Managing radical innovation in the Swedish infrastructure sector : A study of industrialized construction

Abstract: Industrialized construction has been a key enabler for managing increasing customer demands and addressing low productivity problems in the house building industry. It has also been proposed as a solution for low productivity in the infrastructure construction sector, but diffusion has been slow. The focus in industrialized construction is on maximizing the efficiency of the whole production system by implementing both novel products and processes in a traditionally project-based industry. Hence, industrialized construction should be considered and managed as a radical innovation involving multiple stakeholders throughout the supply-chain. Thus, the purpose of the research underlying this thesis was to increase understanding of the management of radical innovation in the infrastructure sector, as exemplified by industrialized construction.To increase knowledge of the whole innovation process, an exploratory approach including both case studies and surveys was applied. A contractor perspective was adopted in an initial study, focusing on the development phase of industrialized construction. It revealed that industrialized construction is a comprehensive and multi-faceted activity that must be managed strategically rather than at a project level. However, early studies also revealed major challenges in the diffusion of the concept. Consequently, the research underpinning this thesis has also addressed the diffusion phase, which occurs in the Swedish infrastructure sector mostly in construction projects managed by a public client (often the Swedish Transport Administration, STA). Five studies were conducted during the course of the research, which have contributed insights into different aspects of the challenging management of radical innovation in the mature Swedish infrastructure sector.The findings reveal that the radical innovation process involves a clear separation between the development and diffusion phases, but these are strongly intertwined. They also show that the major role of public clients (especially STA) in management of the diffusion of innovations developed by contractors exacerbates difficulties of diffusing industrialized construction in the infrastructure sector. Both the client and contractor need to acknowledge the nature of industrialized construction as a radical innovation with two separate phases. The contractor, who drives the development phase of a radical innovation, must apply an appropriate process that addresses needs of stakeholders (both internal and external) who may affect the diffusion phase, while the client must act as a problem owner and facilitate diffusion, due to the strength of the client’s position. The findings further reveal major shortcomings in the current diffusion phase and show that procedures in Swedish infrastructure projects must be modified to facilitate increased diffusion of radical innovations such as industrialized construction. The STA has recognized the need to increase rates of innovation, both by initiating an innovation program and by increasing the rate of design-build contracts, to resolve the issue of low productivity. Diffusion of industrialized construction has been slow. However, the insights regarding management of the radical innovation process presented in this thesis could be beneficial for industry representatives seeking to raise rates of the implementation of such innovation. The thesis addresses various aspects of the radical innovation process and emphasizes the difficulty of diffusing innovations in the current industry climate. The more comprehensive understanding of the system thereby provided may increase the ability of stakeholders, especially the STA, to make appropriate long-term decisions to facilitate increases in productivity.