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COHERENT INNOVATION ON MACRO AND MICRO LEVEL

Jos Lichtenberg

Department of Architecture, Building & Planning, Eindhoven University of Technology,

PO Box 513, 5600 MB Eindhoven, The Netherlands

The diffusion of innovation and new technology in the construction industry is extremely complicated for many reasons. Among others the presence and involvement of many parties during the preparing phase of the building process and the complex SME market structure characterized by the absence of dominant market leaders are characteristic for a market where no one seems to be responsible for the system as a whole. This situation causes a market where change is more or less evolutionary rather than revolutionary and where only few parties do have experience with innovation. Some innovation strategies can be derived from former research such as authors dissertation [Lichtenberg, 2002]. One of them is the strategy of a coherent approach of working on both macro and micro level. The Slimbouwen programme (Slim in Dutch means both smart and lean, bouwen means to build) is mainly focussing on a macro level. It is the result of an analysis of the traditional building process and an answer to a lot of societal problems caused by this traditional approach. Slimbouwen, also embodied by a foundation, shows the way only on a conceptual (product/supplier independent) level. In parallel suppliers of materials and products are challenged by Slimbouwen and the innovators or early adaptors are now rewarded by the erection of the first Slimbouwen projects. These projects do now attract new suppliers to develop new products for this building approach. These innovations do in reverse also strengthen the status, adoption and further development of Slimbouwen. Based on both the analysis of success agents and the Slimbouwen experience, the hypothesis of the positive effects of a coherent approach on both macro and micro level will be reinforced by the elaboration of some practical examples.

Keywords: Diffusion, IFD, Infra+, Innovation, Macro level, Micro level, Product Development, Slimbouwen, Slimline.

INTRODUCTION In many cases product development for the construction market is not failing because of technical reasons, but mainly because of a dragging diffusion process bringing it to the market. Patience and power however will decline with time and at a certain point projects have to be terminated. The diffusion of innovation is researched already for many years. Mainly for consumer markets. Rogers is generally recognized as a founder of the diffusion theorem [Rogers, 1995], but after publishing his book extensive research was initiated in this field . However the construction market has some specific characteristics that set bounds to the diffusion process. The complex structure of the market existing of mainly SME companies and the lack of dominant market leaders is one of them. Others are the involvement of many parties in the building process (incl. preparation phase) and the many shackles in the supply chain (fig 1). From the point of view of a component supplier it is practically impossible to bring change to the construction market. Only incremental innovations in the line of the existing activities are

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considered to offer realistic opportunities. Actually from the point of view of the demand side of the market this has caused a long tradition of 'innovation by addition' without fundamentally changing construction. Lots of innovation is achieved on a component and material level and even today our building tradition as a whole is very much based on the principles of constructing during the Roman Empire and even before that era.

Figure 1: Complex supply chain in the construction industry

In general fundamental change is considered to be of high risk. Nevertheless in some cases companies have reasons to believe that introduction of more fundamental innovations can be very beneficial. For some companies with already a market position the aim is to establish a turn around and to become future proof, but in general this approach is related to new ventures, start ups, etc.

DRAGGING DIFFUSION OF INNOVATION In order to get a better understanding about the slow adoption of new products in the building market some findings can be derived from authors dissertation [Lichtenberg, 2002]. Apart from desk and field research this thesis is based on a so-called retrospective analyses according to the Grounded theory approach [Glaser et al., 1967]. The research includes an analysis of 104 product development projects (cases). A close involvement as a product developer in many projects gave access to background or even confidential information. Being part of projects gave much more insight of company or entrepreneurs behaviour as well as of success agents, as it possibly could have been from information out of just interviews. Among others the following statements can be derived from the said dissertation: Product development is mainly carried out by industrial companies but even here R&D is hardly an incorporated activity. The 'R&D/Turnover' rate amounts at about only 0,3 %. In general outside the building industry this ratio is in between 2-4%. To some extent, product development is being carried out mainly by the market leaders in several building product segments on a project basis. 70% of the companies appear to be not active in R&D at all; The limited effort in product development can be explained by ‘fear for the unknown’ and the observation that until yet the building market does change evolutionary rather

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than revolutionary (radical). Product development is not a daily routine and management is not experienced and hardly able to deal with R&D processes. The decision process in the building market is quite complex due to the many parties involved (architect, contractor, commissioner, various consultants, etc.). They all have influence on the purchase of products. In general the teams of involved parties do not sustain over the projects. In a next project other companies and other people will have to co-operate; Both the lack of R&D experience and the complexity of the building market interfere with the urge to eliminate risks and the incertitude towards the investments to make, the project approach, the possible results and the payback time; ‘Marketing and Strategy’, to be considered as a core competence for innovative success [Cobbenhagen et al., 1995], is not yet incorporated in the construction related industry. Due to the protective market conditions such as a structural lack of building land, governmental involvement and the limited competition, the market is not responding as a free market; The decision making unit (DMU) is not only existing of some employees in one client company, but is divided over independent companies, who are incidentally working together on building project level. Statistically spoken the risk is quite high that at least one of the parties involved does not belong to either the group ‘innovators’ or ‘early adopters’ according to the adoption classification [Rogers, 1995]; The project designer (architect) is not part of the production organisation (contractor). Consequently the architect is not managed by the production organisation as it is the case in other branches. At many points the interests of both parties do interfere with each other; The dependency of wholesalers who appear to be not able to translate market signals into product concepts. This is mainly caused by a limited knowledge level; In general there is a complex dependency of other suppliers and skills to obtain a satisfactory end product. Nevertheless the market is changing all the time, nowadays related to subjects like sustainability, energy, lack of skilled labour, grey growing society, etc. As a consequence existing products will be overtaken by others and on a company level there always has to be cautiousness towards market developments and one has to be prepared for product development. Being aware of the dragging diffusion process, the question is how the acceptance of new products can be stimulated.

COHERENT INNOVATION STRATEGY The findings of the former studies indicate that the success of product development, especially in the case that the new product is part of or fits into a fundamental change, will in general be dependent on the change of the market system as a whole. Among others the activity in product development by other suppliers (1) and the acceptance of innovation by parties at the demand side of the supply chain (2). This conclusion fits in the so-called innovation theories in which is stated that any innovative technology should fit in the innovation system with its actor network. [Tidd & Bessant & Pavitt 2005]. Each of the actors have their specific knowledge, perception, expectations, norms and values regarding the new technology which determine the acceptance and wider diffusion of an innovative technology.

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(1) In general the dependency of other products can be solved by strategic cooperation. The success of the Philips Electronics Senseo coffee maker is for example based on innovating through committed partnership. In this case with Sara Lee's Douwe Egberts coffee brand who in collaboration with Philips Electronics introduced special single-cup pads. The concept was an immediate success. However shortly after introducing the coffee maker, already competing pads were introduced by other coffee roasting companies and retail brands . Not so much a problem for Philips rather than for Sara Lee. In order to stay competitive they had to drop down their prices real soon and the question is whether they were able to pay back the R&D investments. The question arise what would have happened if Philips would not have succeeded in finding a committed partner? In that case it would have been necessary to introduce a brand of their own. Maybe just to provoke real coffee brands to develop new products for this new market. Innovation by committed partnership is however especially an opportunity in case of cooperation between real market leaders. The structure of the building market is for many supplies mainly based on players on SME level and the absence of explicit dominant market leaders. By this situation no one seems to be responsible for the system as a whole. In other words: nobody is powerful by himself to create change and therefore very much dependant of manifold potential complimentary suppliers. (2) Also the demand side of the supply chain is lacking of drive for change. In the paragraph 'dragging diffusion of innovation' many causes for this phenomenon were already listed. In general here the division of functions claimed by rather non strategic small-scale parties is the source for most of the said causes. In case of the Philips Senseo the success of generating demand is simply based on a right judgement of the market and a strong communication campaign. The consumer is interested and decides to buy a coffee maker in the shop. In the building market this is much more complex since a lot of parties are involved in purchasing the new product. One is always dependent on various other players in the building (preparation) process. For that reason change is considered to be high risk. In fact this is already the case for incremental innovations. For fundamental change the possible benefits can be substantial but the resistance of the market will be considerably higher as well. In case of a potential market for a fundamental innovation an approach could be to develop a total so called closed (protected) system, for example a building system, and bring it to the market, preferably to the end customer (developer, housing corporation, consumer). In this case as a consequence of one owns limited capacity, the effect of innovation will be reduced to a small part of the market. Assuming that the intended innovation is based on at least potential needs, the strategy to follow in the frame of this research is to fight on both market level (macro level) creating or activating needs and on company and project level (micro level). Especially in case the potential needs are based on common societal items the hypothesis is that this strategy will speed up the diffusion process substantially. A close involvement in the introduction of a new floor system provides a better understanding how this process can be elaborated.

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INFRA+ FLOORSLAB2 In 2001 a new floor slab (Infra+), earlier developed by a team of A+, was introduced to the market by a new player on the floor market called PFL. The new product was born as a result from a participation of A+ as project manager in the development of a steel housing system called ISB. The development of the ISB system was a joint action of eight companies but was finally not brought to the market. For a profitable production quite a large number of houses would be needed and the companies involved also were hesitating because of the fact that by bringing this system as a whole to the market they would start competing with their regular customers. Also the acceptance of the market of a light weight structure was a point of hesitation. The system was among others aiming at an industrial and cost-effective approach. The process efficiency was based on a division of the system into four subsystems. The structure (in this case cold rolled steel elements), the envelope (facade and roof), the mechanical (services) and the interior (infill).

Figure 2: The ISB system

For said reasons the system was not introduced to the market but some of the parties involved, kept supporting the idea of separating the services from the building parts. Instead of introducing the system as a whole, PFL decided to bring the Infra+ floor slab to the market as a kind of missing link in the traditional building process in order to improve the efficiency of the building process and at the same time to achieve a high rate of flexibility in use. Infra+ consist of a 70mm concrete slab with a width of 2400 or 3000 mm with on top two steel beams with a perforated web in order to be able to pass services. During the interior / infill phase this floor will be covered by a top floor system that is to be supplied by third parties.

Figure 3: The Infra+ / Slimline floorslab

Apart from the fact that this floor was introduced by a party that was not known as one of the established floor suppliers the introduction of this floor was also hindered

2 Infra+ is nowadays on the market as Slimline

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by a higher price. The added value is quite considerable by among others weight reduction, an efficient building process, the elimination of a suspended ceiling, reduction of the gross storey height (slim), sustainability, the integration of heating / cooling (also shown in fig. 3) and reduction of the operating costs on building level. In fact these values would even have justified a far higher price. Nevertheless the price appeared to be an obstacle in many cases and the adoption of this innovation was in the beginning limited to the innovators in the market and to projects with a special problem exclusively to be solved by Infra+ / Slimline. For example the realisation of an extra storey, the reduction of weight on existing structures, etc. The process efficiency and flexibility is in potential even more valuable but was not rewarded by the market at that time. Also the sustainability aspects were hardly valued.

SLIMBOUWEN During the introduction of Infra+ / Slimline in the Netherlands the socalled IFD programme was developed probably inspired by projects like the said ISB but also building on earlier developments in the frame of open building and the theorem of Professor John Habraken. In 1972 John Habraken published his book “Supports, an alternative to mass housing” [Habraken, 1972], already published in 1961 in the Dutch language. In that book he made statements about a separation of structure and infill and later he was also involved in developing technical solutions for the separation of services. IFD stands for Industrial, Flexible and Demountable. The programme was initiated by the Dutch Government in order to generate demonstration projects showing the way to efficiency and fundamental sustainability. The IFD programme was not directive how to deal with industrial, flexible and/or demountable building. This was left to the market. In the period 1999-2006, 92 experimental projects were financially supported and realised showing several ways of how to deal with this new approach [SEV, 2007]. Amongst these projects several projects were carried out with and derived their IFD status from the Infra+ floor system. Since IFD was a programme and not a specific recipe or approach it was intended to end up with the closing of the subsidy scheme. In parallel to the IFD programme Slimbouwen was introduced (SLIM in Dutch stands for both smart and lean, BOUWEN is the Dutch word for ‘to build’). The word was originally (2002) used on authors initiative as a title for a research project aiming at an integral development on building level with a contribution of some companies that provided for complementary products to the Infra+ / Slimline floor slab. Meanwhile it became clear that Slimbouwen also had high potential in the frame of sustainable building. The project was submitted to the so-called EET programme3 for a grant and after it was rewarded, the programme provided for means to elaborate the vision of Slimbouwen and also to develop a physical framework. The vision even obtained more status and became a movement after authors inauguration as a Professor at the Eindhoven University of Technology in 2004 where Slimbouwen was also the main subject of the inaugural speech [Lichtenberg, 2004], the publishing of several articles, many lectures (about 60 each year) and in particular the book Slimbouwen® [Lichtenberg, 2005]. In 2006 the movement became an official status as a foundation. 3 EET stands for Economy, Ecology and Technology

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Slimbouwen starts from the appointment that the traditional way of building does not fit the today’s requirements anymore. Building does substantially affect the environment in many ways and the building process became quite complex. In the last century step by step services were added to the already known building structure, without re-evaluating the building tradition. Slimbouwen is based on a skeleton structure and the separation of services from the building structure. A crucial development for this approach is the use of double shell structures such as the Infra+ floor, but also wall systems, which enables the installers to mount their prepared and prefabricated services as a whole and the user to change the installations during the use of the buildings. By the double shell structures a substantial reduction of material (weight) is obtained, without losing perceived quality such as acoustical insulation. The separation of services facilitates a simplification of the process and a substantial gain of time. Slimbouwen is a new approach for construction and a source for research in the frame of the chair ‘product development’ at the Eindhoven University of Technology. The research programme is named 'Resetting Construction'. As a spin-off of this research also concrete product development is already established. Not only by the university, but also by the market. Meanwhile some 50 Slimbouwen projects have been carried out, some of them rather large and architectural appreciated. By the growth of the number and size of the projects meanwhile a real Slimbouwen market is identified now that creates challenge for the supplying industry to adapt their products or even to develop new products. These products contribute to optimization of the efficiency, flexibility and sustainability and therefore to the adoption of this new approach on an integral level. These innovations do in reverse also strengthen the status, adoption and further development of Slimbouwen. One of the main objectives is to rearrange the building process from an onsite parallel process into a serial process existing of only a few main steps with a minimum of interdependency. This has to be explained. slimbouwen©

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Figure 4: The traditional parallel process (left) and the sequential building process (right)

The traditional building process and especially the finishing process, can be characterized as a complicated process in which the participants do carry out activities with a high rate of interdependency to other participants. The result is a lot of overlap, inefficiency, failure costs, complex coordination, lack of mutual respect, etc. Participants do have to return on site several times since the proceeding is dependant of the progress of other participants. In fact this process is a complex process, where

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facades, roof, services and infill more or less are shaped in parallel (fig. 4, left scheme). A sequential process containing limited number of major sub activities, can only be obtained by a separation of services from the rest of the process (fig. 4, right scheme). In the traditional process the services are interwoven with almost all building parts and in a new approach this has to be avoided. Only then it will be possible to divide the building process into a limited number of sub processes with a low interdependency rate. Each main participant is responsible for preparation, production, mounting, guaranties, etc. for the total sub system. This is similar to other industrial branches. For example in the car-industry, the electric wiring is installed in only one operation. This is facilitated by the design and engineering where the process of wiring already has been taken into account. The installation in one operation also enables the development of a cable-tree. Actually this is basically where an industrial process is all about. At first a proper division into sub processes and next comes the prefabrication and then the automation.

STATUS QUO Originally Slimbouwen and Infra+ had one mutual source. This was actually the said ISB project. Nowadays these developments are acting quite separately. The possibility for the Slimbouwen foundation to exist separately was supported by the scientific embedding in the Eindhoven University of Technology but on the other hand also by the development in the market of new products among others also in the field of floor systems. Apart from the Infra+ / Slimline floor, products that already have been developed or adapted in the frame of Slimbouwen are: Floor systems like the VBI Services Floor or the so-called Wing Floor of Beton Son as well as some examples developed by steel related companies.

Figure 5: The Wing Floor of Beton Son (left) and the VBI services floor (right)

Other developments stimulated by the slimbouwen market are: A top floor system combining integrated floor heating and cooling as well as flexibility in order to give access to the services in floor systems like Slimline and the Wing Floor. The top floor is developed and patented by the Eindhoven University and recently it came to a licence agreement with Indri Floor systems; Other top floor solutions by Reppel and Xella; Double shell partition walls by Gyproc and MAT afbouw; Acoustical insulated drains and sewerage systems by Wavin; Vibration control in lightweight structures by CDM;

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Comfort control in lightweight buildings (among others: low temperature heating and building activation, by Nathan and Upinor); Tools for tendering procedures and design by Adamasgroep and Innobuild; Concepts for home automation by TKH Group / Isolectra; Development of Slimbouwen strategies for the refurbishment market; A new development is that also now complete systems are developed fitting in the slimbouwen vision. For housing this year two building systems were introduced by ZBO and Slokker. Last year BB-Con introduced a dome structure for multipurpose and at the end of this year also a refurbishment system (Comfort+) will be tested in a 1920 housing project in Maastricht. Also some suppliers of building systems are adapting their systems to Slimbouwen in order to become future proof.

CONCLUSIONS New products providing fundamental change are difficult to market. Yet in general they have the potential to provide for a substantial added value. Especially in case the development also supports societal needs or potential needs of a large target group a specific approach by supporting actions on macro scale will activate the potential needs of the market and will also activate other suppliers to develop new products and by that reinforce the movement of change. This approach is presented as an opportunity to speed up the diffusion process substantially. The example of Infra+ and Slimbouwen illustrates the approach but is at this moment the only example analysed. Therefore the macro level approach cannot yet be seen as a proved working method rather than a firm hypothesis for future research.

REFERENCES Cobbenhagen J., F. den Hertog and H. Pennings (1995) Koplopers in Bedrijfsvernieuwing, Beleidsstudies Technologie Economie no.29, Ministerie van Economische Zaken, Den Haag. Glaser, B.G. and A.L. Strauss, 1967. The Discovery of Grounded Theory: Strategies for Qualitative Research, Chicago, Aldine Publishing Company Habraken, N.J. (1972) Supports, an alternative to mass housing. London: the Architectural Press. Lichtenberg, J.J.N. (2002) Ontwikkelen van Projectongebonden Bouwproducten. PhD thesis, Kelpen-Oler: A+ Lichtenberg J.J.N. (2005) Slimbouwen Boxtel: Æneas Lichtenberg, J.J.N. (2003) slimbouwen© een herbezinning op bouwen, een strategie voor productontwikkeling, Eindhoven: TU/e Rogers, E.M. (1995) Diffusion of innovations, New York: The Free Press SEV (2007) Leren door demonstreren, de oogst van zeven jaar IFD-bouwen, Rotterdam: Stuurgroep Experimenten Volkshuisvesting Tidd, J. , J. Bessant and K. Pavitt (2005) Managing Innovation Integrating Technological, Market And Organizational Change; John Wiley and Sons Ltd, 3rd Revised edition

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