Driving Change in a Fractured Industry: ConTech Keynote Examines Progress and Hurdles

“Why are we here? It’s because we’re all instigators,” asserted Rob Leon, chief innovation officer at STO Building Group, speaking at BuiltWorlds' recent Construction Tech Conference in Chicago.

But we need to dig deeper, Leon said. “Are we getting smarter? Are we changing the paradigm?” he asked, referencing the technological practices of the AECO ecosystem. By providing through lines between the major technological adaptations of the last century to the construction industry, Leon brought into question the progress we are making as an industry.

Those shifts can take decades. For example, the computer revolution catalyzed by the Space Race and the Apollo missions ultimately led to the rise of the computing era. By the end of the twentieth century, personal computers became commonplace, and in the 1990s, BIM began to replace hand drawings. Jobsite safety has also advanced by leaps and bounds just from the 1980s when, Leon shared anecdotally, hardhats were optional and fall protection on skyscrapers was nonexistent.

One major shift of the last decade is the influx of venture capital and Silicon Valley interest in construction technology (again, decades later than other industries like healthcare, CPG, automotive, etc.). As construction tech companies like Procore began to go public, the sector began to take notice and realize the value in a burgeoning entrepreneurial environment. The nuances of the industry required specialist VCs, like Brick & Mortar, Building Ventures and other early firms solely dedicated to funding the built environment, to provide the first wave of capital.

Now, as VC has taken hold in built world tech, what role do startups play in shifting the paradigm?

Startups can and are playing a significant role in shifting the paradigm for all companies across the AECO value chain. Startups are providing hardware and software for companies to address the key industry challenges of a declining skilled labor force, procurement, accounting, housing shortages and more.

Despite the pain points that startup entrepreneurship is solving, Leon addressed three notable industry-wide hurdles for construction tech startups: fragmentation can make vertical and horizontal tech adoption difficult; it’s hard to gain internal traction for new tech within legacy companies; and low profit margins inhibit true R&D.

Organizations like STO Building Group are actively working to mend the fractures within the corporate players by implementing internal champions, like innovation teams. Leon used his speech, in part, to explain the company’s STOBG Engine and its four main pillars intended to drive growth and internal tech adoption: data and analytics, information technology, innovation and technical operations. As Leon explained, a business unit like STOBG Engine can allow the company to deliver a better product and explore strategically for a long-term vision by looking to the technology markets for drivers of change.

STO Building Group is not the only AEC legacy player utilizing an innovation arm. Leading contractors across the globe, such as Kajima, Vinci Construction, Bouygues Group, DPR Construction, Ferrovial, Ellis Don and Haskell have innovation arms dedicated to aligning business units with emerging technologies.

These groups can also provide a critical bridge between the tech companies and the enterprise’s business units. These internal teams can quarterback the relationship for startups and effectively champion new practices within a large company. Through these corporate innovation initiatives, startups are able to access the resources needed to ensure their technologies can take hold in a historically reactive industry.

Ultimately, Robert Leon’s keynote speech provided an example of one company’s approach to creating a dedicated group for partnering with technology and shifting the paradigm at not only a corporate level, but an industry level as well. It’s a working model for other companies to consider as they look to technology solutions in the marketplace to direct the future of the organization. The venture capital influx over the last decade is catalyzing this innovation shift; corporates just need to take advantage of it.