Category: manufacturing

How to fix building construction bureaucracy

Sometimes I forget to step outside of our little bubble here and see how people use or in fact don’t use the Internet. When I get that chance I often wonder if anything I’m doing in my career actually matters to anyone.

Usually, however, I’m reminded that even though the Internet isn’t weaved into every aspect of everything, it has great potential in places you might not consider.

For example, I’ve been remodelling my house to make room for a new little roommate due to be delivered in September. I’m trying to do most of the work myself or with help from friends and neighbors. I’m trying to save money, but I also really enjoy it. It’s a fantastic way to reconnect with the things that matter…food, shelter, love and life.

Well, I made the mistake of working without permits fully aware that I probably should have them. It’s my natural inclination to run around bureaucracy whenever possible.


As luck would have it, just as the pile of demolition debris on the sidewalk outside my house was at its worst, a building inspector happened to drive by on his way to another job. He asked to see my permit to which I replied, “The boss isn’t here. Can you come back later?”

The building inspector just laughed. After pleading a bit and failing, I started making calls to get drawings and to sort out the permits.

It was at this moment I realized how much building planning and construction could benefit from the advances made in the Internet market the last few years. The part of construction that people hate most is the one that is perhaps the most important. And it is this part that the Internet is incredibly well-suited to improve.

Admittedly, the permit process was not actually that painful and relatively cheap, too. I have spent in total maybe 1 day dealing with permits and drawings, so far, with a bit more to come, I’m sure.

But the desired effect of permitting jobs is sorely underserved by its process.

At the end of the day what you want is the highest building quality possible. You want builders using proven methods with at least semi-predictable outcomes. You want to make sure nobody gets hurt. And you want incentives for people to share expertise and information.

Rather than be a gatekeeper, the city needs to be an enabler.

One of the brochures I read called “How to Obtain a Permit” includes a whitelist of project types. I’m apparently allowed to put down carpets and hang things on my walls without a permit. Glad to know that.

Strangely, after explaining all the ways the city asserts itself into the process, on the very last page of the brochure it then says, “Remember, we are here to assist you. If you have any questions about your project, please give us a call!” I didn’t meet one person in the 6 queues I waded through the first morning who wanted to help me. They were mostly bored out of their brains.

Instead, the city should be putting that brainpower to work finding ways to lubricate conversation and collaboration around solving building problems. If the building community was in fact a community powered by thoughtful city-employed engineers, then I would be much more interested in working with them. I might even become dependent on them.

For example, if they helped me organize, store, print and even share my plans, then I’d be more than happy to let them keep my most current drawings, the actual plans I’m using to build with. If they could connect me to licensed contractors and certified service providers, I’d gladly give them my budget.

As it stands, my incentive is to avoid them and hide information whenever possible.

Imagine if I was able to submit a simple SketchUp plan to a construction service marketplace. I could then sit back and watch architects and interior designers bid for the planning work. My friends in the network could recommend contractors. Tools and parts suppliers could offer me discounts knowing exactly what I needed for the job. I could rate everything that happens and contribute to the reputation of any node in the ecosystem.

Imagine how much more value would be created in the home buying market if a potential buyer could see all this data on a house that was for sale. I might be able to sell my home for a higher price if my remodel was done using highly reputable providers. There would be a financial incentive for me to document everything and to get the right certifications on the work.

Imagine lenders knowing that I’m an excellent remodeller based on my reputation and sales track record. I might be able to negotiate better terms for a loan or even solicit competing bids for my mortgage on the next house I want to invest in.

At every step in the process, there is a role for the city government to add value and thus become more relevant. Then the more I contribute, the more it knows about what’s happening. The more it knows, the more effective it can be in driving better standards and improving safety and legislating where necessary.

My mind spins at the possibilities in such a world. Of course, when you have a hammer everything looks like a nail. But it seems to me that the building permit and inspection business is broken in exactly the places that the Internet is more than capable of fixing.

Leadership lessons from China

There are some interesting leadership and management lessons from some of the Chinese manufacturing systems that can be applied at all levels of an organization to make it more innovation-friendly. The contrast between leading and managing may be subtle to some, but it’s hugely important in making a company capable of competing in the fast-paced Internet economy.

Not knowing the path to a particular outcome can be excruciating to someone who knows what they want. Managers find it much easier to make lists of things that add up to the sum of the final goal, and they like to put checkmarks next to all the items in the list as they are completed. This system never scales no matter how talented the manager is because that system is totally dependent on the manager.


Photo: Hocchuan

John Seely Brown and John Hagel examine how a network of motorcycle parts assemblers in China break traditional centralized management tactics to optimize for innovation in a paper called “Innovation blowback: Disruptive management practices from Asia.” In the Chinese city Chongquing a supplier-driven network of parts developers work together under the loose guidance of their customers rather than under the orders of assemply-line management:

“In contrast to more traditional, top-down approaches, the assemblers succeed not by preparing detailed design drawings of components and subsystems for their suppliers but by defining only a product’s key modules in rough design blueprints and specifying broad performance parameters, such as weight and size. The suppliers take collective responsibility for the detailed design of components and subsystems. Since they are free to iomprovise within broad limits, they have rapidly cut their costs and improved the quality of their products.”

As a manager, when you define what is to be done and how it is to be done, then you are setting the exact expectation of what is to be delivered. There is no room for exceeding expectations, only for failing to meet expectations. Your best-case scenario is that you will get what you asked for.

As a leader, on the other hand, when you set parameters for success, you let the contributors in the system share ownership of the outcome. This is participatory production which includes an important incentive for each individual contributor: pride. The outcome becomes a somewhat personal reflection of each contributor’s capabilities as a person.

There’s another interesting paper on the concept of peer production called Coases’ Penguin written by Yochai Benkler in 2002 that talks about the incentives that drive users of online media to contribute content to a web site such as Slashdot or Wikipedia. One of the interesting conclusions is that financial reward can sometimes have a negative effect on participation and collaboration:

“An act of love drastically changes meaning when one person offers the other money at its end, and a dinner party guest who will take out a checkbook at the end of dinner instead of bringing flowers or a bottle of wine at the beginning will likely never be invited again.”

John Battelle similarly points out that Google’s latest attempt to monetize peer production in online media may actually have the effect of degrading the overall quality of their ad network. As they provide ways for user-generated content (UGC) sites to kick earnings from AdSense back to content creators on those sites, they are inviting spam and click fraud at pennies in earnings per user at the expense of quality contributions.

“I’ve never seen UGC sites as the least bit driven by money. They are driven by pride, the desire to be first, reputation, whuffie. But dollars? That often screws it all up.”

Of course, pride won’t replace the need for salaries, but it can certainly make up for the margin pressure these particpatory production systems are putting on themselves. When the production process reduces waste, that savings will get passed on to the buyer before the profits get passed back to the creators. That’s how this Chinese network has stolen marketshare from the big motorcycle manufacturers like Honda and Yamaha.

“The average export price of Chinese models has dropped from $700 in the late 1990’s to under $200 in 2002. The impact on rivals has been brutal: Honda’s share of Vietnam’s motorcycle market, for instance, dropped from nearly 90 percent in 1997 to 30 percent in 2002.”

Of course, everyone in the Internet business would rather be in a position of growth than one of decline regardless of the profit margins. The way to put your company on the growth track and to stay competitive through innovation is likely based on these types of leadership principles rather than micromanaging your staff through every step of an unpredictable journey.