The Construction Industry’s Hidden Problem

In this blog, I’m going to talk to you all about unhealthy competition and why it’s so destructive for our industry. So, would you like to know what happens when we have unhealthy or toxic competition, the negative impact it has, and what we should do to fix this right now? If you do, stay with us on this blog because that’s what we’re going to discuss. 

A Little Analogy to Understand the Issue

Let’s anchor back with a bit of an analogy in our minds. When we think about competition, most people think capitalism, competition, and advancement that will help the industry. But let me explain it like this: imagine a competition in a college designed to produce the best overall project or solution. What if those entities started hiding information from each other, hurting other parties, bad-mouthing, and damaging reputations? What if they siloed information and didn’t use the collective genius of the group or did whatever the host wanted instead of innovating, and then never shared the results so others could utilize and scale the solution?

Imagine such a scenario. You’ve seen it before in sports where a healthy competition turns toxic—defacing property, hurting mascots, or even beating people up—leading to the cancellation of the game. That’s what the construction industry is like. We’re in a situation where we are hurting each other through negative competition, not sharing, and not leveraging the wisdom of the team. When someone finds something out, they don’t let it scale to the rest of the industry, causing stagnation and harm.

Major Causes of Unhealthy Competition in Construction

Here are the reasons people compete like they do in the construction industry:

1. Market Share: Companies believe it’s a zero-sum game with limited resources.
2. Profit Maximization: Hiding and siloing information is seen as a way to maximize profit, even at the expense of others.
3. Competitive Advantage: Innovation is hoarded to maintain a perceived advantage.
4. Customer Loyalty: Companies aim for monopolies through brand recognition, often withholding products, knowledge, and innovation.
5. Resource Scarcity: Uneven resource distribution due to siloing.
6. Strategic Positioning: Companies position themselves strategically under economic pressure.
7. Investor Expectations: The focus is on rapid growth and consumption to satisfy investor demands, leading to a system that protects itself.

What Healthy Competition Looks Like

Healthy competition is beneficial when it encourages improvement in customer service, delivery, approach, and relationship-building. It’s detrimental when innovation is withheld, harming workers, foremen, tradespeople, and the industry as a whole. We should emulate models like Toyota, where sharing and openness are encouraged to foster industry-wide improvement.

The Key to Eliminating Unhealthy & Toxic Competition

Unhealthy, toxic competition might seem beneficial to individual companies, but it hurts the industry. Here’s the secret: we don’t win as construction companies unless we win together. We need to start sharing, networking, and helping each other. Here’s how:

1. Invest Together: Form joint ventures and partnerships to leverage shared resources and wisdom.
2. Learn Together: Make information free and accessible. Share systems, tools, templates, and knowledge to raise the industry standard.
3. Share & Train Together: Elevate each other by sharing best practices and training collaboratively.

Negative Effects of Toxic Competition in Construction

1. Quality Degradation: Shortcuts are taken, leading to diminished quality.
2. Unethical Practices: This includes false advertising, price fixing, intellectual property theft, and unfair labor practices.
3. Short-term Cost Cutting: Training, systems, and processes suffer, harming overall quality and productivity.
4. Employee Exploitation: Workers face low wages, poor conditions, and excessive demands.
5. Customer Mistrust: Layers of bureaucracy increase, wasting time and reducing productivity.
6. Innovation Stagnation: Price wars reduce investment in R&D, hindering overall progress.
7. Economic Instability: Toxic competition leads to lower profitability, layoffs, and bankruptcies.
8. Environmental Damage and Legal Backlash: Harmful practices lead to tighter regulations and less productivity.

How We Can Invest, Learn, Share, and Train Together to Eliminate Toxic Competition

To foster a healthier industry, we should:

1. Invest Together: Form joint ventures and partnerships, focusing on industry-positive trends and technologies.
2. Learn Together: Make information free and accessible, sharing solutions and innovations openly.
3. Share Together: Spread best practices, tools, and templates to raise the industry standard.
4. Train Together: Collaboratively train and elevate each other, ensuring fair competition based on service and relationships.

The construction industry’s hidden problem is that we’re all siloed and not sharing, keeping the industry in the dark ages. We need to fix this together if we are ever to match the productivity gains seen in manufacturing.