Innovation in Construction A Project Life Cycle Approach

SCRI Research Report4Innovation in constructionA Project Life Cycle Approach2 What is Innovation?This section of the report provides a brief overviewof inn ovation, its importance to companies and theeconomy in general, and the various types andclassifications of innovation. Innovation is regarded as oneof the key factors contributing to national economic growth,competitiveness, and higher living standards and is atthe heart of the knowledge-based economy (OECDand Eurostat, 2005). However, there is not a single andcomplete definition of innovation. The UK’s Departmentof Trade and Industry (DTI) states that innovation is “thesuccessful exploitation of new ideas” and that “it isthe key business process to compete effectively in theincreasingly competitive global environment” (DTI, 2007).There are many attempts to classify different typesof innovation. For example, Henderson and Clark(1900) classify innovation as incremental, modular,architectural and radical depending on the degree ofproduct/architectural knowledge required to implement.In the UK the DTI (2007) state that innovation can takeseveral forms including product innovation (changes in theproducts/services) which an organisation offers; processinnovation (changes in the ways in which they arecreated and delivered); position innovation(changes in the context in which the products/services areintroduced); paradigm innovation (changes in theunderlying mental models which frame what theorganisation does). Phillips (1997) distinguishesbetween technological innovation and non-technological(including organizational and marketing) innovation.Technological innovations comprise implementedtechnologically new products and processes andsignificant technological improvements in products andprocesses. Organisational innovation in the firm includessignificant changes in organisational structures; theimplementation of advanced management techniques;and the implementation of new or substantially changedcorporate strategic orientations. Marketing innovation,on the other hand, is the implementation of a newmarketing method involving significant changes inproduct, price, and promotion strategy (OECD andEurostat, 2005).The White Paper explicitly recogniesthe importance of forms of innovationbeyond the invention of new (technological)products and points out the “changing face of innovation”that includes services, business processes and models,marketing and enabling technologies (DIUS,2008). Research and development is not a goodindicator of innovation or knowledge generation in manyservices sectors; high levels of innovation activity areoften not based on R&D expenditures (NESTA, 2008)unlike the case in manufacturing. Construction is partlymanufacturing and partly services, so constructioninnovation needs to be investigated taking into accountits unique nature.Construction is a very diverse sector and there is notone single way in which innovation occurs. It willvary throughout the supply chain and project stages,and just as innovation will mean different things todifferent economies, so it is equally important to realisethat the challenge and meaning of innovation for a smallspecialist sub-contractor will almost certainly be verydifferent from that of a multinational constructioncontractor (Abbott et al., 2008). As Blayse andManley (2004) stated, building and construction is partlymanufacturing (materials, components, equipment)and partly services (engineering, design, surveying,consulting, and management) industry. Therefore, theorganisational context of construction innovationsdiffers significantly from a great portion ofmanufacturing innovations (Slaughter, 1998).Innovation differs in every sector and patterns ofinnovation in manufacturing differ from those inservices (DTI, 2007). Organisational change often drivesinnovation in services (NESTA, 2008). ‘InnovationNation’ White Paper (DIUS, 2008) presents a broad vision ofinnovation and its importance not only to manufacturingbut also for services, the creative industries, the publicsector and the third sector.2