growth, the adaptability and the bigger products and service launching capacity with better success probabilities, the organizational agility involves cultural changes inside the organization. This implies that related to people, professional and user factors are the more determining.

The Organizational Agility study showed how the companies were addressing a cultural and business processes change lead to three fundamental axes:

1.- Change Management

In the first place, boosting a major Change Management to better adapt themselves to the market needs. The effective organizations in change management are more agile, not only reducing the impact of changes coming from external factors, but for their higher capacity to capitalize the opportunities that can emerge, such as new technologies, new clients, etc.

Where it is observed a higher advantage referred to Change Management is in the capacity to detect and evaluate changes in the environment and market. As Backyard, the Airbnb department in charge of detect new needs that can be translated into new products and services is a key element to be aware of that changes. Transform the information that collects that technological or trends observatories, to action lines, proposals and projects have to be with the third axe to be developed.

2.- More effective and collaborative Risk Management

The second axe to consider in that the change towards agility is a more effective and collaborative way of Risk Management. When organizations are required to take fast decisions, sometimes they could lose control. The effective risks management helps executives and projects leaders to identify and relive the factors that could block success.

In risk management in the building sector, the real estate companies are considering the final user as a concerned interested party of the projects. Concepts as Customer Centric, Target Value Design or IPD are each time more common in new projects conception. The early cooperation with the rest of the interested parties on the project make easy to identificate and mitigate risks, prior to starting the building fase. In the same way the final user has an increasingly decision capacity related to his house’s project. Thanks to technology we can involve the end user of the project.

3.- Professional Management of Projects, Programs and Portfolios

«When the organization grew in terms of projects and people, knowing more about the status of the projects became a problem …»

The third application axe is an increased use of standardized project, program and portfolio practices. Managers from all the companies have only one thing in mind, acting rapidly to face changing economic conditions, requests and priorities from the organization. But strategy management and prioritization of which projects to start and when to do it only can be made from a professional and standardized perspective. It is essentially a solid base in projects, programs and portfolio management.

“When an organization grew in terms of projects and people, knowing more about the state of the projects became a problem…”, this is a claim that a manager from a fast growing company addressed me recently.

When organizations standardize project management across all the departments, they declare being three times more agile and competitive than those which are not doing. This third transformation is transversal to all the departments. Ultimately it is about transforming the organization to be able to work in a base of projects, as in adaptive and agile frames whether traditional or predictive. It is specially referred to portfolio management and the company strategy based on projects executing.

One of the factors that companies name as a positive value because of his contribution to agility is the application of concepts from adaptative projects, even applied to portfolio management. The iterative techniques in project management set the focus on the addition of value to the client, shortening delivery deadlines.

Program management is a constant request in the building sector and the innovation should be too. We must change the concept “Innovation Project” to “Innovation Program”, in which we could manage different projects that we will activate or keep in standby according to the business needs. Which much shorter projects, manageable, less risky and added value much sooner from this set time to market. This obeys to the simplicity principle from agile environments, where prototyping creation and proposed solution feedback recovery requires the creation of fastly executed deliveries.

Building’s sector companies must assume this cultural change and promote this transformation. Set it in practice is more complex, particularly if our organizations are firmly set and motionless, as the buildings they build.

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Different Approaches to achieve Organizational Agility

In the past Project Management Institute global Congress 2018 celebrated in Los Angeles, Professor Julio Carazo leads a workshop in which professionals who were divided in sectors studied different strategies that companies are using these days to face the agile transformation. If so the obtained results varied to sectors and especially by companies’ size, in the same workshop held in Madrid we achieved some conclusions related the building sector and engineering.

Subcontracting of External Services

Between the strategies used by companies, outsourcing services from other companies to transform and complete a real need, typically a consultancy firm, is the more used one. Matching with the tendency it is observed in other sectors it hopes that is going to happen an even bigger development in outsourcing in the future, especially by the technical nature and the challenges that companies are facing. Thinking, for example in the outsourcing services related with new technologies, as blockchain, big data, etc. as elements of innovation and organizational transformation. Applying new technology to a defined project could lead to a non acceptable risk to any given company due to its lack of experience and skilled human resources.

Both in small and medium companies, that have not enough specialized professionals as the bigger ones, the solution of an external consultancy for this kind of specialized services is the more requested because of its immediacy and its efficiency in the short term. Nevertheless, this is the transformational process that less holds and involve the own staff. If the organizational agility means transform people, this is not a sustainable solution in that sense.

Project Manager

A less used option is to hire a project manager to lead a transformation program. Hiring external agents whether to lead a transformation project or to facilitate that change as external experts it is not a very requested option in companies these days. It is not considered a cheap solution, although it is effective, and could create a certain culture in the long term if they involve the company own staff.

Training

A variation of the prior method that improves the empowering parameters and involvement is hiring an expert facilitator in that matter or “subject matter expert”. It is discerned from the previous method because in this process the facilitator plans the questions but involves the organization to find the answers.

Apart from outsourcing, training is a traditional process to contribute to the skills needed to transform organizations. In some special cases related with technology, as the development of BIM environments inside an organization, companies are still preferring more rapid and efficient solutions in the short term moving to other solutions such as outsourcing or external project management.

Coaching

Companies are becoming clearer that the human factor is key to change their culture in this transformation process. Emotional intelligence, empathy, cooperation, leading and negotiation skills are human factors that cannot be replaced by a machine or AI.

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Following the results of the forementioned workshop the more effective process to enable the interpersonal and leadership skills would be coaching. The professionals at the construction sector considered that the focus in changing organizational culture coaching is the more effective solution in the long term. Considered expensive because of the long returning investment period, it is the solution that creates more involvement in teams. To the companies boarded in a transformation process, this system represents the more desirable way due to the implications on a human level as a fundamental ingredient of organizations. Although it is expected that in the future it will be widely used at all the levels, these days this is the less used method, exclusively addressed to training management positions and companies heads.

The choice of the different ways to face the organizational agility depends on the company size, and the internal skills that each organization have, but particularly the precise problem to solve. Whether the solution would be technical to implement a technical innovation, or to enable interpersonal skills to a more productive working environment, this determines which transformational solution would be the more effective.

Transforming a cultural change

As a conclusion we could say that larger organizational agility involves a transformation to an increase the structure´s performance, the people and processes of any given company, which definitely leads to a rise in the market compactivity.

To building sector companies this becomes obvious when we read news about companies out of the sector that is able to adapt themselves rapidly and sell new services as Airbnb is planning.

The Spanish companies in the building sector need a cultural change to adopt more agile and cooperative frameworks, as it was explained in the article published in Building & Management by Alfonso Bucero, Miguel Angel Alvarez and myself, “Integrated project delivery, an alternative to the usual form of construction work in Spain”:

“A change in the mindset is needed, that involves reconsidering the way of working which we have been engaged for so many centuries, as the only possible paradigm, replace the conflict, as a way of producing construction, through collaboration between all the involved agents in the project.”

In a first approach is more important that is gets introduce this behavioral culture in all the implied parts in the process of building, that the development of related techniques that will come next.

How we reach the organizational agility will be the main task for the organizations in the future. We must seek in our companies’ backyard if we are transforming people and processes with more collaborative projects to face the necessary changes.

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The present article is part of the Editorial for the number 2018-03 of the scientific magazine  Building & Management.

You can download the full text at:

Organizational agility in the construction sector.

 

Architect & Project Manager Professional, PMP Seeking Excellence by Design. Carlos en Google+

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