Commercialization for innovative products in the residential construction industry

This work presents the development of a new framework for the commercialization of innovative products in the residential construction industry. It is the aim of this work to identify commercialization decisions, actions, risks, barriers and accelerators specific to the residential construction industry market that will increase the acceptance of product innovations for those developing them. Commercialization is broadly defined as the process of developing a business enterprise from an idea, through feasibility and implementation, to its acceptance into a market (USDOE 1999, Goldsmith 2003). Commercialization frameworks describe the concurrent decisions and actions along the innovation development process, optimizing all of the technical and business decisions required for a successful introduction to the marketplace. Successful commercialization frameworks serve as a form of development plan, promoting solutions to questions and problems that arise along the development path. This research derives such a framework for the commercialization of innovative products and makes it specific to residential construction through the following tasks: 1. Understanding standard terminology: defining innovation and commercialization as they relate to this work. 2. Creating a lens for the unique nature of commercialization in this industry: deriving a commercialization framework (matrix) from the research literature in business, construction, and concurrent engineering, capable of accepting later alterations. 3. Understanding the manufacturer’s role and risks: conducting case study interviews for fifteen innovative residential construction products that specify important tasks, risks and benefits for commercialization. 4. Understanding the role, risks and benefits of builders, as users of innovation: comparing case studies and workshop surveys of many residential construction industry players that focus on the builder to establish parameters for the innovation commercialization matrix. 5. Linking both manufacturer and builder: comparing manufacturer commercialization bestpractices with builder adoption patterns for innovative products over time. In specifying a commercialization framework to residential construction, this work finds the following: 1. Innovation is not invention. 2. Developer/builders are a single stakeholder along the supply chain in a commercialization venture. 3. Innovation commercialization is the process of developing a product from concept, through feasibility and implementation, to its acceptance into a given market. 4. Commercialization is the coordinated technical and business decision processes (and resulting actions) required for successful transformation of a new product or service from concept to market adoption. 5. A framework for innovative products in the residential construction industry exists herein as a matrix of eight phases in time and eights technical and business functional areas. The framework’s architecture accepts the various data inputs and establishes portions of commercialization important to construction industry products through noted areas, actions, and sequences and could indicate the importance of localized processes that require additional attention when taking a product to market. 6. Steps in the early stages of a commercialization project are most important and no new phases or functional areas for the framework are required. The framework version established herein contains steps that can be removed, not steps that need to still be added. 7. The most commonly used sequences of commercialization steps validate a concurrent-engineering approach. 8. The first phase of this work’s framework is an essential starting point for any commercialization project. 9. Commercialization projects require early integration of marketing within a product’s design. 10. All phases of the commercialization process are essential, while phases 1-4 of our commercialization framework are more critical to success than phases 5-8. 11. Early missteps largely increase the possibility of later risks. 12. The functional areas Process Planning (PP), Human Resources (HR) and Accounting and Information Systems (AIS) are relatively routine for commercializers of residential construction products. 13. The residential construction industry delays the heavy investments in process development and capacity expansion to a late stage of a commercialization project and proceeds cautiously in these functions. 14. Manufacturer case studies suggest an intriguing hypothesis that residential construction products present such significant challenges in other functional areas that financial management (FM) issues are somewhat routine. FM therefore, by comparison to other residential construction-specific commercialization actions, might be perceived as less of a barrier to success. 15. Champions are important to the development process. 16. Based on these case studies, this work posits the hypothesis that a key function of corporate champions is to coordinate successfully all corporate and departmental entities involved in a commercialization project and the role of the product champion as commercialization coordinator should be the subject of future research. 17. Developer/ builders are the supply chain members most influential in determining commercialization success. 18. Addressing the developer/builder risk along the entire supply chain is one key determinant to a successful commercialization project. 19. This research proposes the extension of concurrent engineering (CE) to concurrent commercialization (CC) as a strategy for meeting the challenge of developer/builder adoption. iv 20. Successful concurrent commercialization requires risk sharing among all members of a product’s supply chain, which requires information sharing and knowledge transfer among supply-chain members early in a commercialization project. 21. CC is a significant predictor of commercial success. 22. The closer one comes to achieving CC, the better one’s chances are of commercial success. 23. Products with lower CC percentage did not achieve commercial success, suggesting directions for future research. 24. This research also finds significance in specific thresholds within the adoption process in coordination with CC: a. The initial threshold of innovator seems to play an important gateway role within adoption. b. Only certain products pass beyond this threshold easily and all have CC in their development. c. The early adopter threshold seems difficult for a product to successfully cross at both the early and later part of the threshold. d. Once the threshold of early majority is obtained by a product, commercial success seems certain. The work contained herein is presented in a manuscript format, meaning that each chapter is published or in the process of being published. The following refereed conferences contain chapters of this work: The European Conference on Product and Process Modeling and The Royal Institute of Chartered Surveyors COBRA Conference. The following refereed journals contain, or are considering, chapters of this work: European Journal of Innovation Management, Construction Innovation and The Journal of Product Innovation Management. This research is supported by the NSF Grant Facilitating Supply Chain Support for the Commercialization of Innovative Products in the Residential Construction Market and Modeling Diffusion of Innovation in the Residential Construction Industry. All opinions are those of the authors and not NSF or HUD.