New business models in the wood construction towards 2030
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1 New business models in the wood construction towards 2030 Anne Toppinen 1, Miska Sauru 1, Sami Berghäll 1 & Minna Autio 2 Department of Forest Sciences 1 ; Department of of Economics and Management 2, University of Helsinki, Finland 2nd New Business Models Conference, Graz, Funded by Finnish Innovation agency Tekes/Käpy-project
2 Global view - positive signs regarding wooden multistory construction (WMC): 27/11/2016 2
3 The role of construction sector in sustainable development and bioeconomy In EU, construction accounts for about 50% of extracted materials and energy consumption The total energy consumption in construction could be decreased about 40%, total greenhouse gas (GHG) emissions 35%, and the use of extracted materials 50% (Herczeg et al., 2014) Increase in the use of renewable wood in industrial construction supports sustainable development and transition to bioeconomy through substitution and carbon storage But: business model related research in the bioeconomy context lacking very much (Hansen 2016) 27/11/2016 3
4 WMC in the Nordic countries research findings A rapid growth in the market shares of WMC construction in Nordic countries: Finland: the market share of WMC of all new MC apartment starts from 1% (2010) to 6% (2015) (statistics by Puuinfo Oy / WoodInfo Ltd); Sweden, current share >10 %; local targets to reach 50% Drivers for the growth: bio-economy, investments, regulation (Hurmekoski et al. 2015), development of more advanced business models (Brege et al. 2014; Brege and Lessing 2015). Bosman and Rotmans (2016): bio-built environment based on wooden buildings and construction materials is among the key activities to promote implementation of Finnish bioeconomy strategy! Stern (2014) 27/11/2016 4
5 Infrastructure management part of business model: by Osterwalder et al. (2005), Mokhlesian and Holmen (2012) with emphasis on SDL by Vargo and Lusch (2004) Business block model Description Value Configuration Describes the arrangement of activities and resources. Core Competency/ Capability Partner Network Management Outlines the competencies necessary to execute the company s business model Portrays the network of cooperative agreements with other companies necessary to efficiently offer and commercialize value 27/11/2016 5
6 Literature review and indentification of research objectives Design of the 1st interview round and assembly of the panel on experts Our approach - three-stage expert Delphi process during in FIN and SWE: 18 interviews 17 structuired online questionnaires filled 16 interviews 1st Delphi round interviews Feedback to the first round panelists Formulation of the 2nd round questionnaire based on the 1st round interviews 2nd Delphi round questionnaire Analysis of the 2nd round results, feedback and formulation of a 3rd round interviews 3rd Delphi round interviews Analysis of the results and final feedback to the panelists 27/11/2016 6
7 Id Statement RESULTS: Aspects with value configuration high confirmity among experts By 2030, we will sell and buy more wood construction products and services through open online platforms, such as online shops or professional digital networks. By 2030, prefabrication will be the main operating logic, with less on site building By 2030, we will have more standards, open access platforms and public data banks for the wood construction businesses to use. In 2030, the best business model is to control a bigger part of value chain than today. Likelihood (%) Low 0 0 Medium High Low 0 6 Medium 0 6 High Low 0 0 Medium High Low 6 12 Medium High Desirabili ty (%) 27/11/2016 7
8 RESULTS: Capability view role of SMEs in the network? Id Statement Likelihood (%) Desirability (%) By 2030, there will be many experienced professionals both buying wooden building solutions as well as selling them. Small companies will lack the money and knowhow to develop more competitive and advanced wooden building solutions. By 2030, organizational cultures will be more prone to co-operation and strategic alliances between different organizations. By 2030, a building process from start to finish will be significantly shorter than today. Low 12 6 Medium 6 18 High Low Medium High 24 6 Low 0 0 Medium High Low 0 0 Medium 6 18 High /11/2016 8
9 Interpretation? Some support to the Service-Dominant-Logic (statement 33, even though there the reactions are more divided). Sustainability? - the foreseen rise of prefabrication could benefit sustainability orientation of WMC via material efficiency; also lightness of material, carbon storage Resident view? - Those increasing needs of customers especially these mould problems, people are more and more aware these issues, and there is need for healthier buildings Executive from building industry, 1 year of experience, Fin; As a matter of fact, the most influential things are healthiness of wood, what wood makes to indoor air if we can prove those effects, the positive influence of wood Managing director from wood industry association, 23 years professional experience, Fin 27/11/2016 9
10 RESULTS - partner network? Networked structures, co-operation (also with competitors), the necessity of standards, issues with the complexity and time consuming nature of construction projects, large operators taking control of a bigger part of the value chain, hybrid building solutions, online marketplaces, and even development towards new business ecosystems within the WMC were mentioned But limited coherence between the respondents: It could be [that in the future] we will see competitors as partners. One manufactures the walls and the other manufactures the flooring. Executive from wood industry, 22 years of experience, Finland; It is more and more important to find strategic alliances Executive from wood industry, 11 years of experience, Sweden; We will not do this validation [of wood based building solutions], that needs to be undertaken b the wood industry itself. Executive at a builder company, 26 years of experience, Finland. 27/11/
11 Conclusions addressing indoor air quality with the use of renewal materials a primary channel for the diffusion of WMC over intrinsic motivation towards sustainable bioeconomy: Healthy buildings, healthy people! transforming business models towards sustainability calls for strengthening positive image of WMC especially among largely neglected stakeholder group, residents. orchestration of partner networks and capabilities, including residents as end-users as a part of actor-to-actor network alliance model to share risks seen attractive 27/11/
12 Key literature: Bosman, R. & Rotmans, J Transition Governance towards a Bioeconomy: A Comparison of Finland and the Netherlands. Sustainability 8: Brege, S., Stehn, L., and Nord, T Business models in industrialized building of multi-storey houses. Construction Management and Economics 32: Lessing, J. & Brege, S Business models for product-oriented house-building companies experience from two Swedish case studies. Construction Innovation 15(4): Herczeg, M., McKinnon, D., Milios, L., Bakas, I., Klaassens, E., Svatikova, K. and Widerberg, O Resource efficiency in the building sector. Final report for DG Environment. ECORYS and Copenhagen Resource Institute. Hurmekoski, E., Jonsson, R. and Nord, T Context, drivers, and future potential for wood-frame multistory construction in Europe. Technological Forecasting and Social Change 99: Osterwalder, A., Pigner, Y. & Tucci, C Clarifying Business Models: Origins, Present, and Future of the Concept. Communications of the Association for Information Systems. Vol 16:1. Mokhlesian, S. & Holmen, M Business model changes and green construction processes. Construction Management and Economics 30: /11/
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