A building system at the core

McKinsey draws on a proprietary database of more than 700 modular-construction companies operating across more than 50 countries, together with interviews with more than 20 industry executives. The article finds a fragmented industry containing established and growing businesses, but also notable failures and bankruptcies.

Its analysis suggests three recurring characteristics among successful companies: a building system at the core, control of important parts of the value chain or close coordination with partners, and focused, strategic scaling. Large factories or automation do not by themselves create stable demand, repeatable delivery or a viable business.

McKinsey uses “building system” to describe the components, rules, processes and relationships involved in constructing a building. This includes design rules and permitted variation; manufacture or procurement; transport, organisation and on-site assembly; and the companies participating at different stages.

The distinction is important. A modular product may be one part of a repeatable system, but successful modular construction also depends on how components meet, how work passes between participants and how the system improves through completed projects.

ExoSett can be understood less as a modular building product than as a building system: a common structural and interface framework within which multiple manufacturers, materials, module types and service providers can participate.

The accommodation frame, service frame, accommodation modules and their defined interfaces are intended to coordinate independently produced parts rather than require one vertically integrated producer to make an entire building. McKinsey’s discussion of developers, manufacturers, contractors, investors, engineers, material producers and distributors is therefore relevant to ExoSett’s ecosystem of possible participants.

This is an ExoSett interpretation of the article’s general analysis. McKinsey does not discuss ExoSett, and the existence of common interfaces would not itself establish reliable partnerships, aligned incentives, quality control or commercial demand.

The article warns against expanding factories or entering new geographies before demand, processes and the building system have been demonstrated. Modular construction is capital-intensive, and a poorly performing project can put a business at risk.

For ExoSett, the corresponding lesson is restrained: repeatable interfaces and distributed participation are propositions to test, not proof of a scalable market. Technical development needs to proceed alongside real projects, procurement relationships, responsibilities and demand.

Factory production is only one part of a viable modular system.

Read the original article, return to Research and Reading, or explore ExoSett components.