Adam Malofsky, Calvin Trumbo & Colby Swanson of Elemence

Climate change or not, today’s disaster costs pale in comparison to decades past. Before the Internet, the phone, or even electricity, it was rare to see a nation or a state shut down from a natural disaster. Hurricane Katrina and Superstorm Sandy changed that. While far stronger, and more deadly storms have hit in the past, the economic and societal damage of Sandy makes it the second-costliest storm in US history. In fact, Sandy was not even classified as a hurricane yet by hitting an area utterly unprepared for almost any storm, demonstrates how much work we have to do.

Why the massive damage increase? In simple terms – there are more of us who are choosing to live in increasingly risky areas. Technological advancements, building codes, insurance, and even the infrequency of events all contribute to this illusion of safety. We have a society-wide false sense of security. It’s human nature.

Our sense of false security, coupled with the complexity of replacing a crumbling national infrastructure (often foiled by an ineffective government), proves the necessity for Adaptive Innovation. Through the Adaptive Innovation process we can create new approaches and business models that support a more resilient framework for the world we live in.

History proves this point over and over again. In the 1930’s the New Deal programs were enacted in response to the Great Depression and are responsible for some of our nation’s most valuable infrastructure projects. The World War II era witnessed the Army Corp of Engineers build ports and create airports in just days. More recently, stodgy corporations and even entire industries have been turned on their heads with fresh perspectives such as Uber and Lyft’s new approach to transportation. Airbnb blindsided the hotel industry by reinventing the way people search for accommodations. Privately held companies, SpaceX and Blue Origin, are leading the way by reigniting space exploration. These rapid transformations are proof that even the most entrenched models of business and government can and will be challenged … when the time is right. Timing is a common variable connecting all these examples, and the catalyst was when “pain” reached an inflection point, Adaptive Innovation takes over. Whoever thought it would become normal that business travelers would stay at someone’s home versus a hotel or stop renting cars and summon rides from a local college kid in their own car?

Two industries that are due for resiliency focused Adaptive Innovation are the construction and insurance industries. Construction’s mounting labor shortage strains production, price and quality at a time when we need more and stronger buildings and civil infrastructure. At the same time, the intersection of nature and man’s advancement blows up the property and insurance industry’s financial exposure. Storms are not increasing in frequency or intensity – witness the 1930’s as our most dangerous time in the United States – but when we are hit the damage to a seemingly ever more fragile and complex infrastructure magnifies incredibly.

Resilient construction technologies already exist and are indeed advancing but adoption is slow. Many homebuilders are constructing homes nearly the same way as over 75 years ago (site-built, stick frame construction) with modest advances on speed. Is it acceptable to take half a year to a year to build a house in today’s age when we can build a car in a few hours or a passenger jet in a few months? Keep an eye out for off-site construction (aka. modular and prefabricated) to gain in popularity. Off-site construction versus typical on-site construction will radically shorten build cycles from months and years to days and weeks. At the same time, quality will increase due to higher levels of consistency due to working in a highly controlled and automated environment … Thus removing weather (cold, hot, rain, snow, dirt) as a major construction variable.

The property and casualty insurance industry is also very slow to change today but you might be surprised to learn how proactive they were long ago. Insurance companies were the impetus for the earliest fire departments to protect their “insured assets” and also started Underwriters Laboratory (UL) for consumer safety in products. Today, unfortunately, the industry has generally waned in its proactive stance to protect insured building assets.. In the news, you hear a lot more about raising homeowner premiums to cover risk instead of preventative measures to avoid risk.

Progressive insurance is a unique example of a company who has been highly innovative in its pricing, underwriting and marketing of auto insurance, particularly non-standard insurance. Progressive was one of the first to experiment with usage based pricing as well as “big data” and predictive analytics to refine their risk.. We have yet to see this sort of story unfold in the homeowner insurance sector but the timing is right with the “pain” of soaring insurance premiums for someone (perhaps from outside the industry) to embrace Adaptive Innovation and dramatically improve the homeowner insurance model.

Adaption for rapid resilience improvement involves examining how others achieve it today and adopting those elements first that most easily and rapidly translate through partnerships and alliances:

  1. Automation used in automotive, electronics, and consumer products and packaging.
  2. Durability in automotive and aerospace
  3. Rapid assembly in automotive, electronics and durable goods
  4. Low or no energy assembly used in medical and packaging

In ancient times we built things to last centuries when lives were violent, short and wildly unpredictable. The conventional wisdom today, with our longer and more comfortable lives, is to build more temporary things. On the surface this appears to be a funny contradiction but alas, we are humans and often irrational to a fault. In other words, if we do not adapt, mankind will suffer needlessly at an ever accelerating rate.

A question for you? How can you, your firm, your products contribute to the idea not simply of green, energy efficient and renewable but to resilience as well? Indeed, the resiliency challenge – no, opportunity – is there for the taking by those bold enough to take it on.

The Elemence team is tackling the resilience challenge head on by blending and sharing our collective wisdom across the chemical, construction, automotive, packaging and robotics industries to help innovative leaders understand and monetize the resilience opportunity.

 

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