How one Texas Startup is Revolutionizing the Construction Industry
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Icon: A new way of construction (source: https://www.iconbuild.com/updates/3strands-brings-more-3d-printed-homes-by-icon-to-austin-market)
For decades, the process of constructing houses has been largely unchanged. Recently, there has been a new player in the field: Icon. Icon is a construction technology company which has developed a 15.5ft tall 3-D printer that is capable of building a 2,000 square-foot, single-floor home within a week (Freidman, 2021). Due to a recent spike in the demand for single-family homes, Icon has teamed up with construction company, Lennar Corp, to build 100 new homes near Austin, Texas. Companies such as Icon have created a blue ocean within the construction industry, with Icon having the competitive edge on competitors.
Blue oceans are market spaces which are not yet currently in existence. In these, a company does not have to compete as they do in an overcrowded market (a red ocean, turned red by the bloodbath of oversaturated competition). In blue oceans, companies can create new land to dominate, rather than divide up existing market share. Icon demonstrates that blue oceans are not always created through new technology innovation. In using pre-existing 3-D printing technology, Icon has found a way to link existing technology to what the market needed: more production (Kim, 2004, pp. 77-81).
In recent years, the number of skilled tradesmen has decreased, creating a labor deficit (Friedman, 2021). Additionally, there has been a huge uptick in demand for single-family homes due to factors caused by the pandemic: an increased shortage in labor; supply-chain backups; lower mortgage rates; and the desire for in-home office space. In fact, Freddie Mac estimates a 3.8 million shortage of single-family homes at the end of 2020 (Friedman, 2021). By exploiting these needs, Icon was able to construct the largest community of 3-D printed houses. According to the Wall Street Journal article by Nicole Friedman, “this effort will test the technology’s ability to churn out homes and generate buyer demand on a much larger scale” (2021). In growing the 3-D printed home industry, homeowners will have more flexibility in the customization and shape of their homes, as this new technology allows for curved walls (Friedman, 2021).
The largest advantage that Icon has over new entrants and competitors is economies of scale. Developing and creating 3-D printing technology suitable for construction use is expensive. Icon already has the advantage of building more homes than its competitors, thus paying off fixed costs of the required technological infrastructure at a much faster rate than other 3-D printing companies. To put this in perspective, Mighty Builders, a competing firm, has secured a mere 15-lot deal in California (Friedman, 2021). By leveraging their economies of scale and $266 million in funding (Friedman, 2021), Icon can invest in R&D to improve upon their Vulcan construction system in order to beat the competition.
Although rapidly advancing technology can create short-term competitive advantage, Icon must also use smart business strategy and know-how to stave off imitation. They can do this by utilizing a system of unique business activities performed in a unique way, thus creating an unimmitatable fit. Soon, Icon will be able to pave the way for a greener and more cost-effective construction industry.
Sources:
Friedman, N. (2021, October 26). WSJ News Exclusive | 3-D printed houses are sprouting near Austin as demand for homes grows. The Wall Street Journal. Retrieved October 26, 2021, from https://www.wsj.com/articles/3-d-printed-houses-are-sprouting-near-austin-as-demand-for-homes-grows-11635240601.