Why a leadership reset in SA construction is necessary for the 4th industrial revolution

Théo Gaultier, senior consultant at Odgers Berndtson Sub-Saharan Africa

With stiff price competition in the industry, embracing digitisation could have substantial economic impact. The South African government cut infrastructure spending by 12% this year and construction companies are struggling to stay in business; for example, Esor Construction, Liviero Group and Basil Read Holdings have all gone into business rescue this year.

Benefits of a digitised construction industry

The Boston Consulting Group estimates that within 10 years, full-scale digitisation could help the global industry save an estimated $1.7tn annually. The benefits of a digitised construction industry are obviously significant; however, it will take a different approach to leadership in the industry to ring in the necessary move into the digital era. Globally, the construction industry is estimated to employ more than 100 million people, while it is South Africa’s most labour-intensive sector in terms of labour/capital ratios. It is also a highly-unionised sector and thus likely to be met with high resistance to change in order to protect jobs.

CEOs need to better understand the macro-economic context of the industry. Most often they have worked in an executive role for decades and have not necessarily been directly involved in the latest technological evolution, resulting in an organisational disconnect. A PricewaterhouseCoopers survey on disruption revealed that 80% of CEOs surveyed think the production technologies their companies use will change in the next five years, and 75% cite investing in or acquiring new technologies as the most important strategy for managing disruptions faced by their companies in general.

Global economic turmoil and new digital technologies are overturning industries around the globe, how can our leaders cope?

Key attributes of a digitisation-ready leader in the construction industry will include:

• A focus on talent development – automation will move the industry towards more knowledge intensive jobs rather than physical labour. New jobs will require creative intelligence and the ability to leverage artificial intelligence. Leaders need to look for ways to upskill their existing workforce for jobs such as drone operators, robot resource managers and augmented reality trainers, to name a few.
• Agility – this is important especially for established organisations who will need to quickly respond to change or risk losing forward-thinking employees to new industry players with fresh thinking. As it is, the industry is struggling to attract younger workers who are looking for industries that have a future. 
• Prepared for disruption – closely linked to agility is the ability to embrace disruption. Recognise when disruption is happening and put in place a strategy for multiple futures. The right combination for future disruption is likely to be a combination of longstanding and new offerings. Make small changes and acknowledge that the incremental changes will have a great impact on your organisation. Respond to the changes by seeing the bigger picture and adjusting your business accordingly.
• A collaborative approach – the fourth industrial revolution is new territory for the world, and it is key that construction leaders collaborate with their employees, academia and other industry players for mutual learning and to redefine the industry.

Ed McCord, general manager of heavy machinery manufacturer Caterpillar, said that “in this world of rapid, powerful change, the world belongs to those who can redefine it and today’s pioneers are tomorrow’s winners”. How effectively South African construction leaders can adapt will determine the industry’s future.