July 22, 2018

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Sameer Daoud, DSI: Minimise distractions

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Some fear that the construction sector is heading towards a race to the bottom whereby competition is based primarily on price, sacrificing quality as a result. The definition of progress, innovation, and technology can, in essence, be summarised as doing more with less. However, this does not mean that being creative and having fantastic ideas offers any value in and of itself.

constructionInnovation requires discipline and focus so that it can be applied and lead to real results in the real world.
Whenever I hear buzzwords, I remind myself that much of what comes out of the mouths of sales and marketing people evades the perennial question: “What exactly is the value of what you are offering?” I believe this is not a question that any company should fear. Rather, it needs to be embraced. If a company does not have a valid answer, your business will not survive. This is the only trend and competitive advantage that never goes out of fashion!

In theory, having good business sense is simple; understand the demand in the market and gather the resources necessary to meet and satisfy this demand better than your competitors. However, when opening any business magazine, this simple reality often gets lost in the noise of business gurus espousing the virtues of innovation and creativity. Sure, it is appealing to try and gaze over the horizon and discover new opportunities. It is certainly more
interesting to talk about being an industry disrupter compared to competing in a traditional industry with
conventional technologies.

And who doesn’t want to be the company that swoops in and pulls the rug from underneath its competitors by
introducing a new technology or a game-changing business model? But as entertaining as such ideas may be to listen to, it is not necessarily good for business. In fact, this talk is often more distracting and destructive than it is productive! There is a constant risk of companies being diverted from their core competencies. Counteracting this pressure demands that you can keep your focus and discipline.

I want to address two main threats that companies need to keep front and centre so as not to lose their focus and discipline. These are temptation to pursue ‘new’ opportunities in the form of trends and technologies, and the allure of ‘diversification’ into the unknown waters of emerging markets. Many times, talking about innovation is about creating positive emotions that distract from questioning the real underlying value. As a contractor, we need to place ourselves in the shoes of our clients, and understand the motivations underlying their purchasing decisions.

Our services and products need to fill a need, solve problems, and serve a function. On top of that, these need to get delivered at a more competitive price point than our competitors. This reality is especially clear in our business of construction and MEP. For the clients of contractors, sales pitches that hit all the right buzzwords are not of any value. Our industry is not about selling feelings. It is about solving problems and creating value for your clients.
There are no short-cuts or slogans that can make up for second-tier work-manship or materials. We are focused
on getting the job done and getting it done right. But even for us, the idea of creating ‘new’ markets and ‘new’
demand is often distracting.

Where other industries have seen the entry of companies that have completely disrupted the competitive landscape,
the construction sector remains very traditional. The more established the industry, the more conventional it is likely to be. But even in construction, thinking big often gets in the way of thinking smart. It is easy to miss more lucrative opportunities staring at you right in the face because they seem boring!

The same flawed rationale for pursuing disruptive innovation is present in the allure of entering new markets. To
find greener pastures in the form of profits, one has to leap into the ‘blue yonder’ not yet reached by rivals, too
caught up fighting to the death for the crumbs left in the mature markets. Consequently, the idea that you need to take risks to get higher returns is taken for gospel to the extent that it crowds out better business opportunities
closer to home that are often overlooked or ignored.

Taking a chance on new markets and new technologies may lead to high rewards, but are as likely to leave you shipwrecked or adrift, floating aimlessly out at sea, if you are not very clear about what your weaknesses are. Just as the novelty of new technologies is exciting and appealing, so is breaking into new markets promising rapid growth. However, often it is misleading and a distraction from seeing clearly where you can best deliver value for clients. This is most times the biggest business opportunity that is missed.

A large part of the explanation for this is our temptation to go with the crowd, and believe whatever the current
hype and trends are, which skew our perception of reality. In the late 1990’s, you were not allowed to question the valuation of tech companies. Then it was the wisdom of the crowd that you could not question real estate
investments, or that the price of oil would never again go below a hundred dollars. What are the truths we agree
on today that we will consider to be mass delusions tomorrow?

The argument is that it should not matter, as long as you stay focused on understanding your clients’ needs, and
competing by delivering more value than your competitors. This is the only trend and competitive advantage that
never goes out of fashion. When it comes to both workmanship and materials, the market’s demand for quality is relentless. And this is getting even clearer in the current regional market. Cutting corners is not a viable long-term

In the end, lasting performance and competitiveness is about consistency achieved through focus and discipline.
The only lasting business relationship is the one that creates mutual economic value for both parties.


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