Master's thesis of Professor Raquel Blumenschein

Barlett School of Architecture and Planning University College London

Report submitted in partial fulfilment for award of the degree of MSc in Architecture, option of Building Economics and Management.

Three studies of innovation in the Construction Industry

Raquel Naves Blumenschein September 1989

To my parents and Paulo

Home is where one starts from. As we grow older The world becomes stranger; the pattern more complicated Of dead and living. [...]

We must be still and still moving Into another intensity For a further union, a deeper communion...

In my end is my beginning.

T.S. Eliot, Four Quartets, ‘East Coker’ V

ACKNOWLEDGEMENTS

I greatfully acknowledge the advices, inspiration and encouragement so generously and enthusiastically given to me by Messrs Graham Ive and John Andrews.

I should also like to thank the help given by all the following: Anna Piet (Librarian), B.J. Yates (Business Develop. Manager, Amec Projects Ltd.), Colin Fry (Director, Norwest Holst Management Contracting Ltd.), C.S. Tyler (Project Executive, Schal International), Derek Fryer (Director, Taylor Woodrow Management Contracting Ltd.), David Pertwee (Manager Director, Mowlem Management Ltd.), Professor Donald Bishop, D.M. Battle (Marketing Department, Bovis Construction Ltd.), George Atkinson RIBA (Architect), Henry J. Carruthers (Commercial Manager, Trollope &Colls Management Ltd.), John K. Murphy (Friend and English Tutor), M.R. Kennard (Commercial Director, Schal International), N.H. Parsons (Director Higgs and Hill Management Contracting Ltd.), Raymond Moxley RIBA (Moxley, Jenner & Partners), Richard Sullivan (Friend and English Tutor), Roy Brown (Director, Wimpey Construction Management), Ruth Dar (Librarian), Steven Groak (Director of Building Studies, Barlett School of Architecture and Planning).

Thank you one and all.

CONTENTS INTRODUCTION ............................................................................................................ 8 STUDY ONE.................................................................................................................. 11 A BIOLOGICAL ANALYSIS OF THE PROCESS OF INNOVATION .................. 12 STUDY TWO ................................................................................................................. 21 GENETIC ENGINEERING – THE ADVENTURE OF THE PUBLIC SECTOR AND ARCHITECTS AFTHER THE SECOND WORLD WAR .............................. 22 STUDY THREE ............................................................................................................. 29 THE ENTREPRENEUR – A GENE CELL IN THE PROCESS OF INNOVATION OF THE BUILDING PROCESS ................................................................................ 30 THE RESULTS OF ........................................................................................................ 36 OUR INVESTIGATION ................................................................................................ 36 FACTOR ACTING UPON THE PROCESS OF INNOVATION OF THE BUILDING PROCESS – THE RESULT OF OUR INVESTIGATION ................... 37 RESULTS ................................................................................................................... 38 DISCUSSION AND CONCLUSION ............................................................................ 43 FURTHER RESEARCH OR STUDIES .................................................................... 47 BIBLIOGRAPHY .......................................................................................................... 48

ABSTRACT This report is concerned with the process of change in the construction industry, particularly with how its numerous capitalist units and organizations change in order to allow the appearance of innovations. Although we do not deny the action of external forces acting upon the industry our interest lies in analysing the process of change from within not from without.

The lack of a theory which would provide us with and analytical framework towards the inside of the industry, unifying economic, technical, political and social factors acting upon the process of change in its various private and public organizations, has led us to investigate a different framework for such a complex analysis.

Hence our primary aim is to set up a framework which would enable us to analyse the process of change at the microcosmic level of the industry, taking into consideration all the factors which may affect and influence the various decisions taken by those organizations which operate within it, and lead the pace and direction of its process of innovation.

Such a framework is developed in our first study and consists of a biological model.

The model has been evolved using an analogy with ecology, bio-ecology, genetics and the theory of evolution. The analogy is merely a tool which helps us to grasp the complexity of the subject and to frame it according to our main objective. To what extent the formulated framework reflects the process of innovation in the construction industry is an important aspect if its potential use. Accordingly, using the framework as a basis, we analyse the process of innovation in relation to two different contexts of the industry. The application of our model works as a guide as well as an assessment of our exercise.

While the second study refers to the experiences of the public sector and architects after the Second World War, the third study is related to the private sector and the introduction (by major construction companies) of new methods of procuring a required construction project during the last twenty years.

In the second study we concentrate on the process of innovation in school buildings (between 1945 and late 50’s) which was led by the public sector and architects. The main factors acting upon that process are outlined and how they have affected and motivated those who have taken the decisions, as well as those who had to carry them out, are stressed.

In the third and last study the framework is extended in the light of Schumpeter’s theory of innovation and used in the context of the process of innovation of methods of procurement led by construction firms during the last twenty years. A research into ten

companies (regarded as innovators of management contracting, construction management and alternative method of management) was carried out and its results (shown in a separate section) are used as the basis for an assessment of the framework, as well as for some conclusions about the process of innovation in relation to the private sector.

Although more accurate and complete historical data is required for the formulation of a more precise framework some guidelines are obtained.

INTRODUCTION

INTRODUCTION Change has started to be seen as a natural feature of life, especially after the sixteenth century, when minds like Malthus, Newton and Darwin were concerned with its dynamics and mechanisms, each within his own context. Such a heritage has shown that if we are concerned with change we must suppose motion, thus we must also suppose force and stimulus. The understanding of this fact offers the chance of detecting “necessary conditions” for change to occur and consequently the chance to detect the factors which in combination are responsible for its emergence.

Those who have sought the understanding of the process of change have been driven to ask how does change occur? i.e. what forces are behind this process putting it in motion and keeping it constantly on the move? Taking a simplistic view of Darwin’s Theory, in his search for an explanation of the origins of the species and their process of evolution, these questions had to be answered, and for him change was seen not just “as adaptive but sometimes also necessary” (Bowler, 1983, p.30). Living organisms evolve continuously and successfully adapt to their environment. The force behind this process was to be found in life itself i.e. in its purpose of living and surviving.

Accordingly, if we want to understand the process of change in the construction industry i.e. how it takes place (allowing within that industry the emergence for example of new technologies and new methods of organizing and managing the building process etc) we need also to ask that forces are behind this process. Such an analysis demands a dynamic analytical method, which could enable us not just to understand the interdependence of all these changes but also to unify all the factors acting upon this process influencing its pace and direction.

The fact that we see the industry being composed not just of passive units, incapable of generating their own momentum, leads us to consider the application of the analytical framework found in the Theory of Evolution; change here being seen as being generated by its own units within the industry, which in order to survive must adapt to the given environment. Adaptation is directly linked to survival, which means that in the fight for capital and/or resources firms and organizations carrying out activities related to construction must change. The economically strongest and/or the most prepared to face the ‘new’ are the ones most likely to choose the right direction. They are inevitably followed by others, to the point where what once had been new becomes part o the routine, and the process starts again. As the pace of man is faster than the rest of nature, the process of change generated by human beings is accelerated and gets faster and faster each day. Change has become more than a “natural feature of life”; it is almost synonymous with it.

The primary objective of this work is to try to understand the dynamic process of change within the industry, and as a starting point we will take nature; more specifically

some of the theories (eg. ecology, biology, genetics and theory of evolution) which try to explain how its mysteries work. The use of an analogy can be a powerful instrument in the development of our concepts. It works as a tool for the structuring of our process of thinking, widening our scope for analysis. Such an analytical exercise has been used in the development of many theories. For instance, the evolvement of Darwin’s theory itself had inputs from chemistry (eg. Henry and Parkes) as well as from economics (eg.

Malthus), (Schweber, 1982). We could also here give the example of Herbert Spencer, who applied Darwin’s concept of “survival of the fittest” to the social order; which gave rise to Social Darwinism. At the risk of those without experience or a strong background allowing the analogy to take over this exciting exercise is worth the effort; and it is used here to set up a framework for the analysis of the process of innovation in the construction industry.

Looking at the origins of the word innovation we may be able to find a link between change and innovation particularly if we include purpose in the meaning of change.

Innovation is derived from the latinverb innovarewhich means to renew, to alter; and formed by the suffix – ion which “form nouns denoting state, condition or action” (Klein, 1966). Accordingly innovation can be defined as a ‘purposeful change’, i.e. there is a goal to be achieved which requires changes in values, beliefs, procedures, places, markets, products, or process of production etc. It differs from invention, as the latter refers to an idea emerging from a discovery, an insight not for the purpose of reaching a definite objective. Nevertheless may innovations have been a result of inventions and as capitalism follows its natural course, inventions have also been codified and can be ordered in advance; so also innovations.

Unrelated to its source, innovation may be defined as a positive change, which occurs in order to improve and to give “a new vigour and life to an individual, a situation or a process.” (Rogers, 1971) The intention is one of being positive. However we all know that there is an evil side to it, as one may ask: to what extent can one consider the atomic bomb an innovation? The relevance of a balance between the good and bad side of innovation is not our subject here but the understanding that once a process of change has started it is endless and indeed “change begets change”, even through a discontinuous process.

Going back to our definition we could say that we agree with Drucker when he says that innovation “allows greater ability and capacity to act and to respond to our needs” (Druck, 1967), independently of their nature. If on the one hand ‘innovation’ may allow capitalists to be more profitable on the other it can give greater chance for the fulfillment of social needs, particularly under circumstances of shortages and urgency.

Although, through innovation, private and public sectors can acquire ‘greater capacity and ability’ for the achievement of their aims, each of them has its own process of changing in order to make possible the appearance of innovations which may require different approaches for the analysis of that process within each context.

STUDY ONE

A BIOLOGICAL ANALYSIS OF THE PROCESS OF INNOVATION

The analysis of the process of innovation in the context of any industry involves complexities and difficulties. Economic, technical, organizational, social and political factors are all elements interacting within a dynamic environment (internal and external) influencing and affecting the emergence, development and diffusion of innovations. The fact that each industry is a different community (different aggregate of individual capitalists units) with its own characteristics, makes such an analysis even more complex.

Demand determinism v. technical determinism are normally found in most of the works trying to explain the forces behind the appearance of innovations. A distinction between “process innovation” and “product innovation” is also offered by studies of industrial change. (Rosenberg, 1982) Neither the former reasons nor the latter distinctions are satisfactory when applied to the context of the construction industry. (See Groak&Ive, 1986).

Two major aspects of the construction industry have compelled those concerned with its process of change to search for more dynamic and dramatic approaches, which particularly require the introduction of a “partial social dimension to the analysis” (Groak&Ive, 1986). Firstly, the existence of the peculiar building process and its product. (Turin, 1965) Secondly, their close interrelationship.

The lack of a theory of innovation applied to the construction industry which unifies all the factors influencing the emergence of innovations (economic, technical, social and organizational) and could enable us to detect the necessary conditions for innovations to occur and diffuse, has compelled us to seek a structure for such a complex analysis.

Therefore the aim of this paper is to set up a framework which consists of a biological model that borrows from ecology, bio-ecology, genetics and the theory of evolution, some principles and language as in fact we are dealing with complex interactions among complex and dynamic organisms. Our intention is not to find a complete answer for the problems involved in the analysis of innovation of the C.I., but to investigate what an answer might be.

Ecology is “the totality or pattern of relations between organisms and environment” (Webster Unabridged Dictionary). Bio-ecology is a branch of ecology which is dedicated to “the study of biotic communities” (Clements and Shelford, 1939) or living organisms; their processes and functions within the communities. In as much as the construction industry is composed of an almost infinite number of different capitalist units and organizations which indeed are alive and complexorganisms, interacting with the environment and with each other, going through different processes (eg. growth and reproduction) and exercising different functions within their community (eg.

Competition and migration) ecology and bio-ecology can provide us with a dynamic

framework for the structure of the C.I. as a whole considering how there numerous firms and organizations react and coact with each other and with the environment in order to survive and reach their aims.

The study of biotic communities concentrates “on the action of the habitat upon organisms, the reaction of those upon the physical factors and action of organisms upon each other”. To take an industry as a main focus of study is the same as to take a slice of an ecosystem. Indeed our concern is with a slice of the economy: how the different firms and organizations, which here are identified as different species (architects, contractors, manufacturers, clients, planners, developers etc.), belonging to different families (private organisms and public organisms) hence with different characteristics, interact in order to survive and evolve.

Although the process of evolution is closely related to the process of surviving, it is on the former rather than the latter that the major interest of this study lies. The process of evolution is here understood as the process wherein organisms living in a capitalist ecosystem go through mutations changing some of their characteristics (1). Therefore the theory of evolution, biology and genetics come into play to complete our background.

Thus, this study has been divided into two complementary parts: one of which is subdivided into two sections which deal with the interaction of the different living organisms of the industry among themselves and their environment (the ecosystem); and the other dealing with change and mutation of these organisms and their environment which affect and influence their interactions, hence the different processes and functions carried out during their life history (2).

I

The ecosystem is the “basic functional unit” of ecological studies, “the gross anatomy and physiology of nature”. In fact it includes both organisms and non-living environment, “each influencing the properties of the other and both necessary for maintenance of life” (Odum, 1985). Some characteristics of the whole are not found in any of its components alone. It is concerned with structures, functions, parts, organizations, properties, control, balance, flow, exchange of information and energy, etc. Any ecosystem demands energy for its existence and survival; energy is a “common denominator” used for a first-order classification.

The composition of the ecosystem and how it works depend on how energy is generated and distributed. In the same way we could differentiate a capitalist economy from a socialist one by analysing how capital is generated and distributed. As here we are

dealing with a capitalist reality it should be stressed that despite the fact that the energy circuit does not hold the self-expanding characteristic of the capital circuit (in either the ecosystem or the capitalist economy) organisms and capitalist units must compete for energy and capital in order to survive, i.e. the flow of energy must exist.

Energy is used by organisms in order to acquire all substances and elements necessary for their existence and survival. The energy in an ecosystem is distributed among organisms through a chain of dispensation which is continuous and incessant. The natural light transformed by plants through the process photosynthesis allows them to survive; in their turn they (once eaten by animals) are a source of energy for some animals; they in their turn are a source of energy for other animals including man; and the chain could be carried on almost indefinitely. In our economic ecosystem without energy (capital) factors of production (labour, produced means of production and land) cannot be acquired, hence, an economic activity cannot be established and as profit is not realized, the process of accumulation cannot take place.

An ecosystem with a steady flow of energy can remain in balance for almost an indefinite period. However most ecosystems are like the capitalist economy, going through cycles, not just because of the normal cycles of organisms and communities but also because of changes in the environment. Like slumps and booms, cycles occurring in an ecosystem, or changes in the environment (e.g. the burning of the rain forest or the Chernobyl disaster) can alter its composition as well as the characteristics of its organisms and components. In fact the face of capitalism changes as it goes into different cycles, consequently its units also show different features from previous periods. For example as capitalism goes through cycles its big units tend to get bigger.

While in nature evolution occurs gradually unless for example a nuclear war or disaster happens, in capitalism “evolution is a disturbance of existing structures and more like a series of explosions than a gentle, though incessant, transformation� (Schumpeter, 1939). Nevertheless, both in capitalism and in an ecosystem an imbalance can cause the destruction of species, the emergence of new ones and the mutation of others. But just before we get into mutations, and consequently into variations and natural selection, we would like to focus on our biotic community, its processes and functions.

II

A biotic community is composed in essence of living organisms, animals and/or vegetables. Each individual has its own process of generation, growth, movement, propagation and reproduction, and each biotic community as a whole carries out the functions of aggregation, establishment, migration, reaction, coactions, competition and cooperation.

Aggregationis directly linked to migration – as organisms multiply, reproducing themselves in one habitat and migrating to another they form communities, i.e. they associate with others of their kind and other species. Plants migrate to different habitats due to the action of birds, winds, rivers etc. We could say that they follow Nature’s purpose but this does not apply to our organisms, which will change their habitats or migrate to other ones only if it is profitable, or the new habitat offers a better chance for surviving and accumulating.

Establishment – or ecesis – the process of making a new home, involving the adjustment and often adaptation of organisms or community to a new place or habitat (Clements &Shelfors, 1939). For some plants ecesis consists simply in their “continuation to grow and reproduce”, which depends on the degree of competition for survival in the new habitat. Comparing this with our dynamic capitalist units the establishment of new firms within a new environment is in fact merely a continuation of their process of growth and reproduction. Like plants, our firms face the difficulties of competition when arriving at a new place. Although the move of the firms is not a result of natural and sometimes random phenomena (rather it is part of a strategic process based on the signs of the markets, or inflow of information, or even predictions and forecasts) competition must be faced and only the strongest, the most efficient and adaptable can win.

Interaction involves reaction and coaction. Reaction is the “consequent effect upon the physical factors of the habitat”. It is very much part of competition and plays an important role when the community is performing such a function. It refers to the actions taken by some living organisms in order to make possible their survival. It is closely associated with coaction as the latter refers to the “enormous range of interactions among individuals, since it involves not only the idea of acting together, but also that of urging and compelling”. Living organisms coact for food, shelter, reproduction, defense, communication etc., in the same way that capitalist units interact for their survival. Despite the fact that in nature organisms do face competition for space, light, food etc., the law is survivingand not accumulating. Nevertheless, in both realities the best reach their aims and the others die.

When interacting, organisms provoke reactions, such as for example “the materialshelter coactions of the beaver involves reaction in the uses of mud… and a combination of coactions and reaction in the destruction of vegetation and modification of the habitat as the consequence of flooding”. Such reactions will change the current data of the environment, and accordingly, the interaction of organisms will change.

Some plants survive by producing flowers, others by producing fruits. Some serve as habitats for micro-organisms or food for herbivores. In the same way clients, contractors, architects, planners, builder-manufacturers, public bodies and institutions etc. have different characteristics and ways of surviving and reproducing. As they interact with each other and with the environment, flows of stimuli are exchanges and

different processes and functions are carried out. If the current data of the environment changes interactions are affected, thus the various processes and functions are also affected.

The labour process, the technological, the design, the building, the exchange, the financial and the accumulation processes are all results of interactions of the different firms within the community and the ecosystem. Considering that in our ecosystem energy has the feature of being self-expanding and such a fact is the reason for its existence we could say that all the other processes which are a result of the interaction of the different organisms are submitted to the process of accumulation. The latter works as a link, as a guide and as a force which puts the process of growth and reproduction in motion. As reproduction must take place if species are to perpetuate, the accumulation process plays a vital role in the process of reproduction and evolution of private organisms (3).

In the majority of living organisms reproduction occurs once they are mature and the process of growth has been completed. In others it is simply a continuation of growth.

The former can be identified in seasonal plants such as rice and the latter in various kind of trees.

Seasonal plants are like temporary organizations (considered by the Austrian School), capitalist units with a short life. Once their factors of production have been reproduced they die and a new plant initiates the same development. Such a neo-classical approach considered firms as being like rice, which means that just the factors of production can be reproduced but not the individual organism.

A more realistic interpretation for what happens in capitalist life is offered by the Institutional Model, which can be identified for example with an oak tree. Reproduction is simply a continuation of growth. And even before the achievement of its maturity an oak tree may give birth to many others. Some may grow very big and strong and remain alive for many years. In a community of oak trees some become so big that a monopoly is established, and small ones may not have the chance of surviving, or if they do it is because they have become subordinate to the big ones.

We could go further with our analogy and try to be even more specific. However taking into consideration the scope of this work as well as our main aim which is to deal with the process of evolution of capitalist organisms i.e. how those organisms mutate, causing the emergence of innovation, we must introduce into our analysis the basic principles of genetics and the Evolution Theory using the preceding sections (on the ecosystem and on the biotic community) as a background.

III

In higher organisms reproduction involves the union of two cells known as germ cells.

Once united the resulting cell will go through numerous divisions until the embryo is formed, which will develop into a new organism. Such a new organism carries characteristics of the individuals which provide the two initial cells.

The most important hereditary material (or genetic material) is found in the DNA which is contained in the chromosomes. The genetically functional unit is the gene and consists of a chain of many molecules of DNA. Such molecules have the capacity and ability of replicating themselves, transferring the genetic information to the replicated cells. Such genetic information determines the characteristics of the new organism. An organism carries a large number of types of cells, each with its own chain of DNA, hence with its own genetic information and responsibility for developing a specific part, organ or component of the organism.

Similarly Capitalist organisms are composed of many different sections and departments, i.e. different organs. Each of them is composed of different substances, elements and cells, i.e. people. Although people do not hold the replicating feature of a natural cell, it is people who carry the genetic information of capitalist organisms and make possible the development of its various parts and organs.

The genetic information determines the structure of the organism, its organization, its shape, its form and operation. Different germ cells stores different genes and, although some organs can be considered more important than others, the whole must work as a unity if the organism is to survive. An organ may be ill or a branch may be broken, consequently the whole organism will be affected. Accordingly if a variation occurs in any organ or part of the organism the whole must learn how to cope with the change, and must adjust to it.

Variations are consequences of mutations. The latter are responsible for the changes and evolutions of organisms. According to Darwin mutations occurred at random, and despite the continuous character of evolution (a gradual and slow process of adaptation of the organism to itself and to the environment) by definition mutations are discontinuous (Bowler, 1983).

Bio-genetics has proved that mutations are a result of spontaneous change in the structure of the DNA chains which can cause changes in the organism. Such changes can greatly affect how the organism works, its structure, its organization, how it behaves (thus how it migrates or competes) and even what they produce. It also has been shown by modern genetics that though mutations are a spontaneous process they can be affected by the environment, particularly if a strong and powerful amount of

radiation is released in it, which can induce changes in the DNA chains changing the stored information thus causing mutations and consequently variations.

Like living organisms capitalist organisms also go through mutations i.e. through changes in the DNA chain of their cells which within our context, means a change in the data which defines the cells’ existence and behavior. The cell existence and behavior is a result of interactions of the cell with itself; or with the cell and the organism; or with cell and the external environment; or with the organism as a whole and the environment; and finally or a result of a combination of all these interactions. Therefore any change in any of the components of those interactions (the cell, the organism and the environment) may cause the DNA chain of a capitalist cell to change.

Either an invention or a change in strategy are examples of a change in the DNA chain.

The former may be considered as analogous with mutations in living organisms (spontaneous), nevertheless as the latter refers to “the new decision rules and guidelines which guide the process of development of an organization” (Ansoff, 1987) our analogy tends to break down. Hence the changes in the genetic information of the cells of a capitalist organism may involve extra factors besides a spontaneous one, i.e. it may have a definite purpose of direction.

A large proportion of innovations (both in product and process) have been a result of inventions (4). If we assume that the invention is a result of a discovery or a brilliant idea, and that it is motivated neither by a need nor by a strategy (i.e. it is not a response to changes in the data of the environment) it is analogous to mutations which have occurred spontaneously – indeed at random. For instance if we imagine a building material manufacturer, and suppose that suddenly one of its cells invents a new product or a new way of producing a product, a mutation would occur provoking the appearance of a variation, i.e. an innovation. Nevertheless, the organism is not quite sure if the emerged innovation can survive, or be profitable as this is not for it to determine but for the market (5).

On the other hand let us imagine an architect who since starting his professional life (which we can suppose was during the 50’s) had been thinking about a different way of organizing the building process; one which would allow him a greater integration with the construction stage. The moment he started to think in a new ‘method of management’ a mutation occurred. As the organism (the firm) decided to implement the idea a variation emerged – a newproduct i.e. an innovation. Assuming that the idea worked out well or rather there was a demand for it a new species has resulted.

However to say that such a mutation has occurred at random is to deny that clients at that time started to require better methods of management, thus the mutation may have had a direction.

It is a natural feature of the cells of a capitalist organism to be in constant interaction with the environment, which means that any change in its data can affect and influence

the happening of mutation as well as its course; and as cells go through mutations changing the characteristics of organisms, they also change the data of the environment.

Considering that this is composed of economic, technical, political, and social factors any change in any of those factors can generate a change in the whole data of the environment affecting the genetic information of different cells.

Accordingly, innovations (the variations occurring in capitalist organisms) are also a response of the organism to a change in the environment, which may impose new forms of operation, or new products, or new processes of production, etc. Considering that capitalist organisms survive in order to accumulate, some of the mutations will occur as planned and directed towards this aim.

Nevertheless, although the environment exercises a great influence on capitalist organisms, and can powerfully change their characteristics, (particularly if an imbalance emerges), the process of change of the industry is also generated inside its units, which in order to survive must continuously transform themselves.

NOTES: (1) The characteristic of a capitalist organism refer to its organizational structure, how it operates, what it produces, how that is produced etc.

(2) “Life history is the life cycle of the individual, (referring to an individual organism) it embraces the entire round of activity or behavior from birth to death. It is not only a cycle in its complete expression, but it also often includes minor cycles corresponding to those of the day, season, or year.” (Clements and Shelford, 1939) (3) As distinct from private organisms, public ones survive in order to fulfill social needs.

Hence their survival is directed towards the gathering of resources and the undertaking of programmes. See study two.

(4) Studies of industrial change normally focus on product innovation versus process innovation. The former refers to “a qualitatively superior output from a given amount of resources” and the latter refers to “a greater volume of output”. (Rosenberg, 1982) Despite this in most of those studies product innovation is neglected (for the sake of simplification). Its importance has however been stressed. Depending on the interpretation, process innovation embodies new machinery which in its turn is a product innovation of other capitalist units (Kuznets, quoted in Rosenberg, 1982). And product innovation (as well as process innovation) plays an important role in the evolution of the economic system. (Schumpeter, 1949) According to Schumpeter innovation is an internal factor of the economic system which plays a vital role in the development of the economic system. Schumpeter’s theory is briefly reviewed in the third study of this work.

(5) In nature it is the natural selection which decides which variation will be incorporated within the species or not; “variations determine the response of the system (that is its eventual survival)” hence natural selection selects the most suitable ones, those which allow a better rate of survival, consequently those which are more adaptable and better

adjusted to the environment and to the need to survive in it. In a capitalist economy the selected variations will be those which allow greater accumulation, therefore capitalist species change at a much greater rate than natural ones. And as what matters is the survival of the individual and not of the species some mutations which occur in capitalist organisms are kept away from other organisms, protected in order to avoid competition.

STUDY TWO

2

GENETIC ENGINEERING – THE ADVENTURE OF THE PUBLIC SECTOR AND ARCHITECTS AFTHER THE SECOND WORLD WAR

In the preceding study we have developed the proposed general framework of our work, concentrating on the private organisms of the capitalist system. In this second study we apply such a framework to the context of the public sector (a biotic community composed of organisms which belong to different families with different characteristics), hence our analogy demands a further expansion which we intend to keep short.

Although organisms acting in the public sector carry different characteristics they also need energy for their survival, which instead of being directed towards accumulation of capital is directed towards gathering of resources and accomplishment of programmes in order to fulfill social needs. As normally resources are scarce and the number of programmes to be accomplished is large, competition is a function which is also carried out by the public community, if social goals are to be reached, especially when resources and different programmes need to be undertaken at the same time, as happened at the end of the Second World War. The post-war period was a period of reconstruction and adaptation, as well as of shortages and urgency. The need to reconstruct the country and put its economic process in motion again required among many other things the building and rebuilding of houses, hospitals and schools, which had to be done not just quickly, with the resources available, but also within new standards established according to new ideas dormant since before the war. The list of social goals which were to be achieved was extensive.

Consequently public sector organisms had to restructure themselves and change some of their characteristics (1) in order to reach their new social aims. They faced a challenge analogous to that faced by geneticists trying (for example) to introduce new characteristics in some vegetables, in order to make them more resistant to determined plagues and diseases (2). This implies that, in order to fulfill a need a mutation must occur.

There is no doubt that the accomplishment of the new social goals (which here refers to the provision of buildings) by public organisms demanded the causing of mutations (changes in the DNA chains of some cells), i.e. it demanded (among other things) changes in attitudes, values, beliefs, procedures, as well as in knowledge and expertise (technical, organizational and managerial). As we shall see the new combinations of the DNA chains were not introduced just in the cells of the public sector, which were able and ready to evolve in the required direction (for example some architects), it had also

to be spread to other cells (eg. administrators) and even to other organisms (eg. manufacturers) (3).

It was no accident that the architect was a potential mutant cell, and indeed he/she “took almost completely the lead” in the whole innovative process. The lessons which some had learnt during the war (managerial and organizational skills as well as the ability to deal with new situations) and the seed of the modern movement latent especially among young architects were greatly responsible for their vital role in the process of change which emerged after the war, even though it was concentrated in the building of schools rather than of houses or hospitals.

The distinctive features of the buildings (for example housing and schools) which implied different requirements and designing, involving different types of organizations with different attitudes towards policies, organizational and administrative approaches, may explain the closer involvement of the architect in that process. It may also be one of the reasons why the innovations which appear in non-traditional school buildings have caused a greater architectural impact and have been regarded as much more important than in housing or hospitals.

Such importance is not restricted to new methods of construction and new uses of materials in response to non availability of materials, but extended mainly to the new products created, which makes “the non-traditional schools something more than a pisaller dependent entirely on the lack of availability of traditional resources for their usefulness”. (Bowley, 196, pg.263) The new products were in fact a result of a completely distinct approach to the development of design, which involved cooperation and exchange of knowledge and expertise among designers, manufacturers, users and administrators. Such an approach reflects the new combinations of DNA chains and has led to the development of system buildings which allowed the construction of “over three hundred major education projects” (most of them within limits of time/costs and in accordance with the modern educationalists’ ideas) A rate of one new school or major instalment of a school every twenty-three days”, proved to be the experience of the Hertfordshire County Architects Department, during the period of 1946-64 (Keath, 1983), where the genetic engineering adventure began and greatly influenced the building process.

Our aim in this study is to concentrate on the experiences of the public sector in relation to school buildings (particularly in relation to the Hertfordshire County Council where the whole process originated), outlining the main factors which have been acting upon this process of change compelling public sector organisms to change the DNA chains of their cells, and how the new combination of DNA were introduced.

I

The primary force which made the public sector search for new methods of construction and new materials was the scarcity of resources, among them traditional materials (such as brick) and skilled labour (Bowley, 1966). The lack of resources was exaggerated once there was the decision to build new towns (to cope with the demographic growth) and the introduction of the 1944 Education Act. The Butler Act defined the responsibility of local authorities in providing continuous education (primary, secondary and further education); raised the school-leaving age and attributed to the Ministry of Education total control and direction “of the national policy for providing a varied and comprehensive educational service in every area” (Keath, 1983).

The immediate consequence of the Butler Act was the provision of the “temporary huts” (Hutted Operation for the Raising of School Age: HORSA), which consisted of prefabricated buildings with very low standards, as observed in a report of the RIBA Committee on school design and construction: “Except for the portal framework (which was in fact too adequate for the supposed temporary nature of the building) the general construction is inadequate and is more appropriate to a storage-shed building than to a school” (“Ministry of Works standard hutting for schools”, RBAJ, Feb.1946, p.131; quoted in Keath, 1983).

Indeed the huts were not the response expected by the modern viewers of educational needs, nor by the architects who intended to work for a social architecture. Their spread was an extra challenge or rather a threat, facing the counties, especially those like Herts which had a chief education officer (John Newson) who believed that schools should be designed “for new and continuous developments in teaching, not repetitive railway carriages in which children and teachers would have to adapt themselves as best they could” (Saint, 1987).

In 1945 there was some pressure on local authorities to produce their school-building programmes. Herts worked out that “175 schools” should be built “over fifteen years” (Saint, 1987, p.62) if its programme was to be accomplished. It seemed almost “unrealistic” that a small authority like Hertfordshire’s would be able to build such a number of schools, especially at that particular time, when as architects’ department did not even exist in the county.

With the establishment of an independent architects’ department (in 1945), Herts initiated its adventure which “was the first post-war design breakthrough”. From the logical idea of using a system of “light construction” (which was in accordance with the primary concern and recommendations of the Wood Report which accurately recognized the lack of availability of resources) the selected team (under Charles Aslin)

started to work towards a social architecture using all its creativity and personal abilities, and to explore the lessons learnt before and during the war.

The primary school programme was the first to be tackled (1948-49), and although the county had to face great obstacles, its geographical position allowed some advantages compared to other counties. For instance its proximity to the BRS (Building Research Station) gave a fruitful opportunity for exchanging information and advice about testing of materials and systems.

Chestnuts and Essendon were the first primary schools to be built in the county using a light steel frame. The choice of steel may have been due to the ideological preferences of architects and the lack of firms dealing in reinforced concrete construction (or any other suitable material), which had better market opportunities in other sectors (for example housing) (Bowley, 1966). Hills, a company which had produced light steel frame structures during the war, and had also developed the design of “a school classroom unit on an 8’3” grid (according to the Wood recommendations) was brought to work together with the county’s architect department (Keath, 1983). The urgency and putting the programme in motion (due to the pressure of the Ministry of Works and the threat of the huts) Hill’s prototype was initially accepted. The embryo of a system started to evolve and although architects did not create the system they acted as “midwives to its birth”. Chestnuts and Essendon worked as the county’s prototype, and with constant feedback and assessment the programme was carried out aiming at a flexible system, which would cope with the individual need of different places and the different ideas of educationalists.

The secondary school programme followed (1949), based on the experiences of the primary school one. Further developments had to be made, as libraries, workshops and laboratories had to be provided within multi-storey buildings, which meant a more complex programme. Hence a greater flexibility was required and a pressure to change the 8’3” grid (used in the primary school) arose; consequently new systems evolved using a 3’4” grid. Although the 3’4” grid was used for a period in Herts, a greater contribution to its development appeared in Nottingham, where the CLASP system evolved.

In 1948 Stirrat Johnson Marshall (who since 1945 had worked as deputy architects in Herts) became the Ministry of Education, bringing with him the spirit of cooperation in exchange of information characteristic of Hertfordshire. A development group was formed in order to search for a more adequate system for secondary schools. With the increased demand, different systems were also developed by the private sector using aluminium and rolled steel. A partnership between the development group and the various manufacturers which took the market opportunity was established and created a series of new systems. Among them: a system using hot-rolled steel developed with Hills; another using cold-rolled steel, developed with John Brockhouse and Company; the Integrid pre-stressed concrete system; a steel and aluminium system, developed with

the Bristol Aeroplane Company, etc. (Saint, 1987). Such a set of systems may exhaust the “meccano set” offered for the construction of non-traditional school Buildings (4).

The role played by Johnson Marshall was surely crucial. Through his attitudes towards the exchange and development of research (with a multi-disciplinary team); his policies and administrative innovations it was possible to spread the experiences and principles of Hertfordshire to other, reluctant, counties as well as to those lacking either the will or the necessary skill. As he supported the use of “less traditional procedures than competitive tenders”, it was feasible for the counties’ team (notable Hertfordshire’s) to acquire a better knowledge of costs, through a greater contact with production.

Although all these efforts greatly contributed to the spread of innovation there were objections from local authorities and also some architects in accepting non-traditional methods, meccano systems and materials like aluminium and glass. Furthermore, the inability of the programme of individual Education Authorities to provide the “minimum quantities necessary to obtain the real economic advantages of industrial mass production” was also an obstacle to be overcome. A further step needed to be taken and the idea of grouping authorities in order to have “bulk purchase” started to emerge.

The bringing together the authorities with similar problems or expectations would also intensify the exchange of information and expertise for the creation of a wider range of systems able to suit individual needs, as well as the spread of the new combinations of DNA. This movement had its gene from the architects, who found in the use of modern technology the possibility of performing their role, which consists basically in providing aesthetic and workable buildings for the masses. The consortia movement starts in 1957 with CLASP. This first consortium was then followed among others by SCHOLA (1961) and SEAC (1963).

The main legacy of such ideological and pragmatic movement has been a greater integration of the building process, as a better understanding of its fragmented parts and elements has been acquired.

There is no doubt that what has been presented in this study is a quite concise summary of one of the most important processes of innovation in the construction industry, which greatly influenced the building process as a whole after the Second World War. However as far as this study is concerned, it only shows the main factors which have acted upon the process of change imposed on local authorities.

It cannot be denied that the major factor acting upon this process was the lack of resources combined with the urgency of building schools. However, the resulting solutions were mainly the responsibility of those who were professionally and ideologically prepared to seek for them with all their potential; and were committed to make sure that they would come out with the best solutions.

The changes in the characteristics of public organisms were realized through formal as well as through informal channels. The former refers to the policies and changes in procedures by those who made the decisions within local authorities as well as within the Ministry of Education. The latter relates to all the ideologies of those who believed in a better world for all and who, through the carrying out of their task, spread different genes.

Three main points may be regarded as being responsible for their use, and which may show some of the necessary conditions for the process of diffusion of innovations. First they increased the ability and capacity of local authorities to accomplish their objectives; second as they were used they became more understood and third the policies and procedures adopted by those responsible for the programmes made sure that they would be used.

The experience of the public sector in trying to allocate scarce resources for the accomplishment of its vast educational programme exemplifies a model with two interdependent points. First, in order to fulfill urgent needs which normally are subject to constraint (eg. unavailability of resources) changes must occur which will cause the emergence of innovations (technical, organizational and managerial). The role played by those who have the authority and capability of taking decisions is crucial within this process, making sure that programmes are formulated and carried out within budgets and established and acceptable standards. Second, policies and changes in procedures are not sufficient if those who are supposed to carry out the defined changes are not prepared to accept a new situation for cultural reasons, lack of understanding of the whole situation, and lack of skills and expertise. It should be stressed that both points are extremely relevant within the context of developing countries where lack of commitment by government bodies, money, material, managerial and technical skills and expertises are a common feature.

NOTES: (1) See note (1) at the end of the preceding study.

(2) Genetic engineering has been developed based on the principle of gene manipulation. In the U.K. “gene manipulation is defined as the formation of new combinations of heritable material by the insertion of nucleic acid molecules” (Old and Primrose, 1985) (3) Mutations can only be forced into cells if the cells are somehow able to accept them; as well as we shall see the architects working after the Second World War had been through mutations before and during the war, which made them ready to receive and spread different genes.

(4) However it should be borne in mind that innovation in school buildings was not restricted to those systems; there were for example the experiments of Lancashire with “load-bearing brick piers and steel beams, combined with novel materials internally”.

(Bowley, 1966)

(5) For instance the establishment of a ceiling per school-place which gave more flexibility for local authorities, as well as an opportunity to create a basis for the comparison with traditional methods of construction; and the introduction of 1,1/2-2 years instead of annual approvals.

STUDY THREE

3

THE ENTREPRENEUR – A GENE CELL IN THE PROCESS OF INNOVATION OF THE BUILDING PROCESS

The building process is one of the numerous processes that results from the interactions of organisms (capitalist units) which acquire capital for their survival by engaging in activities related to the construction process (1). It can be defined as the process of producing a given building from the activity of decision-making (which should include the decision’s history) to its occupation. Consequently it relates directly to the exchanging, planning, design, construction, management etc. of a required building.

Accordingly, it is the process wherein inputs and resources (physical and human) are gathered and transformed according to an applied technology a well defined pattern of relationships, specifications and targets in order to provide a building, i.e. it is the process wherein land, materials and components, energy and fuel, machines, plants, tools and manpower are brought together and organized for the production of a given building (Groak, 1982).

In order to understand how those inputs and resources are put together and organized, the building process should be broken into stages (brief, product design, building design, production, assembly, consumption). Fixed roles (landowner, developer, builder, planner, financier, design, etc.) are performed and inputs and resources are introduced by different organisms of the industry. (see Turin, 1967) Although the organism which performs a given role may vary (depending on the method adopted by the client for procuring the building which in turn reflects the organization and management of the process) the roles are fixed.

Such a framework allows us a wider view of the process under consideration. Wider in the sense that first the building process is not seen as synonymous with the production process (input-production-output), but the former embraces the latter; second, it is directly linked with all the other processes wherein each of the inputs and resources is produced and/or obtained, being subject to their influence and the exchange of stimuli; and third we could say that it suggests that an innovation in the building process implies a replacement of organisms in the performing role.

Accordingly, any change in the land development process, the finance, the exchange, the design, the production, the technological, the labour, the consumption and the accumulation processes can affect and influence the structure of the organization which is supposed to define how the required inputs and resources are to be held together as well as how roles are distributed among organisms.

As seen in our analogy, the accumulation process is the one which unifies all the other processes because it is through this that the main factorfor the existence of capitalist organisms is acquired, providing the possibility of growth and reproduction, thus of evolution. As organisms interact for capital they exchange stimuli which provoke reactions and coactions affecting the current data of the environment, consequently the various functions performed by the community, the various processes resulting from their interactions as well as the mutations of the organisms’ cells (2).

During the last twenty years we have seen the emergence of new methods of structuring the building process which in fact are new products offered by construction organisms and are a result of different mutations having occurred, (the majority in the organism of contractors), in order to allow greater possibility of survival (which means greater strength when competing for energy), or greater adaptation to changes occurring in the environment.

Those new methods of procurement reflect the changes which have emerged in the building process, due to the interaction of different factors (economic, technical, organizational and social) which once interacting in the environment have caused changes in the data available to construction organisms influencing and powerfully affecting the mutations of their mutable cells.

The aim of this study is to extend our biological model introducing Schumpeter’s theory of innovation, in order to analyse how these factors interact (at the microcosmic level of the private sector of the industry), causing mutations, and the emergence of innovations (which in fact are new products offered by construction companies). This more detailed framework is discussed in the final part of this dissertation against the results of an investigation which has been carried out with the main objective of detecting some of the factors that have acted upon the process of innovation of the methods or procuring a building.

The investigation was carried out (using interviews and questionnaires) within 10 companies (most of them among the major British contractors) regarded as those which have innovated in relation to management contracting, alternative methods of management and construction management. How the research has been carried out and its results are systematically revealed in the next section.

This study concentrates on the main points of Schumpeter’s theory, particularly those which are of major interest for the purpose of this work: the meaning and definition of innovation; the identification of his (Schumpeter’s) mutant cell – the entrepreneur; and the main assumptions of his theory of innovation which bring out the modus operandi of innovation.

I

Like Darwin, Schumpeter within his own context also tried to find an explanation for the process of evolution. The impact and contribution of the latter may not compare with the former; nevertheless, Schumpeter’s theory has provided a dynamic approach for the understanding of how the economic system works and evolves.

The traditional economic theory has demonstrated how elements and parts of the economic system seek a state of equilibrium which for some reason (eg. alteration in demand or supply) changes, causing those elements and parts to react accordingly, bringing the system back to the previous position. Such a static view implies that the economic system works and evolves by adapting itself to the changing data. Schumpeter strongly disagreed with such a static approach, which views change as being adaptive and responsive, always searching for the same position of equilibrium. First it does not elucidate the process wherein economic life itself changes its own data “by fits and starts”, and what phenomena those changes give rise to.

Although his main concern was with the whole he also went to a microcosmic level in order to explain how change takes place within the capitalist economy giving rise to a phenomenon called “development”. The latter was understood by Schumpeter as the changes in economic life which “are not forced upon it from without but arise by its own initiative, from within” (Schumpeter, 1949, pg.63). Hence, the main question to be answered was to what extent the internal factors inherent in the economic process can produce change, i.e. to what extent internal factors are responsible for the cycles which seem to be so natural to capitalism’s life, changing its framework and course each time they emerge.

While Schumpeter was investigating the role played by the internal factors (changes in taste, growth and innovation) he made clear the importance of external factors (war, danger of war, revolutions, social unrest taxation etc) as “…it would be possible to write, without any glaring absurdity, a history of business fluctuations exclusively in terms of external factors, and such a history would probably miss a smaller amount of relevant fact than one which attempts to do without them” (Schumpeter, 1939, vol. I, pg.12).

However, in spite of the recognition of the relevance of external factors as well as of changes in taste and growth as internal factors which interact and can cause change in the economic system, innovation is taken as distinct as “it is not implied in, nor a mere consequence of, any other”. In fact innovation is an internal factor of the economic system which plays a vital role: “innovation is the outstanding fact in the economic history of capitalist society or in what it is purely economic in that history” (Schumpeter, 1939, vol. I, pg.86).

Schumpeter defined innovation as the carrying out of new combinations of factors of production (3). The discontinuous appearance of such new combinations characterizes what for him was meant by the phenomenon of economic development i.e. the employment of existing resources in a different way. The concept of “the carrying out of new combinations” includes: “(a) the introduction of a new good; (b) the introduction of a new method of production; (c) the opening of a new market; (d) the conquest of a new source of supply of raw materials or half-manufactured goods; (e) the carrying out of the new organization of any industry, like the creation or breaking up of a monopoly position” (Schumpeter, 1939, p.66). As far as this paper is concerned we will be referring (particularly) to the concept of innovation in relation to the first and third types as here we will be considering the introduction of new methods of procurement (products offered by construction organisms) and the opening up of new markets (like the case of migration of American firms).

New combinations are effected by new firms and new men. As a capitalist organism goes through mutation (by the action of the entrepreneur) it makes profit which eventually is depleted by the action of other organisms fighting for their survival and also giving birth to new ideas (or copying ideas; or improving upon them). Hence, in Schumpeter’s model those survive who are the ones who keep the innovative activity in motion (4).

The carrying out of new combinations involves not just the opening up of “new firms” with a definite purpose, but also the different employment of productive means available in the economic system. Although the former assumption (as we shall see) cannot be applied to our context the latter is inevitable.

As seen in our analogy, innovations are a result of mutations. In Schumpeter’s capitalist organisms the only gene cell capable of going through mutation in order to originate an innovation is the entrepreneur. Such a mutant cell carries peculiar characteristics and performs a fundamental role within capitalisms’ evolution. The entrepreneur is defined as the individual who will try what has not been tried before. She/he will choose new ways of doing things or new things to do according to the data available to him/her.

This is quite a complex concept as it is a result of the interactions of the data available to him/her in the environment; his/her own interpretation and assessment of this data; and his/her ability and capacity of creating upon this evaluation, the latter being closely related to “intuition and freedom of mind”.

Adding Schumpeter’s concept of ‘Horizon’ which refers to “the range of choice within which a businessman moves freely and within which his decision of a course of action is taken” (Schumpeter, 1939, pg. 99), and applying it to out context we could say that the likely direction of a contractor’s choice towards the adoption of a given method of management depends on all the factors that interact giving as a result his/her own data which include: the internal factors of the firm, external factors of the environment, plus his/her ability to foresee what could be done, and even to create from it.

Consequently to do something new is not an easy task. First the environment normally resists what is new until it becomes familiar, and eventually part of the routine. Second, the environment may lack or refuse to provide the necessary inputs for the new combinations. Third what is new involves risks, errors and uncertainty and it takes time for new data to filter through and to be made manageable.

As well put by Penrose, Schumpeter’s entrepreneur is a “dramatic and colorful” individual, who differs from her entrepreneur in the sense that the latter is concerned with growth of the firm, thus “an innovator from the point of view of the firm, not necessarily from the point of view of the economy as a whole” in Penrose’s words (Penrose, 1980, foot-note, pg.36). Nevertheless, one is very much related to the other within our own context, and in both investigations the entrepreneur’s function involves ambition, vision, judgment, knowledge, curiosity, creativity, initiative, authority, i.e. she/he is the driving force of the process and the leader. Leadership in the sense that she/he is the one “who leads means of production into new channels” as well as “she/he draws other producers in her/his branch after her/him” (Schumpeter, 1949).

Such a stimulating and powerful image is almost charismatic if one does not ask why most of the entrepreneurs (in their great majority) have not tried to canalise all their energy towards a better and fairer world. But abandoning such a “naivity” (we do not have room for it in this work) this almost autonomous cell can be present in any organ performing any other function. She/he may be the owner, a manager, a salaried employee or a director etc. The activity of the entrepreneur will be “mixed up with other activities” consequently the latter appears much more evident than the former, although the former is the essential factor, i.e. the entrepreneur is not an entrepreneur “all the time” or “just an entrepreneur”. Therefore there is great difficulty in identifying who the entrepreneurs are. The extent to which the entrepreneur as well as the modus operandi of innovation was found within our context will be explored later.

NOTES: (1) The construction process is here understood as the process wherein buildings are exchanges, financed, designed, planned, constructed, managed; etc.

(2) Mutations here are seen as being directly affected by the environment as the latter refers to a dynamic situation which is constantly changing requiring change and adaption if organisms are to survive, achieve their aims and evolve.

(3) It is important to point out that ‘factors of production’ includes resources and services; and as pointed out by Penrose the distinction of them is important in the sense that “in the distinction we find the source of uniqueness of each individual firm” […] “The important distinction between resources consists of a bundle of potential services and can, for the most part, be defined independently of their use, while services cannot be so defined, the very word ‘service’ implying a function, an activity” (Penrose, 1980, pg.25).

(4) At the time Schumpeter developed his model the presence of the giant companies which were constantly going through mutation (in fact a shell of gene cells) and which

characterized what he refers to as trustified capitalism (as against competitive capitalism) were still exceptions, contrasting almost entirely with what we see nowadays.

THE RESULTS OF OUR INVESTIGATION

FACTOR ACTING UPON THE PROCESS OF INNOVATION OF THE BUILDING PROCESS – THE RESULT OF OUR INVESTIGATION

Our intention in this section is to describe systematically our research and its results which have provided us with the basis for some of the conclusions which are shown and discussed in the final part of this dissertation.

Considering that the major interest of the work as a whole is first to investigate a better approach to the analysis of innovation in the construction industry (which in relation to the private sector has been a result of the combination of our biological model and the Schumpeterian theory of innovation) and secondly to detect some of the necessary conditions for innovation to occur, we have directed our research towards those aims.

The primary objective was to look for some of the factors which have acted upon some of the private companies in the industry (regarded as those which have innovated in relation to management contracting, and alternative methods of management and construction management) (1) affecting and influencing their process of change.

The research was carried out through five interviews with senior staff of the chosen companies and twelve questionnaires of which seven out of twelve have been received, with five complete ones. The nature of the subject under investigation and the small number of companies involved led us to the use of an open questionnaire which would allow us to obtain a wider view on the subject.

Accordingly the collected data is not quantified statistically. In order to avoid repetition the results have been grouped into ten blocks which correspond to the major factors that have been defined to be studied according to the objective of the work; although in some blocks we do specify the answers of each company in order to produce a clear view. The reason for the use of the alphabet to refer to the companies is that 85% of the interviewees and of those who replied have chosen to remain anonymous.

RESULTS

I – When the company started to think about using a new method of management and when it actually started to use it: A – CM – In 1981 the company was established (as a result of a joint venture with an American company) in order to practice construction management.

B – CM/MC – In 1980 the company was established to offer PM, MC, and CM. Nevertheless MC had been carried out by the ‘parent company’ since late in the 70’s.

C – MC – In 1974 the idea originated and in 1979 the company started to use it.

D – MC – The company has been involved in MC since 1968. In the early 70’s the management form which is used today was produced.

E – MC – The company used a management form of contract in 1929. In 1969 it introduced MC for the first time in the United Kingdom.

F – MC – The idea originated in 1969 and the company has been involved in MC since 1978. In 1982 the workload in MC became sufficient to sustain a separate operational overhead which was set up in 1983.

G – MC – “MC as a form of contract was first considered by some 20 years ago” (the company did not specify when it started to use it).

H – MC – In the late 70’s the company started to feel the need to develop MC. In the early 80’s the building arm of the company started to use the method, until 1984 when a separate operational overhead was set up.

I – AMM – The idea originated in 1953 and started to be put into practice at 1969. It was fully developed through the 70’s.

J – MC – The idea originated in the early 70’s. A special department was set up for the carrying out of the MC. Early in the 80’s a separate organization was formed to concentrate on MC.

II – The influence of American methods of management or American companies and practices at the time the idea originated and developed (a scale from 0% to 100% was offered): A – 60% to 70% B, C, G – 10% D – 30% E, F, G, H, I, J, K – 0% *Since the 1980’s seven companies have been established in a joint venture of worked with American companies. The increased influence of American methods, principles and techniques since then, was stressed by all the companies.

III – The section of the company in which the idea of using a new method of management has originated:    



The idea of searching for a new method of management was advanced by the chief executive: A Originated in the ‘Building Division’ and approved by the group: B/C A decision taken by the board of directors: D/E/H/J The idea originated in the Design and Construction Operation where later in 1982 a Managing Director recommended the setting up of a separate operational overhead: F The idea was advanced and developed by a particular member of the company/or partnership: I/G

IV – The process of acceptance and approval of the idea within the company:  



Once the idea had been assessed and seen to be appropriate, the decision to proceed was made by the Board of Directors: all companies, excluding I. One company (H) stressed the difficulties in getting acceptance of the idea. The Building Arm of the company did not see MC as positive to its activities due to the high overheads and low fees. Furthermore the lack of a ‘track record’ did not allow the company to obtain work initially.

Three companies (A/G/I) stressed the participation of a particular individual in the process of acceptance and approval.

V – The process of defining the idea and its implementation:   

  

The idea was implemented at once as it had been developed in the USA. It has been adapted to the British context as it has been used: A The idea was implemented at once and was developed by the parent company: B The implementation of the idea was effectively carried out all at once by the formation of the company in 1979 and then evolved over the following 3/4 years: C The idea was implemented in stages, according to the acceptance of the industry: D/H/J The implementation and definition of the idea were a result of a constant reexamination and appraisal of the company’s approach: E/I The idea was carried out in stages and defined continuously: F

VI – The initial expectations of the company when adopting the new method:  





To acquire a share of the expanding market allowing the company to grow: A/B/C/D/G/H/J The expectations were very high as the company perceived management forms of contract as being a unique selling point and a method of revolutionising the construction industry: E To educate the client to the benefit of the company’s approach to MC; which has been successful as over 65% of the current workload is for clients we have worked with previously: E To provide a service to the client where appropriate circumstances prevailed: D/I

The well structured management disciplines on a MC would have a spin-off effect to improve our management techniques and skills; which greatly contribute to the improvement of the performance on traditional contracts: F 

Three companies (B/J/H) have stressed their underestimation of their expectations.

VII – The unfulfilled expectations and the unforeseen consequences which have emerged:  

The need to adapt as the “UK factor” has influenced the way things “are done now”: A The downturn in MC with a similar increase in fixed rate/JCT lump-sum work: C

 

 

The disillusionment of clients due to management contracting being used in inappropriate circumstances or with inappropriate contractors: D/C The need to constantly develop and re-appraise the company’s approach as other contractors “copy” the MC. Consequently the company has adopted the use of CM: E The enhanced salary expectation of MC staff over ‘traditional’ construction staff i.e.: high overheads: F/H The rate at which the company has grown: H

VIII – Some of the reasons for adopting the new method of management: 1) There was a market for it – A/B/C/D/E/F/G/H/J/K 2) Client’s need – D/I 3) It is more profitable – E 4) It is not more profitable but involves less risk – A/F/G/H 5) Diversification in order to reach a wider market – A/E/F 6) Reaction to competition – A/C/F/H/J/K 7) It allows more flexibility – A/C/E/F/H 8) Less fixed capital employed – C/E/F/G/H 9) Less fixed capital employed but higher overheads – H 10) There is a minimal capital employed, although the company is not a self generator in the terms of traditional contracting as no construction monies go through the books – A 11) Availability of internal resources – E 12) Opportunity – C/D/E 13) It allowed the development of general management skills – B/F 14) It suited clients who were looking for the professionalism of a consultant combined with the acumen of a major contractor – B 15) It is a good form of contract for the client – D 16) Ambition – I

IX – Some of the factors which have contributed to the use of the new method: a) Within the company:  The company would suggest the ‘new method’ if this was appropriate to the project: B/I b) Within the industry:  The requirement for swift construction: F/I  Increased market as clients generally gain from time and cost savings: B/E

X – Some of the factors which have constrained the use of the new method: a) Within the company:  A lack of available staff with adequate experience from associate companies and hence the need to recruit external staff: C/H/J  A lack of trained staff available in the market. Hence, the need to train the new hired staff: A/H/J b) Within the industry:  A lack of understanding of the merits of MC on the part of certain clients and consultants has led to inappropriate methods which devalue full benefit of the method: C/D/E  The plethora of new management contractors coming into the market with little experience of the method: C/B/D/E  The lack of a lump sum fixed price tender which many clients cannot accept: F  The state of mind of the industry – “Its culture” i.e. the difficulty of the industry in accepting a new approach to management: A/I/C/D

NOTES: (1) Sources which have provided us with some of the names of the investigated companies:  Thomson, Neil – Alternative Method of Management; Building, 27th January/1978.  Brown, K. – Half-century of Bovis Fee; Construction News Magazine, 4th October/1978.  Management Contracting Survey/1984; a report by the Centre for Construction Market Information, sponsored by the RIBA as well as leading contractors.  Lambourne, Hugh – American Construction Culture and the UK Industry; unpublished report produced in partial fulfillment of the requirement for the degree in Building at University College London, July/1989.

DISCUSSION AND CONCLUSION

DISCUSSION AND CONCLUSION

In the search for a framework which would allow us to analyse the process of innovation of the construction industry three main points have remained: First, in spite of recognizing the importance of external factors acting upon the industry (its various public and private organizations), we see the direction and pace of the process of innovation as a result of the various decisions taken by leading organizations (at a given moment in time) which carry activities related to construction.

Second, the decisions in their turn emerge as a result of interactions between internal and external factors within the organizations (private and public) at any given time.

Third, in order to understand how these interactions emerge, we must seek for an accurate and complete study of the various organizations and the factors acting upon them (at a given moment in time).

Therefore if we are seeking for an understanding of how change takes place inside the industry we must do it by looking closely at what economic, technical, political and social factors were acting upon the process of change, leading those who take the decisions or influence them in one direction and not in another.

It is not implied here that we intend to replace theory by history; nevertheless, without history a theory (which should work as a tool for the understanding of reality) cannot be developed and formulated. Although we have tried to outline and detect some of the factors which have acted upon the different organizations of the industry (in distinct periods and situations); and how those factors have interacted within them, from our point of view we have just started to develop the embryo of our analysis, especially referring to the private sector of the industry, where neither the entrepreneur nor the modus operandi of innovation were found present.

However, if on the one hand the framework developed (based on Schumpeter’s theory of innovation) does not offer a real picture of the process of innovation within our context, on the other it provides us with some guidelines.

The difficulty in finding the entrepreneur in our investigation may not lie just in the fact that such a figure has been weakened within the capitalist system on the whole, but may be because in some of the companies the process of implementing a new method of management occurred some twenty years ago, and those who provided the information were not totally aware of that process. Or possibly the rationalisation of the process has dissipated the entrepreneur’s image. The last two reasons themselves would justify the search for more accurate ‘historical data’.

In 90% of the investigated companies the decision to adopt a new method of management was regarded as being made by the board of directors Despite being the

responsibility of one manager, it was not she/he himself/herself who carried out the new combination (in Schumpeter’s terms) but the company. Thus there was no identification of a magic figure. Only three companies out of ten have clearly pointed out that the new combination of resources and services has been carried out due to the responsibility of particular men who (although they need the approval of the organization) were not just able to foresee the need for a new method of management, the market and opportunity (MC and AMM), but also capable of elaborating and defining an idea. (see block IV, p.

39).

Another explanation for the difficulty of identifying the individual entrepreneur in our particular cases, may lie in the fact that apparently we have been talking to imitators or “induced innovators”, rather than to innovators. The former term refers to those who will copy the same idea, thus they are not considered innovators at all. The latter term refers to those companies or individuals who a) try to improve upon emerged new ideas b) or “to do similar things along similar lines”. In fact just 25% of the researched companies (1MC, 1AMM, 1CM) regarded themselves as innovators (which they normally referred to as “the first”) and in just two of them (AMM, CM) the entrepreneurial figure was identified) (see block III & IV, p.39). The other 70% stressed their individual process of developing the idea of offering a new product (see block V, p.40), which seemed to be more a tentative way of differentiating the product than necessarily improving upon it.

Construction Management is a clearer example of induced innovation. This new method of procuring a building was introduced in the U.K. at the beginning of the 80’s due to a joint venture between a British company and an American one. Consequently we have witnessed a migration of American organisms, bringing not just a new method of organizing and managing the procurement of a new building but also having an influence in the fields of productivity, working environment, access etc. (see block II, p.38) Seven out of ten companies which were investigated have been engaged with or formed a consortium with American companies during the last five years.

The explanation for such a migration may lie in the combination of two main factors: on the one hand American firms have been looking for new market opportunities (particularly due to a decline in the American construction market) and not only in the U.K. itself as a new market but also as a bridge into Europe; on the other hand the British boom has seen a great demand for giant projects, which have required a new approach to management and organization of construction which could cope with the scope of such major works.

The migration of foreign organisms into the U.K. community has caused a change in the data of the environment, affecting and influencing the actions of our mutant cells, particularly (as shown by Schumpeter) due to the fact that once a successful innovation has been introduced into an economic system it becomes easier for others to follow.

Stressing this Schumpeter grouped into three kinds the obstacles facing the entrepreneur.

First the “resistance of the environment” is clearly shown in the resistance of some of the participants in the industry to accepting the use of a new method of undertaking a given building. It can be summarized in relation to the lack of understanding of those new methods which consequently has led to inappropriate use, hence the devaluation of the ‘merits of the method’ (see block X, section b), p. 42). We should add to that internal resistance, present in the particular case of the company ‘H’ (see block IV, p.

39).

Secondly, “for the repetition of acts of routine the environment offers the prerequisites, in the case of new things it sometimes lacks.” Here again we could consider the internal and external environments. Both have shown the lack of available staff (see block X, section a), p.42) which greatly affect the carrying out of a new idea.

Finally, “a new path offers difficulties when dealing with the current data”. This relates to risks and uncertainties. The nature of “the new data” may be represented by the unforeseen consequences to which some companies have been subject (see block VII, p.41) and which have worked against the pace at which innovations could be carried out (1).

Furthermore the fact that the decision for the establishment of a separate overhead organization was considered only once there was an increased demand or a requirement by the client, for a stronger identification of the company as a manager contractor or construction manager may indicate the resistance of some companies in facing uncertainties and risks (80% of the investigated companies have taken in average three or four years to establish a separate overheads organization; see block I, p. 38) It cannot be denied that demand has played a vital role in the emergence of those innovations (as well as the response to competition and the possibility of having more flexibility and less capital employed) (see block VII). It is not necessary to recall that we are dealing with privatecapitalist organismswhich survive in order to accumulate, thus: an opportunity to grow and expand their markets; the risk of losing a potential market or of being more flexible to operate in it, are all favorable conditions to innovations to take place. However, to say that they are sufficient and their existence exhausts all the possible factors acting upon this process does not show the ‘true history’. Many obstacles must be overcome (eg. the lack of available staff and the understanding of the industry) which can greatly affect an innovation’s direction, or slow its pace.

The resistance of the industry’s culture towards the new was also an obstacle faced by the public sector in the carrying out of innovations in school-buildings. If on one hand the consequences of such a resistance in the private sector represent extra work by the leading firms in relation to a constant assessment and reformulation of their innovations due to a deterioration of their main concepts, on the other it may represent loss in social terms within the context of the public sector, as programmes may get delayed, or not be accomplished at all; or if accomplished the standards of the resulting solutions may not match with the the required ones.

NOTES: (1) We have referred to the pace, as no evidence of unforeseen consequences being able to obstruct completely the carrying out of the innovations was found.

FURTHER RESEARCH OR STUDIES

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Although difficult, wider research among the industry as a whole could be carried out in order to make possible definite conclusions about the entrepreneur and modus operandi of innovation.

Detailed studies could be carried out concentrating on the process of innovation of the companies regarded as ‘innovators’, which might include detailed research into the process of “having the idea”; defining, approving and accepting it.

A study of particular individuals in that process should also be considered in order to define with more accuracy how the different factors may affect their decisions; which may lead us to the development of different models exploring those individuals and the performing of their various activities, taking into consideration all the factors acting upon them at a certain period in time characterizes by the raising of an innovation.

MSc students should be motivated towards the carrying out of empirical investigations for two main relevant reasons (especially for those who intend to work for a more efficient industry): first as through them a closer contract with the industry could be established which is extremely important for the formulation of a theoretical body in relation to the construction industry; second, it is a good opportunity to exercise our ability of formulating our own arguments as well as of developing our own process of analysis.

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