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 2004 News

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.

Photo: Industry representatives discuss barriers to innovation.At question was the role of attitudes to change in general and personal preferences in industry responses to opportunities to adopt innovative products and technologies. The second of three roundtables convened to examine barrier removal, the group heard presentations on three emerging innovative technologies and offered insights into the most critical barriers that these and other innovations would face in winning acceptance by the professional group they represented.

The group discussed the reality or misperception of the following hypotheses:

  • Both attitudes to change in general and personal preferences are expressed at every node in the operation of the construction industry. Various housing delivery process participants may exercise preferences that can either enhance or delay the acceptance of an innovation, as a function of these process phases: land development, design, pre-construction, construction, and post-construction.
  • When considering the preferences of these participants as either enhancing or delaying the acceptance of an innovation, it is important to realize that these preferences may derive from various sources, including cultural values, attitudes to change in general, perceived or real economic advantage, influence of peers and others, or any combination of these.
  • In attempting to influence or modify the preferences of any respective participant, it is important to understand both how the preferences manifest themselves, and what their sources are.

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.

Photo: Homebuilding industry discusses barriers to innovation.The discussion highlighted the usefulness of segmentation by channel in the selection of technologies for acceleration; while some innovations might be more easily adopted by a custom builder who produces ten homes per year, others may be better suited for the production builder.

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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