From projects to business ecosystems via supply chain management
The last time we had a new Labour government back in 1997 they set up an industry task group, led by Sir John Egan, charged with identifying ways to improve the quality and efficiency of the UK construction industry, and deliver “best value” in infrastructure projects.
Their report influenced our thinking for a generation, encouraging us to adopt best practices from other industries, particularly automotive. It advocated radical change, to think beyond the boundaries of our projects to unlock the potential in our supply chains, and to embrace the new discipline of supply chain management.
The change of government set Martyn Jones thinking about the transformation we need today if we are to meet their aspirations for productivity-raising infrastructure projects – such as replacing dilapidated schools and hospitals – initiating new green energy projects, and building more council housing.
Alongside this, the government is also committed to regional development to deliver economic growth to all the countries and regions of the UK, and address longstanding challenges, such as our flatlining productivity, lack of skills, and poor transport.
Construction will play a hugely important role in integrating and fulfilling these parallel missions. But there are significant challenges meaning that we probably need to once again rethink our boundaries, and this time beyond projects, frameworks, and supply chains, and even community-based development.
Perhaps we need to see construction as a wider ecosystem. Alex Vaughan, CEO at Costain, could be nudging us in in this direction. Commenting after the recent Budget he argues, “Shaping, creating, and delivering complex, transformative infrastructure demands effective planning, clear decision-making, and collaboration between the industry, government, and regulators. The UK needs to reset its relationship with infrastructure by committing to a 10- or 20-year plan …. enabling essential infrastructure to be delivered more productively, whilst providing consistency and continuity of demand for investors and the supply chain.”
Seeing construction as a business ecosystem along these lines requires working much more in concert with key players nationally and in our regions to gain the maximum value from investments by – yes of course – pulling levers in construction but also in the wider economic, environmental, political, and social environments.
But what is a business ecosystem? It’s where a cluster of organisations coordinate with other, largely independent economic players, to create a different coherent offering. A network of organisations working together to create value for customers beyond what is possible within the boundaries of individual organisations, projects, or supply chains. The goal is to create more value collectively than the members could create on their own.
It works by the ecosystem producing goods and services of value to customers, who are themselves members of the ecosystem. The member ‘organisms’ include suppliers, customers, lead producers, competitors, and other key stakeholders such as local and regional governments.
Over time, they coevolve (in biology, coevolution occurs when two or more species reciprocally affect each other’s evolution through the process of natural selection) their capabilities and roles, and tend to align themselves with the directions and leadership set by one or more companies at the centre of the ecosystem.
Those companies holding leadership roles may change over time, but the function of a business ecosystem leader is valued by the community because it enables members to move toward shared visions and purpose, to align and maximise their investments, and to find mutually supportive roles
The key characteristics of a business ecosystem include engagement with customers, value sharing based on a win-win approach, organisational entrepreneurship alignment, and continuous smart and focused learning.
Here are some potential interventions that could support business ecosystems, each of which applies to the economy overall but may be more effectively pursued by targeting a cluster of firms within our regions with their uniquely shared challenges and prospects.
First, business ecosystems require information – both internally and externally – to identify opportunities and unlock expertise and potential. This information and research can be used to inform organisations and other stakeholders about their strengths, areas for growth and the priorities for shared action.
And there’s access to capital of course. Firms critical to driving both innovation and job creation, need capital to grow.
Next are cluster-based talent development strategies and intra- and inter-organisational learning to refresh and develop the specific skills and competencies needed in that ecosystem.
Engagement with research and development activities within universities, other research institutions, and private sector firms can yield more value and impact if coordinated and applied by an ecosystem.
Then there’s the specific role construction can play in a business ecosystem. The provision of tailored infrastructure and placemaking is seen as critical precondition for growth of a business ecosystem, such as logistics facilities or high-speed broadband connections. And interventions related to research commercialisation or talent development may also require physical investments, such as applied research labs, data centres, or training facilities.