Sunday, July 5, 2020

Innovation "Baby Steps" for the Modular Housing Industry

Every modular factory person and modular home builder regards innovation with a lot of skepticism and for good reason. Rising costs associated with freight, new regulations and codes and now a projected 20% increase in lumber prices can have that effect on people.

It takes a lot of time, talent and money to produce innovations that affect the entire modular housing industry and who really wants to be the person or factory that leads the way? “Not me” said one after another.


OK, if innovation for an entire industry is the challenge, then what about innovations for a single factory or a single modular home builder. You still need the same time, talent and money. The trick is how to allocate those limited resources, especially money, to first learn what the future needs are and how to innovate to achieve them.

You do not get innovation for free – you have to allocate time, money and people to the search for new products, services, methods etc. However, innovation can lead to powerful cost savings, profitable new products and competitive advantage.

Right now for the residential housing industry, the main benefit of innovation simply might be survival. If we just continue to cut costs without innovating we will be bypassed by other types of construction that are being innovative.

No matter that we understand that innovation is a priority, it still comes down to one person, either a builder of someone in the factory, deciding that they will pick up the flag in begin leading the charge.

There are many ways to achieve innovation. Let’s divide activities into three categories.

It costs virtually nothing to:

  • Communicate a vision of innovation
  • Set goals and objectives for ideas, prototypes and innovations
  • Ask your people for ideas
  • Ask builders for ideas
  • Ask your customers for ideas
  • Ask suppliers for ideas

2. It costs very little to:

  • Run brainstorm meetings
  • Evaluate and select the best ideas
  • Build models and prototypes
  • Ask customers to evaluate your prototype products or services
  • Implement small incremental innovations in your products, services and methods
  • Empower people to try more initiatives in their areas
  • Investigate new collaborations. Partnerships, ideas and products

3. It costs a lot of money to:

  • Roll out major new products or services
  • Try an entirely new business model

So you should do a lot of items from Category 1. Generate many ideas from all sources – it costs very little.

You should do a few things from Category 2. Definitely move the best ideas to the prototype stage and evaluate them (but kill them if necessary).

You should think long and hard about items from Category 3, but be prepared to allocate some of your scarce resource in this area.

Innovation involves making bets. Often these bets fail. But if the modular housing industry is to stay in the game someone will have to start making small bets until one or more come off.

Innovation is not free, but it can be done on slender means if we adopt this kind of approach.

1 comment:

  1. Crawl before you walk is wise advice when you attempt to move from labor intense processes to automated processes. Both take the same number of teams and steps in the beginning yet long term it lessens your dependence on team growth beyond its current size hence reduces your largest cost in any operation, Labor and Labor Burden cost.

    40 years ago I worked in an industry that collected large volumes of data on paper and that data consisted of 45 specific collection points daily to ensure profitability by unit, not overall operation. The problem was paper data collection failed to have a central location to maintain the data so that was our fist step, create a system where data could be centrally deposited and viewed by the team. Great, except it still relied on people to analyze the data which was subject to opinion and lacked objectivity therefor very subjective results were generated amongst varying units and divisions. Therefore the next step was to automate the data analysis to ensure objective results were not based on opinions alone.

    So what was that business 40 years ago, TRASH, yes good old Solid Waste Collection.

    35 years ago I left that industry and went to work in a governmental unit auditing businesses. Yeah, I know, say no more. When I arrived the first thing I observed was the lack of any system to collect data and yet paper was 3 feet deep and no system existed to even know what was needed to be collected. Step 1 know what needs to be collected otherwise useless paper will result from we have always done it this way so why change now.

    That's a very hard step not only from not knowing what to keep and what not but battling the institutional experience factors of always done it this way.

    Once that was accomplished what central location would data be stored, of course we have always filed paper so lets keep doing that. Therefore the challenge was to get folks on board to create a database to store data only at first to avoid piles of unnecessary paper.

    Now that we have a system, now we need to analyze the data and once again the subjective approach comes into play which lacks an objective result.

    The tricky part is not offending those in place for many years with new ideas and completely new processes. Many times we ended up with a

    "Computer Screen attached to a Typewriter" which lands us back at the beginning.

    Many good meaning and very knowledgeable folks on teams have years of experience in an industry yet lack the skill to automate. We found it necessary for the success of the process to blend that industry experience with a Systems Analyst to lay the ground work to instruct programmers to build a system that didn't resemble a "Typewriter with a Screen" producing useless data analysis.

    Step 1 is a very critical step in knowing what needs to be analyzed and collected to ensure "objective" results. This is a crawl before you walk process and very hard in that personalities come into play as my opinion is worth as much as yours because you have never ..... built a home...audited a to understand an industry and the list goes on.

    So what does this have to do with Gary's article, start with the things that cost little and be careful who you listen to along the journey as you need an Objective Team to analyze the Processes and Data or the beginning will become the end quickly as you start to spend money.

    Anyway, thank you for reading 1 point of view based on 40 years of heartburn trying to change a process.