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McKinsey's Secrets to Scaling Construction Tech
Owen Drury
August 14, 2024 • Estimated Reading Time: 10 minutes
INDUSTRY INSIGHTS
An Hour (and a half) With McKinsey
If you follow us, it will not be news to you that last week we were joined by David Rockhill, Partner at McKinsey.
David is responsible for the construction, real estate and infrastructure division and is the author of a number of notable articles and thought leadership publications such as this one.
Fun story - I cold reached out to David on 18th January, after I had read this article and voila… the rest is history!
The End Of The Productivity Curve?
I couldn’t help but start our conversation by asking about the state of the McKinsey productivity curve.
This curve is responsible for nearly every conclusion on why construction NEEDS technology.
But as someone who has immersed themselves in construction technology for the last few years, the subject gets boring. Even David admitted that not a month goes by without someone phoning him to tell him that the measures used within the curve are not quite right.
The good news?
It’s being revamped. And at the time of writing, here is the updated article and version.
Anyway, in this article, we won’t dive into this. Instead, we’ll pick apart David’s thoughts on how large enterprises view, choose and implement new technologies.
These are small snippets of the key points raised within the episode. As always, we recommend listening to the full podcast for more in depth discussion points.
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A Strategic Approach To Navigating Construction Tech For Large Enterprises
Successfully implementing new technologies across large organizations can be challenging.
In this newsletter, we'll explore key strategies for effectively adopting and scaling construction technology, based on insights from our podcast with David.
Align Technology with Business Strategy
The first step in successful technology implementation is ensuring it aligns with core business objectives. As Davidl explains:
"You need to link it back to business value. So looking at your business, and forget about digital for a minute, just look at your business and figure out where it creates value, right? And so, or how it creates value. So look at the revenues, look at the costs, and figure out where you can make the biggest change using technologies."
Rather than starting with a specific tool, begin by identifying key business processes or workflows where technology could drive meaningful improvements in productivity, quality, or cost reduction. Set clear targets for the impact you want to achieve, then work backwards to determine what technology solutions could help meet those goals.
Secure Executive Sponsorship
For technology initiatives to succeed, they need strong backing from leadership.
"The first is around having very clear sponsorship and having digital written into the strategy. And that means having, typically the CEO, saying this is a business priority and we're gonna put resource behind it."
Without this high-level support, technology projects risk being seen as side initiatives rather than core to the business. Ensure digital transformation is a key pillar of company strategy and has vocal champions in the C-suite.
Build the Right Tech Stack
Implementing technology effectively requires having the right foundational systems and tools in place. This can be challenging in construction, where decentralized project teams often use different software.
"Each project or each business unit can make decisions about what tech they do or don't use. And so you end up with this very fragmented tech stack often, particularly in construction companies where different BUs or even different projects have got different preferences for different software."
To address this, companies should aim to standardize core systems across the organization while still allowing flexibility to use specialized tools where needed. Focus on interoperability and data integration to enable information to flow between systems.
Take a Pragmatic Approach to Data
Many companies get stuck trying to perfect their data before implementing new technology. Rockhill advises a more practical approach:
"What we really encourage our clients to do is kind of just to start. So don't kind of clean up the data and then define the use case or define the change. Actually do the change and use what data you can and then use that to drive the improvement in the data."
Begin with the data you have, even if imperfect. As you implement new technology and processes, you can iteratively improve data quality over time.
Develop Digital Talent
Successfully leveraging technology requires having the right skills within the organization.
"Making sure there are the same kind of career pathways for your digital talent as there is for your engineering talent. And it's as core to your business as engineering talent is."
This may mean creating new roles and career tracks for technology specialists. It also requires upskilling existing staff, like teaching engineers computational design skills.
Integrate Technology into Core Workflows
Rather than treating technology as a separate function, it should be embedded into day-to-day operations. Rockhill suggests:
"It's about actually developing this stuff together. So building your, a bit like I was saying with the engineers who were learning computational workflows, it's about embedding your digital talent with your engineering talent and developing new ways of working together."
Cross-functional teams combining domain experts and technologists can help ensure solutions meet real business needs.
Drive Adoption and Scaling
Implementing technology successfully requires driving widespread adoption across the organization. Rockhill recommends:
"You need to get smart about how you're building capabilities in your business and also how you're incentivizing your business, people within your business. So what are the incentives within their personal development plans, maybe within their salary structure?"
Consider how performance metrics, training programs, and compensation structures can encourage employees to embrace new technologies and ways of working.
Focus on Key Business Challenges
When evaluating technology investments, concentrate on solutions that address core industry pain points. For contractors, Rockhill sees two key focus areas:
"One, how can I address the labor shortage? So how do I use technology to get more out of my existing workforce or re-skill my workforce faster? And the second is everything around regulation and risk. So how can I use technology to improve transparency, improve traceability, limit the risk?"
For engineering firms, priorities include increasing workforce productivity and developing new technology-enabled service offerings for clients.
Embrace Emerging Technologies
Looking ahead, several emerging technologies show promise for the construction industry. Rockhill highlights augmented and virtual reality:
"How do you not only use augmented reality to support construction workers on site, but how do you use VR and digital twins to train construction workers? So I think the whole thing about building capabilities of construction workers and simulations is quite exciting."
He also sees potential in AI-powered design tools and more intuitive, accessible software interfaces that reduce training time.
Conclusion
Successfully implementing technology in construction requires a holistic approach that goes beyond just selecting the right tools. By aligning technology with business strategy, securing leadership buy-in, developing digital talent, and focusing on adoption and scaling, construction firms can maximize the value of their technology investments.
Interested in learning more? Check out the full episode with David👇👇👇
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