Wednesday, March 6, 2019

Which Comes First - Innovation or Awareness

Henry Ford famously said, “If I had asked people what they wanted, they would have said faster horses.” This quote has been passed along and shared for over 100 years, because there’s some real truth to it.

Innovation in any industrial endeavor can bring about both positive and negative effects for an industry. In the Henry Ford example above he had to have said it after the introduction of the assembly line. He couldn’t have said it about the automobile itself because he wasn’t the innovative brain behind the first one.

Until Ford’s innovative idea of building automobiles on a continuous assembly line all of them were built in small garages one at a time. People mostly bought those cars from the builder himself or from a very small handful of garages and stables that offered the builder some space to sell them.

Taking a hard look back at Henry Ford you have to wonder why he thought an assembly line would be a better and faster way to build cars. If he built it without having first built a market for his cars the result would probably have been bankruptcy and ridicule.

But Henry was already building cars the way others were, one at a time in garages. His first plan wasn’t to improve the way cars were built, it was simply to sell more cars. So how could he do that? Build more and bigger garages, hire a lot more workers and put supervisors on the road to keep an eye on quality and quantity?

I’ve never read this anywhere but I would wager that Henry said to himself “If I make people aware of my cars and it’s successful, how am I going to build enough to satisfy the demand?”

Awareness of the Ford Automobile then became his first priority, establishing a network of dealers came next and then the need for his ‘assembly line’ was next.

Can you imagine Henry walking into a bank or sitting in front of investors showing them his plans to build hundreds of cars a day when others could only build a fraction of that?

In fact, Henry Ford did not invent the first automobile assembly line, Ransom E. Olds did. The difference between these two auto pioneers is Ford had thought the entire process through from promoting his brand through opening dealerships to meeting the demand for his cars while Olds was more focused on just producing cars faster.

Ford made people aware of his brand of cars before he announced his innovative assembly line. He began establishing a dealer network before his innovative assembly line was in production.

Henry Ford knew without making people aware that he was going to help them own a reliable car at a fair price that his assembly would be just another funded innovation that was doomed for failure.

Fast forward to today’s prefab and modular housing. Innovation is the buzzword at every seminar, conference and investment group meeting. Innovative new housing, innovative new procedures and innovation in automation is being shouted from the rooftops. Investment fund managers, billionaires fresh from their Silicon Valley startups and even banks are lining up to throw money at just about anyone that has a unique innovative idea.

What is missing is what Henry Ford knew over 100 hundred years ago. Awareness and Marketing come before innovation can be profitable. Throwing money at Tesla a few years back has brought mixed results as the company simply doesn’t have a good track record when it comes to its cars.

Elon Musk knew a long lasting, inexpensive battery would someday power the future of the auto industry. He counted on being able to vertically market and produce battery powered Tesla cars and because he preached innovation over awareness his car company has never reached his lofty goals of a million Teslas a year.

Meanwhile other automakers have been making their customers aware that they are about to release the next wave of electric cars and are ramping up production to meet the demand.

There are some really great success stories in housing lately including Katerra and Entekra but these are not really true innovative prefab companies. They improved on a process by introducing automation which is not innovation. Where they both have shown brilliance is in their marketing and awareness programs.

Their owners speak at every conference and seminar with great confidence in their product because they built awareness and continue to do it. Will they ever be innovative? YES! They can be innovative now that they’ve made awareness their driving force.

So what is holding back the modular housing industry from taking over new home construction in the US?

It simply boils down to awareness. Ask 10 people what a modular home is and you will get 10 different answers.

What we will be seeing in the near future are a lot of new modular factories turning out assembly line modules designed for mass housing. Plans are already in place to open modular factories to build hotels, apartment buildings, nursing homes and schools where 100-200 identical modular units will be built and shipped to jobsites.

What is missing from this picture are new modular factories building custom homes. There has been little awareness of this type of modular construction and I know of no new custom modular home factories coming on line anytime soon.

Awareness comes before innovation.

1 comment:

Josh Margulies said...

“If i could produce a more affordable vehicle.”