Searching for the 'Uber of Construction'

Nathan Wood, Founder & Chief Enabling Officer, SpectrumAEC

While attending the Advancing Construction Technology conference in Chicago last month, an audience member asked the now infamous question to a panel of AEC and technology experts, “What is going to be the Uber of construction?” The answer is usually a tossup between the rapid growth software startup Procore, or the modular prefabrication startup Katerra.

I would argue that we’re asking the wrong question.

“As collective partners in construction’s digital transformation, we must define what data matters, who it matters to, and why the individual sharing the data is incentivized to do so properly”

Instead, we should be deconstructing the components of the innovation itself (ridesharing) to understand how Uber was able to capitalize on it better than Lyft or others. This way when disruptive innovations like cloud collaboration and offsite construction are introduced, there is a standard framework in which to assess the viability of any new opportunities.

Regardless of industry or technology, a disruptive innovation (also known as digital transformation) passes through four maturity stages: technology, individual, business, and public policy.

To help us understand what the “Uber for construction” might look like, let’s deconstruct how Uber became Uber along its journey through each maturity stage.

Stage 1: Technology.

The technological requirements to enable a ridesharing app like Uber are tools that most Americans already have in their pocket or purse — a credit card (used by more than 70 percent of Americans) and a smartphone (used by more than 80 percent of Americans).

Why is it, then, that as of 2018 only 36 percent of Americans had used a ridesharing app?

Stage 2: Individual.

There are four factors that impact whether or not an individual will download and use the Uber app: awareness, availability, comfort, and cost. If an individual is not aware that ridesharing even exists, they’ll never download the app. Once they see an Uber commercial on TV they may download the app, but they will never use it if there aren’t any drivers in their part of the country. To use Uber, you also must be comfortable sharing private data with them like your phone number, GPS location, and credit card information. Last but not least, the ride using Uber must not be cost prohibitive compared to rideshare competitors and traditional transportation alternatives.

Stage 3: Business.

The first ride I took with Uber was in 2010, when Uber still only consisted of private black car service and cost 1.5x more than a taxi. (But when it’s late, the concert festival has ended, and you’re stranded outside Golden Gate Park without a taxi insight, you’ll take it.) Over time, Uber learned how to capture a higher profit margin while reducing the cost to the end-user. They did this by going around the taxi companies and contracting directly with private drivers. By making UberX slightly cheaper than the taxi alternative, they were able to capture enough individuals to cross the ‘chasm’ of adoption. This ‘pool’ of early adopters were necessary for provide Uber with the necessary data to develop the algorithms that eventually led to UberPool. Thanks to UberPool, what used to be a $56 UberX or Taxi ride to the airport dropped to $29 as long as you are comfortable sitting next to a couple of strangers and waiting an extra couple minutes if they’re dropped off first. Through each iteration of the ridesharing solution, Uber refined their cost structure to ensure the needs of the supply (vehicles, drivers) and demand (riders, cargo) are met or exceeded while maximizing their own bottom line.

Stage 4: Public Policy.

A clear sign of disruptive innovation is when local governments begin to change their laws to accommodate new technology solutions.

At first, airports banned ridesharing at the behest of competing taxi companies required to pay an airport fee each time they pick up passengers. Thanks to a strong government relations team, Uber was able to negotiate with Airports a way to pay the same airport tax and better control where passengers and picked up or dropped off by collaborating with Uber.

In my opinion, the premise of asking ‘what’s the Uber for construction’ is flawed. It assumes that we could have predicted Uber’s success without first understanding the concept of ridesharing and all of its components. Their ability to influence individuals to change daily transportation habits through technology is truly remarkable. The correct question should be how might Uber address this opportunity for market disruption?

Building Information Modeling (BIM), Internet of Things (IoT), and Artificial Intelligence (AI) are prime examples of disruptive innovation opportunities waiting for the right team using the rigth tech on the right project. Prior to embarking on your next technology transformation, invest the time to gather the impacted stakeholders and address these burning questions across each stage:

● Stage 1: Are the enabling technologies required for this innovation mature enough to rely upon?

● Stage 2: Are the individuals affected by the innovation (a) motivated to adopt it and (b) empowered to improve it?

● Stage 3: How might this innovation produce win-win opportunities to increase profit without sacrificing quality or client relationship?

● Stage 4: What changes to project or public policy would impact the success of the opportunity?

As collective partners in construction’s digital transformation, we must define what data matters, who it matters to, and why the individual sharing the data is incentivized to do so properly. When project delivery teams come together during project kickoff to define interoperability standards through a Common Data Exchange (CDX) framework, the byproduct of their collaboration is the Uber of Construction we’ve been searching for.