innovation

The rise of the 'Super Subbie'

So, where’s the really good money being made in construction these days? Those outside the industry might be surprised at how comparatively little the Prime contractors make when you balance return against their investment in capital, commercial risk and meeting health and safety obligations.

From our experience, it's been the so-called “Super Subbie” who is consistently managing cashflow and making good returns.

subbies.jpg

 

What differentiates them is their clear ownership of a specific technical niche and their understanding of where they sit in the market.

The Super Subbie focuses all their attention on being good at just a selection of key things - which are important to their customer. This could be anything from foam bitumen stabilisation to traffic controller design and installation to deep stormwater excavation to urban streetscapes.

They are the go-to guys for that product or service, and a client will often specify using them. They also consistently execute and deliver on promises.   

So what can the stretched Primes – and anyone else in business – learn from the Super Subbie?

  • A clear understanding of the core customer – they have a very clear understanding of their core customer, the one that provides the maximum return and repeat revenue for their business down to a department and person level.
  • Tight and personal management of customer relationships – because they engage actively to understand their customer’s challenges - and design solutions around these problems - Super Subbies maintain tight customer relationships.  They are in regular contact with customers, and mutual trust is high.
  • Be world class at a few things - being narrow and deep as an organisation to own their corner of the market.
  • The whole business understands the value proposition – from management to crew, everyone knows and can articulate their value proposition and what they do as a business i.e. ‘we are world class at x, or we deliver services for z industry’.
  • A clear understanding of customer return on investment (ROI) – Super Subbies can articulate the return on investment for a customer which can often come with some form of guarantee and warranty – eg % reduction in customer complaints.
  • They deliver – Super Subbies fundamentally build a reputation for execution and delivering on promises.
  • Ability to change market offering – Super Subbies take feedback from customers and are quick to innovate, implement technology, and make changes within their business.
  • World Class + Value Proposition + ROI + Execution = Premium Price and Market Sector Ownership – Being all the above creates the opportunity to demand a premium, be specified in tender documents and negotiate work directly with customers.

We all know examples of great subbies that have built their business by being great at all or some of the above. And I know that some Primes would argue that their size means they just can’t be as flexible as the Super Subbies. But this is really about culture, not size. You only have to look at the likes of Apple. Their customer-centric and innovative culture has seen them sustain an 80% profit share of the premium smartphone market. 

Warner Cowin, Height CEO

 

Infrastructure and Maintenance in 2027

What will the industry look like in 2027? Will we still have large contracts? Or will there be a mass unbundling of services?

Will I even have a business in 2027?!

Self-driving cars and beyond

Self-driving cars and beyond

What Uber and Airbnb have done to disrupt and radically change the taxi and hotel industries is sending a clear sign that technology is changing the way customers buy and suppliers deliver.

So what does it all mean for physical works contractors, engineers and asset owners who manage or deliver contracts for major public assets like roads, water, facilities and open spaces?

Here are my top 8 predictions for how our world will change by 2027:

  1. The end of reactive maintenance (and customer complaints?) From the door hinge at the library through to the length of grass at the park, remote sensors will deliver continuous real-time asset condition and performance data. This will be crunched using AI to predict when an asset is about to fail so that a request for service is issued before a customer complains.
  2. End of the multiple asset owner. The platforms and integration of asset data across multiple asset types could mean a truly integrated delivery of services that it could be feasible that facilities, water, roading and open spaces asset owners could all be integrated into one asset owner and management function. Thus reducing the need for multiple government operational departments and contract delivery options.
  3. Unbundling of big contracts (Maybe the end of the big contractor). Future IT and Artificial Intelligence platforms, coupled with sensors on everything, will be able to manage asset data and coordinate work planning at a micro level. This will give asset owners real-time optimised data down to a micro level in which they will be able to predict and issue work orders for the smallest of faults. Coupled with the flexibility to create an Uber-type queuing system for jobs, means that even small tasks could get issued directly to pre-approved local suppliers for quoting. There may no longer be a need for contractors with large internal workforces who currently perform these types of jobs as part of major contracts.
  4. Driverless autonomous maintenance. Assets maintenance shifts towards being completely autonomous and remote, without the need for operators or supervision. Plant will locate to various sites around the network and be in operation 24/7. It is not hard to imagine solar-powered remote mowers maintaining parks or pipe root-cutting robots working day and night.
  5. The future maintenance worker will be more of a generalist.  We are likely to move towards 3D printing of replacement parts on-board an autonomous vehicle en route to a site.  Diagnosis will be automated. This means that the technician of the future will be a generalist who effectively swaps different assets or replacement parts in and out.
  6. You won’t need as much plant, assets, spare parts or personnel. With plant being solar powered and working autonomously, there will be no need for large pools of operatives, plant, corporate offices and yards. The real-time collection of asset condition and performance data will also mean that the traditional contract and asset management staff roles will no longer exist.
  7. There will always be a need for that personal touch. I believe customers will still want that human touch to deal with issues and for site liaison. Maybe I am being naive but the concept of automated machine-based empathy doesn’t work for me yet.
  8. Price, margin and budgets. In theory, a net reduction in plant, labour and hard infrastructure should mean a reduction in those costs. However, this may be offset with an increase in technology-based costs to support the new normal. I suppose the question for suppliers is not one of profit or revenue but more fundamental: how do I change the way I do business to prepare for the future?

At Height we help our clients prepare for the future by understanding trends in their industries and markets and helping them develop innovation strategies. Please get in touch to discuss how we can help your business.

Warner Cowin, Height CEO

An Engineer’s Guide to Working with Creative People – It Isn’t That Scary!

As an engineer, I have often seen myself and my colleagues struggle to maximise the opportunity to achieve innovative, game-changing outcomes through working collaboratively with creative people such as graphic designers, architects, fresh young minds or even big thinkers. Maybe it’s something in the engineer’s DNA that leads us to see only the constraints in other ways of thinking.

I used to worry that working with creative people would mean relinquishing control – something that could possibly spell disaster. Now on reflection, I realise our biggest achievements at Height have resulted from letting the creative juices flow, without allowing the engineering side to micro-manage the whole solution.

Since starting Height in 2013, I’ve built a team of engineers and creative people who successfully work together to develop world-class bids and procurement solutions for clients in New Zealand and overseas. Here are some of the things I’ve learnt about working with creative people:

Height's unique approach to tendering and procurement

Height's unique approach to tendering and procurement

  • Don’t assume you know what the creative solution already is – 101 stuff really but how often have we as engineers (technically competent as we are), come prepared with the solution already in our heads and effectively used our team as an extension of ourselves to document and create what we think is right? Be open minded, creative colleagues can provide a fresh perspective and clever solutions you may not have even considered.
  • Provide context, not look and feel – this is the challenge and where we often slip into predetermining the outcome. The trick here is to describe the broad outcome that you want to ultimately achieve in the context of the audience, key messages, emotions, risks, etc. Being too prescriptive in the early stage will frustrate your creatives and limit their ability to make something new and exciting.
  • Let creative people be creative – this is often where the magic happens, so once briefed, I find that if I give my creatives some space and a chance to work up a concept without my meddling, it gives them the opportunity to explore their full creative and innovative thinking. If they need any more detail or information from you - they’ll ask.
  • Understand that creativity is an iterative and interactive process – the power of working up an initial concept provides a starting point for everyone to work from. Its ok for it not to be right first time, it will likely take some refinement and reworking.
  • Review with the end audience in mind – this is where we can undo all the good creative work and revert to our original predetermined solution. Try to put yourself in the end users’ shoes (they may not be engineers) and use your wider team to challenge, review and update the creative solution.

So, engineers, have faith and a little trust in those creative colleagues. Relinquish some control and you might be surprised to see what game-changing or profitable solutions may come from it.

Warner Cowin

CEO at Height and Engineer

“Australasia’s Leading Technical Tendering and Procurement Specialists”