The ravages of innovation
Providence, R.I. — Technology is a disruptor to how companies do business and how they evolve.
That was the message from Tim Costello, president, CEO and chairman of Builder Homesite and New Home Technologies. Costello discussed how advances in technology quickly changed the business landscape and often destroyed the business model of companies that did not quickly change with the times.
“Technology forecasting and planning is a fool’s pursuit,” Costello said while addressing a room of dealer-attendees at LBM Expo 2018. “You’re trying to connect dots but we know we are going to be wrong. What we have to be good at is adapting fast.”
Rather than keeping an eye out for a “single 30-foot wave” of technology change, Costello suggested that dealers pay attention to the numerous 3-foot waves that occur. “Very seldom is it one technology. It’s a collection of technologies coming together,” he said.
For instance, Costello pointed to Uber, which in seven years has amassed more than 50% of the market share while outsizing taxi and limo services. On the other hand, Costello discussed the former film giant Kodak who had a jump on the development of digital technology but didn’t use it to its advantage. Similarly, Blockbuster had a 90-day exclusive rental agreement on the biggest films but was eventually overrun by the advent of Netflix, rental kiosks and on-demand services.
According to Redfin, the residential real estate company that provides web-based database and brokerage services, 41% of millennials put an offer on a home last year without ever seeing it in person.
And with advancements in virtual and augmented reality, home shoppers can take a tour of a home without ever setting foot in it while getting a clear picture of what the structure will look like during day or night. Lighting, appliances, countertops, paint schemes, flooring and even the view out the window can all be visualized through today’s technology.
“These are tools people use every day,” Costello said. “Your little paint chips don’t do it anymore.”
The same can be said about customer service that is provided 24/7 online via the rise of chatbots. “We’re never closed because we have ‘Helen’ and Helen is over here,” Costello explained while noting LBM dealers don’t deliver that level of service.
In the case of home building, Costello focused on the rise of automation. Japanese firms Sekisui and Sumitomo Forestry have been making acquisitions in the United States while growing and promising fast turnarounds for new housing. In the case of Toyota’s home building division in Japan, the company can complete building a new home within 15 days while holding on to interest-gaining payment capital for 45 days.
Costello also warned that big companies are sometimes the weakest because they are addicted to how they currently do business. Conversely, a smaller company who is not at the top is willing to undergo change to get ahead.
“Technology is constantly changing and morphing under our feet,” Costello said. “What you learned in the last 30 years is helpful but won’t help you prepare for the next 25 years or two years.”
That was the message from Tim Costello, president, CEO and chairman of Builder Homesite and New Home Technologies. Costello discussed how advances in technology quickly changed the business landscape and often destroyed the business model of companies that did not quickly change with the times.
“Technology forecasting and planning is a fool’s pursuit,” Costello said while addressing a room of dealer-attendees at LBM Expo 2018. “You’re trying to connect dots but we know we are going to be wrong. What we have to be good at is adapting fast.”
Rather than keeping an eye out for a “single 30-foot wave” of technology change, Costello suggested that dealers pay attention to the numerous 3-foot waves that occur. “Very seldom is it one technology. It’s a collection of technologies coming together,” he said.
For instance, Costello pointed to Uber, which in seven years has amassed more than 50% of the market share while outsizing taxi and limo services. On the other hand, Costello discussed the former film giant Kodak who had a jump on the development of digital technology but didn’t use it to its advantage. Similarly, Blockbuster had a 90-day exclusive rental agreement on the biggest films but was eventually overrun by the advent of Netflix, rental kiosks and on-demand services.
According to Redfin, the residential real estate company that provides web-based database and brokerage services, 41% of millennials put an offer on a home last year without ever seeing it in person.
And with advancements in virtual and augmented reality, home shoppers can take a tour of a home without ever setting foot in it while getting a clear picture of what the structure will look like during day or night. Lighting, appliances, countertops, paint schemes, flooring and even the view out the window can all be visualized through today’s technology.
“These are tools people use every day,” Costello said. “Your little paint chips don’t do it anymore.”
The same can be said about customer service that is provided 24/7 online via the rise of chatbots. “We’re never closed because we have ‘Helen’ and Helen is over here,” Costello explained while noting LBM dealers don’t deliver that level of service.In the case of home building, Costello focused on the rise of automation. Japanese firms Sekisui and Sumitomo Forestry have been making acquisitions in the United States while growing and promising fast turnarounds for new housing. In the case of Toyota’s home building division in Japan, the company can complete building a new home within 15 days while holding on to interest-gaining payment capital for 45 days.
Costello also warned that big companies are sometimes the weakest because they are addicted to how they currently do business. Conversely, a smaller company who is not at the top is willing to undergo change to get ahead.
“Technology is constantly changing and morphing under our feet,” Costello said. “What you learned in the last 30 years is helpful but won’t help you prepare for the next 25 years or two years.”