CEO Jordan Cram was recently interviewed by Brittanie Campbell-Turner, host of the renowned Constructrr podcast. Together they touched on subjects including the internet of things (IoT), the use of data in construction, evidence-based team design, and the significance of the acquisition of designtech.
Brittanie: Hello and welcome to the Constructrr podcast, the future of the built environment. I'm your host Brittanie Campbell-Turner, and this podcast is dedicated to helping property owners have certainty in their decisions about their construction projects. We talk about fostering trusting relationships, help you to understand how to lower risk, be under budget and on schedule. And, most importantly, exceed your end users desires. Welcome to this episode of the Constructrr podcast. Last episode we wrapped up our recap of the 20th annual LCI Congress with a presentation where James Pease and I present on the topic of how to increase adoption of the IPD model by using blockchain. James Pease is a regional manager of facility and property services with Sutter Health. And he's also developed an education platform at LeanIPD.com. Where he's been sharing through webinars and blog posts, different elements about how one can be successful in running lean projects. in this presentation, James and I talked about how it's unquestionably the future to incorporate blockchain and smart contracts with construction contracting. We focus on integrated project delivery contracting, although blockchain can impact and streamline any contracting model. If you haven't listened to that episode yet, check it out at constructrr.com/IPDblockchain
In today's episode my guest is Jordan Cram, CEO of Enstoa. Enstoa is listed in Inc. 5000 for six years. Enstoa is a New York-based systems integrator that offers a data-driven evidence-based approach to capital project development. Jordan and I discuss why IoT does not deliver on its promise to provide overwhelming productivity. We talk about the future of IOT and actually an IOT device they've created. We discuss data as an asset, the notion of applying science to culture and how Enstoa has rolled this out in their own company, by a not using organization charts which is very interesting. Last but not least, we talk about their recent company acquisition, and what they're now able to offer. I'm sure you'll enjoy this interview, listen in.
So, this morning we're speaking with Jordan Cram CEO of Enstoa, which is a New York-based systems integrator that offers a data-driven evidence-based approach to capital project development. So, Jordan, welcome to the Constructrr podcast.
Jordan: Well thank you, it's great to be here with you.
Brittanie: So, tell me a little bit about you. Tell me about you know how did you get to this point of using data-driven evidence-based approaches to delivering projects? I mean that sort of a journey, what's your background?
Jordan: Thanks that's always fun to reflect on where we've come from helps us know where we're going. I started in construction, I was working for various GCS or CMS in the US. I was then pretty early in my career, over in the Middle East working in Kuwait and just fell into a management by fact approach and mindset. It never stuck with any of my employers, I kept resigning. And at one point I just felt really bad about resigning and figured I'd go on my own. And I would say really since that time I've been on this pursuit of helping data drive value, helping decisions be data-driven, really helping to augment the decision-making process with insights that data can provide.
Enstoa’s my second company, so I've had two runs at it and we're certainly on a good run now, that's how we got here.
Brittanie: It's funny how you know sometimes from a perception standpoint, things can appear like failures. And I'm sure at some point you were like, why is this industry not figuring this out? And I'm sure, I don't know, from my perspective, I know my family, if I were to just keep quitting jobs. Because I was unhappy, they would look at me pretty strange. So, it sounds like you guys are obviously now on a great path, it sounds like your purpose.
Jordan: I was looking back to our 2007 business plan, like, a week ago. And someone asked me, 'did you create a business plan?' and it's just shocking how close it is to where we are eleven years later. You know now we've got traction, you know we're sitting more at the strategic table in our client relationship. So, we're able to have a much greater impact than we certainly did in those early years. It has been really very much a laser focus on trying to drive value improvement and productivity in the industry. Sort of feels like we're just getting started, there's so much work to do.
Brittanie: Definitely. So, let's hop into some of the topics that we planned to talk about today. For my understanding, Enstoa has been able to build an elaborate IoT device (internet of things) that capture a lot of information about buildings, and you can share a little bit about that you know I listen to a talk of yours, and it appears still that, we are not using internet of things to its broadest capability.
I think we understand it at a high level, we all have iPhones but we're still not understanding how tech, I would say the majority of the industry is growing now. But we don't understand tech and how we should be applying it to maximize the data that it's collecting. Tell us about that device and tell us about your opinion of how we're collecting data as well.
Jordan: We tinker around with various devices; I mean the great thing about IoT is it's so affordable. And you can construct these devices really fast that can have a range of sensors, from motion, light, sound and temperature, so on and so forth. And so you can construct these devices and they start collecting all this ambient data. The question you bring up is, why is it not delivered on its promise of overwhelming productivity. And that's a question that for a while now, we have been spending a lot of time thinking about it.
Brittanie: With the ability to attach just some sort of sensor on tools, something as simple as you know light levels and humidity. You know that can provide so much in a work area, it can also provide, well I'm thinking work on the construction site. But I'm also thinking about a workplace once you arrive and the end users in this space. So, I mean there's a spectrum, a broad spectrum that we can really be pulling information from, but you are right sounds like we're just at the beginning of it.
You mentioned data as an asset as a concept. Could you share what that is and let's talk a little bit more about that.
Jordan: Well, I think there's some... I don't know if it's a thing in childhood or in DNA or something, but some people, they see data as a crucial strategic asset, and I don't mean like lip service towards it. But you know, they turn to the right, they turn to the left, if they see any opportunity to collect data, they're all over it. If they're in some kind of management or leader position they really hold their people to a standard of structuring data, collecting data. Even if they don't have any immediate use for it, they are relentless about collecting it, structuring it, storing it.
It's that mindset that data is a very valuable asset. Think of it like gold or water and just how diligent people are to find and protect and store, and not waste. And to me, data is in that category. I think in 10 years, I don't know maybe it's 20, it will just be that way. But today, especially in construction, it's just not really there. And so you don't get the weight behind the power of IoT or AI or even just plain old reports and analytics. Because that philosophy around the importance or the strategic nature of data is just not there.
Brittanie: So, case in point, especially in our industry, EPC or any AAC firms themselves. It doesn't appear as if they're seeing themselves as a knowledge or data asset company. Are you seeing that or is that fictitious in my head?
Jordan: No, and they're in trouble. I mean if I stumbled across this stat from Gartner just earlier today 'By 2021, AI augmentation will generate three trillion and business value. And it will recover or eliminate 6.2 billion hours of worker productivity'. It's just unfathomable, so in 2021, that's two and a half years from now. So, imagine the amount of data that construction kicks off from equipment and positioning and tags and location information.
I don't know what percentage of the construction cost should be spent on tech, but, you know, probably in the two three four percent range. And right now, I bet it's in the 0.2 to 0.4 percent range, sometimes lower. The construction leaders are obviously not putting their money where their mouth is, if they are in fact supportive of data and data collection and data generation.
Brittanie: Well, it's an interesting thing like research and development, the budgets that many companies have in this industry, are close to nothing. Unless say for instance... I can use this as an example, where I work, Mace, we do have budgets for research and development, simply because it will be refunded by the government, subsidized. Because they're based in the UK and that's only UK-based research. So, any company there can do that, however in most places it's got to come out of their pockets. It's not an incentivization to go ahead and sandbox ideas. But we have tech that can maximize that data.
So, like how do you think where we're being disincentivized. I mean I see it on a day-to-day basis. But why do you think that's the case, why do you think we're disincentivized from using our data?
Jordan: I don't think it's anything more than just the status quo dominates, and that it's just easier to be conservative, and keep trying what you used to do and hope that it's going to yield a better result. I don't think it's any more complicated than that. And then along comes an individual, or a set of individuals, that are somehow oblivious to the risks of trying new things, and they disrupt markets and they change the game entirely.
Jordan: Like your point on research and developments a really good example, why not go allocate a hundred million dollars to this? Profit margins are so thin in construction. Waiting around won't change that. It's possible that it will be a technology company that, like what Uber did in the taxi industry, becomes the world's largest construction company.
It's unlikely that today's companies will be shaken up adequately and take tech and data seriously. I don't mean to be so, you know, ‘doomsday’ about it, but the call to action to me is just, it's time we all get there.
Brittanie: That's right. So, we've been taking a lot of cues from the manufacturing industry over time. Obviously, on this podcast, I would say it's very much grounded in learning about lean construction and lean methodologies. We've had the executive director of Lean Construction Institute on the podcast, we've had one of the founders as well. However, I feel as if we're still missing some things from the manufacturing industry. It seems like we've been missing the fact that we need to have open data, and essentially gain some efficiencies with the supply chain.
And make sure that we're taking advantage of the information that we're collecting, in order to improve the industry on a whole. Was it someone from Stanford that mentioned that we need to be taking advantage of that?
Jordan: Oh, yeah that was fun, I stumbled across that quote from a professor from Stanford Business School, who said that we reached the limit of internal optimization and that future gains are going to come from the supply chain. That's the one you're talking about, right?
Brittanie: I'll include a link to this in the show notes. Yep, that's exactly it.
Jordan: You and I could talk about that as though it's construction and - and that quote was from 1999 in manufacturing. It's just so ironic.
Brittanie: Oh my goodness, but I mean that's how long the innovation has been around, right. The idea of collecting the information that we have and making it broadly accessible for the industry to move forward at large. And to think that we're missing that opportunity is sort of mind-blowing.
Jordan: Yeah, it's like some good old Jack Welch, you know? When I think of those comparisons of productivity: GE generated ten billion dollars of value internally through applying improvement in Six Sigma. That's massive. Anyone that's read Jack Welch will know he made no excuses for anything. And if I'm sure people came to him and said ‘Hey boss, there's no way we're going to be able to streamline the supply chain. It's too fragmented’ or ‘The contracting structures are inhibiting the improvements that we'd like to make, so, we can't do it’, I'm sure he told them, ‘I can't hear the word can't, and so go do it’, and they would do it.
I don't really buy that manufacturing had an easier time at pulling off those supply chain improvements. And going back to that whole comment on leaders, Jack Welch is a great example of somebody that really empowered, I guess, to your point earlier, funded, his team to enable them to achieve that kind of remarkable results.
Brittanie: Yeah, but that moves us into thinking about how we're going to approach things differently. And you mentioned the contract structure with Jack Welsh, whether you were just going through the thought process or not, but I mean it's obvious that you know we do have some siloed approaches. And a specific mindset that's sort of stuck in the way that we've been doing things.
So, you know I've been investigating blockchain for about a year now. And there's an interesting integration here that we have with data, given that we have a lot of information that can be pulled on to an immutable ledger, so, that we can access that data. I've been looking at this from all different angles, but I'm really interested in your perspective, because of the data-driven approach that Enstoa’s is taking. Tell me what your thoughts are on shifting the mindset, shifting the approach, as it relates to incorporating blockchain, and really thinking about this behavior change that we need to start taking.
Jordan: Yeah, I guess all these things thread together you know it's IoT, and devices that can generate so much valuable data, and data as an asset (a strategic asset) and then the power of a blockchain. It's incredible what that technology promises, and what it's able to do. Our industry is highly fragmented; this is you know something everybody knows. There can be hundreds of organizations that are tethered together through contract structures. Those contracts, they're not geared towards transparency and collaboration prime and sub and sub and sub-sub. They're all protecting each other from losses and they've got real-world concerns like cash flow and safety and things like that. So, you know we're equally passionate about blockchain, it's one of the things I love about your blog. There's always lots of rich content on it.
Brittanie: Thanks Jordan.
Jordan: We stood back and we said, okay how can we get involved and how can we help support this technology. And we've landed on the lawyers. Just said, let's go and find some forward-thinking law firms, construction law firms, who are ready to do things differently. If they're not involved, then they could very easily resist the movement. And so it made a lot of sense to partner with them and together design contracts and contract structures that can support what those immutable ledgers can do.
Brittanie: So, you mentioned the subcontractors and the sub of the sub of the sub. It brings to mind, when I've spoken with Construction Industry Institute Stephen Mulva, about flattening the supply chain and the OS 2.0, operating system 2.0. Are you familiar with that methodology?
Jordan: Yeah, pretty familiar.
Brittanie: I am going to explain it here for you (the listeners), because Jordan was fortunately right and lockstep with me in this part of the interview. OS 2.0 is a multi-industry spanning collaborative research supported effort, that aims to redesign industry procedures and standards with current technological advances in mind. The goal of OS 2.0 is to create a standardized technology-enabled platform that accommodates future change and makes capital projects more financially viable and sustainable.
Both CURT and CII are working on OS 2.0. You can find out more about OS 2.0 in my interview with Stephen Mulva, found that Constructrr.com/ep42. Do you think that would support this approach to implementing blockchain as well?
Jordan: I think it's on its own, it's not comprehensive enough. But what Stephen Mulva and CII are doing are absolutely like pushing in the right direction. We need everybody actually pushing in that direction of transparency, out with the old. Let's redesign the new way that, this industry is going to work. How are we going to reorient our contracts from protecting to value generating? So, yeah I think it's a critical message and an important one.
Brittanie: Yes, so tell me a little bit more about what Enstoa is doing you know working with the lawyers really creating that structure to change the contracts. Obviously, you're on board with flattening the supply chain and being more collaborative and developing more transparency and trust in the industry. But what would that look like? Could you give us an example of what the thought process is?
Jordan: So, we work with mostly the owner/operator side, you know we've got a growing EPC service line that's mostly centered in China. But a lot of our work is in the owner/operator space. So, I'll just use that as an example and they're at the very top of that supply chain. And if you look inside one of their organizations, you'll see actually three teams doing the same thing, but none talking to one another. So, you usually have a group that is developing policies and procedures, you know, 'you're going to do this and this procedure has these steps' and so forth. You have a separate group that is in procurement and is drafting and creating contracts. You may then have a third group that is creating technology and workflow systems. So, just in that environment you know Enstoa works, we created an integrated practice about two years ago, where we brought in the management consulting aspect, and have been working very hard at least to align the procedures the policies with the tech and automation. The contracts and the legal side are still sitting out on its own.
So, you know our belief has, we have to get the owner-operators aligned internally. And then that alignment has to occur within each company, which is an inward thing that needs to happen. We then also need to rework those relationships between organizations. There's so much that actually has to happen. Does that make sense?
Brittanie: It absolutely does to me, because I've been thinking about it from this perspective as well. So, that's really crucial though to break it down that way, and it's bridging the gaps if you will and making sure they're we're all dealing with the same relevant info. Internal to their companies and then coming back out to construction.
Jordan: Yeah I mean you know the silos inside of organizations can be fierce, you know, tribal. So, we can't just look outward you know talk about the supply chain, really everyone should. They should get their own house in order, which means that they're running on modern principles of transparency and collaboration internally. That the cost and the schedule and the safety and financial teams are all openly collaborating and sharing.
Jordan: That has to happen. There's going to be some tipping point, you have to reach some critical mass, where enough companies have internally achieved that degree of transparency and collaboration, that end up working on the same project. And then they enable a new contractual structure up and down the supply chain. Sort of like, you know, everything aligning perfectly for a moment.
Brittanie: Yes, at one moment in time but consistently.
Brittanie: Well, tell me a little bit about what Enstoa is doing to do that internally. I mean you mentioned you know the owner/operator companies are needing to transition right. And each companies on its own journey to understand, how they're going to be working more optimally for the business, that they do. Whether it's pharmaceutical or you know whatever it is that they deliver retail.
I'm curious as to what you guys are doing internally, to be more transparent within your company. I mean it'd be interesting to hear from a company who is recommending this, holding sort of that management consulting role for others.
Jordan: Ah! (laughs) Do we eat our own dog food?
Brittanie: That's right!
Jordan: I mean you know it’s certainly better to ask people on the team compared to me. But we're just about to cross the 100-person threshold, we probably will in the next week or so. It's a pretty exciting time for us, that's a major milestone. And if we look at Enstoa’s internal structure, I've never published an org chart. There were attempts and I always shut them down. We run on an organizational model that would most resemble a holacracy. And I don't know if you're familiar with that, but it's –
Brittanie: I am actually, but go ahead and explain for the audience as well.
Jordan: Yeah, it's based on self-organizing principles. In our case we have squads, I think there are 17 squads at Enstoa, each has a squad lead. How those teams organize internally is completely up to them. People can opt out and you know say, hey I want to be on that squad, it's up to them to communicate that through. There's a high degree of autonomy and self-organization, across squads we actually do apply quite a bit of communication rigor. So, it's a nice blend of efficiency and rigor, with allowing for decision-making and creativity and autonomy.
We pivoted to that model 18 months ago, we were in a matrix structure. And it was broken and we were in a tough spot from the perspective of performance and morale. And we were probably about 45 or 50 people at that time. And I just so excited to see it continue to flex and grow at 100 people. Essentially, a collection of start-ups is what it is.
Brittanie: Yes, that's all fascinating actually. I'm coming across this holacracy model simply just because I'm investigating blockchain, and more and more companies are working to adopt to this model. It's really great to hear that, yeah you are eating your own dog food, and it's working. You know, companies can run into challenges with this model as well, but it's interesting to hear about the rigor and the self-driven approach.
Jordan: What enabled us to do that was applying science to culture. And we all became such believers in it, that we decided to take that IP and do something special with it. It was all driven off of research from a Columbia Business School professor. And so we're making a big move in this space. I'm so passionate about it, I think it's so important for organizations to offer the opportunity for people to have impact, to be fluid in their work. We've found that by applying science to culture and values, you can enable it on a mass scale, that's really exciting.
Brittanie: I know you can't talk about moves moving forward. But I am curious as to the acquisition that you guys made with designtech, that was able to provide a little bit more as far as the services that she provides the clients. Could you share a little bit about that?
Jordan: Yeah, sure! The Designtech team, what an amazing group of people, and what a story, that the founders Mark and David started this business in London, focusing on computational BIM. They looked and felt like Enstoa 2012, they brought to the table expertise in Revit, in BIM, applying machine learning and AI to those data sets, and augmented where we were historically around finances, cost schedule related to capital projects.
So for us what we say as we needed, you know, the three legs of the stool: cost, scope, schedule. We had cost and schedule and designtech brought scope.
Brittanie: Got it. It sounds as if, as far as generating like a profile scenario, it can happen a whole lot more quickly. Simply because of that scope leg, if you will, is something that you can almost iterate faster. Is that, is my understanding correct?
Jordan: There's lots of applications for it for sure like in the master planning phase, all the way through to asset management. And then there's the core beam use case in design and construction. So, we've got some really exciting things on the bookends of that around master planning, where you know that the high-level strategic decision makers are able to see complex scenarios in seconds. They would be able to generate tens or even hundreds of them, and then use smart algorithms to pick the right portfolio projects, and visualize them along the way. Not just like 'decision on spreadsheet', it's like you know visual 3D interactive. And then all the way through to the handover of the assets, properly supporting the FM.
Brittanie: Tell me, what your next steps are with Enstoa? I mean if whatever you can share, I'm just I'm really excited about what you guys are doing. And I just want people to understand it, what they should be looking to you guys. Either for thought leadership or for potential services in the future, just could you share a little bit about that.
Jordan: Sure, yeah you mean like the plug on, what we do and what we're going to do.
Brittanie: Yeah, I'm asking for the small pitch, yes.
Jordan: Yeah, we started our business in 2007 doing Oracle Unifier configurations. And we've just done so many of those worldwide, we still continue to do it where the leader in that space. You know now as Oracle's continue to acquire products, we've grown with them. We've got that core application configure and process automation skill. As I mentioned few years ago, we teamed up with a really bright gentlemen Mike Matthews, who was coming out of PwC. And we stood up our management consulting practice, that allowed us to really engage in organizational design and business process design efforts, that should ideally precede the technology-related work.
We are, as I just alluded to earlier making a very strong move into the culture space with a proven. Means to engineer culture around the strategic needs of the organization. And all of that stuff wrapped together, we're really working very hard. I personally have been working very hard on helping leaders, articulate the digital transformation visions for their organization. it's just we have to get that right, we've put some really bright brains on the problem of helping a leader or group of leaders, craft the digital transformation vision for their own organization, you know where are we going to digitize and how.
And then broadly communicate that message with organizational change management, so that the benefits are realized. At this stage we really are and able to take an organization from innovation workshop through visioning all the way through, you know handing the keys over to them at the end of the process.
Brittanie: Yes, cool. Thank you for sharing about that. I got to thank you, before I ask you for how can people learn more about Enstoa, about you. I just want to thank you for taking the time out, wanting to share on the podcast about your perspective of the industry data on a whole. And how we can think about the changes that we're making to maximize data use and shift our behaviors as well. This has really been fun.
Jordan: Yeah, I'm just stoked to be here, You know I've been trying to do this for a month or two. I'm so glad it worked out.
Brittanie: Please tell us you know what's the best way to learn more about Enstoa and get in touch with you.
Jordan: I think in LinkedIn is just so good. So follow us on LinkedIn, connect to all of us. We're actually incredibly transparent, we just see this as everybody's job to move this industry forward. So, just get connected with us there, and of course you can visit our website at Enstoa.com. I guess if you're in China, find us on WeChat, and, of course, we're on Twitter. You know, we try to be everywhere.
Brittanie: I'll make sure I put those links in the show notes for everyone. And thanks again Jordan, this has been really fun.
Jordan: Appreciate it, great to be here. Thanks.
Brittanie: If you liked this episode, find out more in the show notes at Constructrr.com/JordanCram. If you learned something valuable in this episode share it with your friends and colleagues. You can also let me know you enjoyed our discussion, by connecting with me on twitter @brittanie_CT, or find me on LinkedIn. You can also email me at Brittanie@constructrr.com. Next week we will be speaking with Simon Andrea, chairman CEO and founder of building block REIT. A blockchain backed real estate investment trust. Building block formed in 2018 by a group of real estate and blockchain technology professionals. And it is the first REITs in the US to combine the tax advantages of investing in a REIT of blockchain technology. Building block is reimagining REIT investing and opening up this sought-after, alternative investment category to everyday investors. I'm looking forward to sharing this interview with you next week. Don't forget if you haven't subscribed to the podcast, do so at your favorite podcast player. I look forward to continuing the journey with you next week.