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October 28, 2004 PATH Asks: Do Preferences in Homebuilding Industry Impact Acceptance of Innovations? Roundtable Explores How Market Sectors Make Decisions to Adopt Innovations Washington, D.C. -- Professionals representing various sectors of the homebuilding industry concluded a two-day meeting today with a wide range of recommendations to PATH on how to overcome barriers to innovation by market sector. Participants represented the views of their respective professions, including builders, manufacturers, appraisers, trade associations, architects, and academic researchers.
The group discussed the reality or misperception of the following hypotheses:
The group concluded that the absence of a certification program to back an innovative product is a significant barrier to its introduction in the housing industry. Builders and architects alike depend on certification as protection from liability. Certification also facilitates the willingness of risk-takers to be the first to adopt a technology not yet in use in the marketplace. The plight of small manufacturers was another area of concern for the group. They suggested that these manufacturers could benefit from governmental assistance in negotiating the necessary steps to prepare a product for market, as well as strategic guidance in the market introduction of the product. These manufacturers often depend on engineering to the exclusion of the marketing ability to introduce a new product. If the product has not reached maturity when the market is ready to accept it, even strong innovations will fail. For this reason, barriers that keep immature products from the marketplace should be protected. It was also noted that c onsistent standards within a fledgling industry are critical to its success. Participants agreed that the incremental innovation fares far better in achieving a high adoption rate than the break-through innovation that requires the industry to retool the process. Large manufacturers with R&D resources to innovate and the marketing sophistication to successfully introduce a new product generally will not risk a larger innovation. Innovations that require front-end investment in training, are not adopted by code, increase buyers' first cost and are "invisible" to the buyer are not likely to achieve significant market penetration. The group recommended that PATH make consumer education on life-cycle costing and the availability of proven technologies a priority. Information should be designed for consumers, to explain easily and concisely the benefits of various technologies, and should be more widely disseminated. Home performance, the group concurred, may be the final frontier for the high-end homebuyer looking for a distinguishing characteristic.
Participants noted the problems associated with reliance on an untrained labor force, consumer indifference to energy costs in the absence of an energy crisis, and the incapacity of appraisal rates to reflect the worth of specific innovations without sufficient market penetration to demonstrate value. The dialogue also brought to light the similarities in the challenges suppliers and manufacturers face in the introduction of new products, and showed that suppliers can effectively act as gatekeepers to innovation. The roundtable outcomes will contribute to the ongoing development of PATH's process for reviewing and selecting innovations to support. The recommendations will also inform the development of action plans to address barriers specific to key market sectors. Detailed results from the roundtable will be posted on PATH's Web site in December. PATH will convene a final barrier panel in November and is implementing a variety of initiatives to combat the bigger institutional barriers to change. Content updated on 3/8/2005 |
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