In the dynamic landscape of today's business world, leaders are constantly challenged to guide their organizations toward greater growth and profitability. While the core business of the contractor is the execution of the construction process, the role of innovation in this effort has become not just a strategic choice but a fundamental necessity. Technological advancements, from basic digital workflows to complex emerging technologies, are not merely tools; they are the driving force behind a new era of business evolution.
Across the $13B global construction ecosystem, the average net margin across the entire value chain is approximately 5%. More specific to the builders themselves, the net margin figure drops just below 3% globally. As total spend on construction, both public and private, continues to increase, leaders must look not just toward top line growth but also bottom line expansion in an effort to grow the business. Innovation will play a critical role in both these endeavors.
When asked what the greatest benefit to investing in new technology is, construction CEOs largely focused on the creation of new profit opportunities
Risks & Opportunities
While the ever-increasing access to technology is seemingly positive to businesses' growth efforts, the further development of technology also poses critical risks to builders. The scaling innovation of technology such as AI software solutions, prefab / modular construction, and jobsite robotics are very much potential threats to builders as much as they are opportunities. If the organizations developing these new solutions bring significant value to the construction value chain, key revenue streams, both current and future, may begin to shift to these organizations that are providing these solutions. The opportunity for builders is to understand how to think use or partner with these disruptive technologies in a way that is good for business.
While all of this is still very unclear, it is a critical task of the leaders in the industry to understand the opportunities and risks, and develop their own approaches to sustainable growth and profitability.
Innovation, synonymous with progress, is the key that unlocks untapped potential and propels organizations toward unparalleled success. Technological integration isn't a luxury; it's a prerequisite for staying competitive. Those leading the pack with efficient and effective technology adoption find themselves not only future-proofing their operations but also carving out substantial advantages in efficiency, customer engagement, and ultimately, the bottom line. In this landscape, our upcoming CEO Forum Annual Meeting is designed as a nexus of knowledge, a space where forward-thinking CEOs converge to explore how innovation and technology are not just catalysts for change but the very essence of sustained growth and profitability. The insights shared and strategies unveiled within the walls of this summit will be the compass guiding companies toward a future where innovation isn't an option; it's the lifeblood of thriving enterprises.
Winning Strategies for harnessing the power of ai
As the applications of artificial intelligence continue to evolve, the potential impact on profitability, though still early, is undeniably greater than zero. AI has the ability to revolutionize business processes, from optimizing operational efficiency to enhancing customer experiences. Understanding how to harness the power of AI is not just a competitive advantage but a strategic imperative in today's tech-driven marketplace.
In the first step towards internally leveraging AI, 50% of contractors surveyed (US-based contractors with revenues from $100M - $5B+ annually) indicated they already have a data management strategy. Over the last decade, contractors have become wise to how much data they produce on a daily basis from all facets of the business. The next step in more recent years has been the development & implementation of BI / data analytics solutions in an effort to utilize that data to make informed decisions. The next iteration of this process, currently underway, is layering artificial intelligence technologies into that data structure to fully optimize the way data sets are being utilized.
Though early in it’s adoption, larger contractors are closely monitoring and developing internal initiatives and programs which implement artificial intelligence in various applications. From the perspective of the C-Suite - it is critical to understand what’s working, what isn’t, and what the implications of each will be.
Ready to find out more?
Discussions and research on innovation & technology, and the potential impact on profitability and organizational growth, are all part of the BuiltWorlds Business Strategy Track. Curious to learn more about BuiltWorlds Research Tracks?