Mateo Zimmermann - Bridging the technology quotient gap in construction

In today's episode, we'll be discussing the state of technology literacy and how we can bridge the technology quotient gap. Mateo, welcome to the show. We're very, very happy to have you with us today. Anything that you'd like to add before we jump into our conversation?

Mateo Zimmermann: No, I Tim, thank you very much for the invitation and excited to be here and discuss a little bit about one of my passions, which is, is technology and innovation.

Tim Butara: Yeah, I'm also very excited about speaking with you about this particular topic. I think it's a very important topic as you know, technology usage dominates and being tech literate and tech savvy. Is starting to not be just, you know, an advantage, but kind of a requirement for doing anything and succeeding in today's age.

So let's start by describing and breaking down some of these terms. So what exactly is technology literacy and what specifically is the technology quotient gap?

Mateo Zimmermann: Yeah, so it's good always to do a definition, but I mean, literacy is when people kind of can read or not. And this is exactly the same for technology.

So it's, it's really the, the ability to effectively understand, use and engage with technologies. And then the technology quotient gap is, is the difference and the disparity between the required skills and knowledge to leverage modern technologies and the actual technological competence of the individuals or the industries or companies process.

Tim Butara: So, you know, if technology and if tech literacy is something that's very important as we, as we established just now, like I would assume that, you know, this technology quotient gap has a very detrimental effect on organizations and businesses, right?

Mateo Zimmermann: Yeah. Obviously the key to innovation lies in bridging that technology quotient gap that I just described.

And and yeah, obviously what we're seeing then is that several industries are affected. We at CEMEX Ventures, since we work in the construction industry, and that's where we are active, actively investing, actively working with the, with the industry, with entrepreneurs and so on, is, is actually where one of the most affected.

And I can say that industries like construction are lagging and taking option. And really it's, it's about time now and it's, it's the time to transform or be left behind in the industry. A lot of people ask me kind of on, on, yeah, but what, what is, why is it that construction is actually one of the industries that suffered the most?

Why is it behind other industries? Because actually there is a term in construction called the productivity gap which describes how much other industries are progressing and construction is actually the last one. So it's, we're behind agriculture or other industries where you would think actually there's less innovation, right?

So a lot of people ask me for the reasons for that and kind of, because a lot of people think it's a mindset issue in the industry. And I, I would say actually in construction, the people that I've encountered, I've worked in several industries, but the people that I've encountered are extraordinary. I've never seen so much.

So talented people like an industry. So problem solving. So there's both focuses on solving issues and fires that are happening in, in construction. And there isn't a lot of execution style in the industry. So actually the projects that are completing construction are remarkable. So I can only say good things about actually the mindset and about the people that work in the industry.

And I will say kind of in the end, we're the same humans that are working in one industry or the other, right? So it's not like we're different. Well, let's say in humans, when we come home, we use exactly the same technologies, the same innovation and so on. And the other thing that people say, yeah, I mean, maybe it's a technology issue.

Well, actually it's not. I've been working for CEMEX Ventures for eight years. And I've seen amazing technologies, amazing entrepreneurs in software, in hardware, solving the most critical problems with people that understand the industry because they come from the industry and have large experience. They have done, it's the second rodeo here and launching companies and startups and there's a very big customer focus.

I always say, Yeah. Kind of the issue that we have in construction, that's why we're the last industry in terms of productivity. It's, it's a structural issue. Our industry is very complex. It's because we're a project based industry. So that means that all innovation is born and dies with the project and actually that the innovation has to show a very quick ROI.

Other issues are there is low margins in our industry and actually the biggest margin in our industry, the sector that has the highest margin is actually the banks, right? So for builders, for material suppliers and so on, that margins are very low. That doesn't give you a lot of space for, for innovation.

Also, projects are becoming more and more complex and it's a risky business, right? And it's building homes, hospitals, roads, trains, infrastructure. You can't fail. So you then the cost of failing is too high. And that obviously is a, is a very risk averse industry as well. And, and also there's a very big fragmentation.

It's a, an industry where there is the long tail is very, very big. There's a lot of big companies. And small companies working together, it changes a lot with every project. So there's a very also lack of standardization and low stability of people, partners, subcontractors, location, right? So, so that makes, makes, makes it very difficult for, for our industry to, to adopt technologies, to be at the forefront of also productivity, innovation, and so on.

Tim Butara: Yeah, it's, it's definitely one of the, of the sectors that really can't afford to take huge risks because you know, you know, in cases where a digital startup or like a digital product or something like that, the worst case scenario of risk taking is unsatisfied customers. Or like refunds that need to be made or something like that.

But, you know, in the case of construction of failure can literally result in in like like health issues or lives being lost or, you know, in some cases, a lot of lives. So so I can see why. You know, why, why it would be more prone to, to kind of lag behind in technology adoption. And because, I mean, we are talking about more the skills and, and, and everything related to technology.

But if you're kind of not pushed, if you're not motivated in this sense, to adopt new technologies, then, then why would you, why and how would you then then focus on developing these new skills if, if, you know, you, you couldn't really use them because they would be in areas that are very risky. So that makes a lot of sense.

Mateo Zimmermann: Exactly. Yeah. And people are very focused on construction. They're fully in execution mode. They're running, they're very busy. There's also a lack of workers in the industry. So it's difficult to experiment new things. Kind of, when we talk about innovations, we, at the very beginning, we talk about experimenting.

And it's not the environment, and it's not the dynamics, it's for experimentation. Right? So that's, That's a big issue. And obviously, there is no also problems with budget with with again failure, but not only kind of in terms of the structure, but also the failure that a cost a delay of one day in a project is very costly, right?

So you can't be fooling around with technologies have to be tested technologies that that show a very quick ROI.

Tim Butara: Yeah, that makes sense. And, and probably obviously safety should be a huge priority, right? Because it's, it's crucial, you know, in construction, it's like the people making the stuff need to be safe and, and the stuff that's being made.

So whatever is being constructed, whether it be a building or a road or train rails or something like that. Everything has to also be safe, you know, so the people building it, it has to be safe for the people building it. And it has to be safe for the people who will eventually end up using it. Exactly.

Mateo Zimmermann: And I think that's a good topic. Actually, I feel we don't talk about enough about safety, but I say that, okay, there is some complexities in our industry, but at the same time, we have very big challenges, right? And, and for example, in terms of safety, they're just like gives you some facts, but 30 percent of workplace fatalities happen in construction.

So, Just for Europe, actually, that means it's the data is 3000 deaths per year and a lot of non fatal injuries, right? So there it's it's a challenge. It's a it's but it's also our obligation to to try different things. I'm not just talking purely about innovation and technology, but to try different things to improve that, right?

Because obviously what we've done so far is not enough. And we do need to do more.

Tim Butara: So how can we improve tech literacy in this field? So in construction,

Mateo Zimmermann: it's a difficult question. And obviously that's why I have my job, but, and I have to say also kind of some acknowledgement to a lot of construction companies out there that I know are doing a lot of efforts in terms of innovation and technology.

But as I said before, it's a very big industry. So I'm talking here about the more sophisticated companies. And that's not probably not even 1 percent of the industry. So we need everyone. And I want to say everyone is really everyone in the industry to, to go that road as well. Right. And, and I think the first step to do that is, is.

First to acknowledge that we have a problem, as I said before, some of the challenges as well, but we have other kind of bigger problems and challenges that we need to address and the industry needs to innovate and adapt. And and that's, I say that because a lot of people that's, it's also kind of that saying that if it, if it ain't broken, why fix it, right?

So. I'll tell you that's not enough. Kind of. I think the construction industry is in a race against time. We need to adopt and technologies is for me. It's the winning strategy. At least it is a differentiation strategy and without innovation and the industry will continue to struggle with inefficiencies and outdated practices.

Right? Kind of for me, it's really about thinking, okay, there's a problem, so let's do something. And for me, it's really designing a strategy to be more as a company, right? Design strategies to be more innovative. And that requires kind of a multi multipurpose or multifaceted approach with, and I always say kind of for innovation, it's really innovation is about curiosity.

That's the first, for me, the first key that And the first word that I want to emphasize is curiosity. really fostering the capacity of testing new things, having the right incentives, having a purpose of also improving our industry. So you have to feel the pain that I was describing in terms of safety, in terms of sustainability, in terms of that there's a very big lack of homes and infrastructure in the world.

So we, we have to, we have to do something about that. And then it's obviously also in the businesses and in the companies, it's very important to. To champion an innovation culture that's very important to have values, also the security to security for the employees and freedom to fail which is something that failure is something we don't talk too much about, especially in Europe.

It's like a forbidden word, but also kind of the, also the tools and resources for the people. And we also need a big focus on people. Innovation will come through people. It's not. Obviously the company will give the right basis, but the innovation comes from the people. So we need a lot of training, education to do that.

And, and then it's kind of a, also kind of finding the right approaches within the companies. Kind of an introspective approach of understanding the processes, questioning things, identify the right pain points, and also the right sponsors within, within the company. And then obviously the, the innovation has to be aligned with the, with the company strategy.

I would say that that are kind of the key, key items to drive innovation and, and take literacy within, within a, within a company.

Tim Butara: So if all of this is done right, what will be the kind of tangible benefits that construction will see, you know, in, in the future, in the coming years?

Mateo Zimmermann: So for our industry, the impact is it's 15 trillion.

That's right. That's a number that McKinsey did and in a report, they said that they actually did the opportunity according to them. If we embrace tech and innovation in construction. It, it's that. So I always use that number to, to give an image. I mean, I don't know how much even 15 trillion dollars is right.

But, but it seems like it's, it's very big. And, and also as an industry, construction is the second largest in the world. So, so obviously I, I'm not surprised that the number is very high, but I would say kind of that the, the impact is huge and we can feel that also kind of, everyone will feel it.

Construction is an essential business. We could do more homes. So as an example, actually there is a, a gap. In the U. S. I think it's about 5 million homes as a gap, and in Europe it's less than 10 million homes, right? So there's a big gap in Europe that it's increasing. And also it's, it's becoming more expensive houses, right?

So it's important also for tech to increase productivity and at the same time, make housing more affordable. And it's not only housing, it's obviously more hospitals, more schools, better and more sustainable infrastructure. So to save time when you're traveling and so on, the impact will be also kind of less accidents, as I said before, in an industry that is.

Is dangerous to work in and and the other very important thing that is a is a big trend and also very important is the that our industry is right now not very sustainable, not very sustainable in terms of waste and in terms of greenhouse gas emissions. So our industry makes 40 percent of greenhouse gas emissions by construction and operational buildings and infrastructure and our industry generates.

30 to 40 percent of total global waste. That's, I always kind of like to, to explain what that means. It's actually 1. 3 billion of tons of construction demolition waste. And that's equivalent to 350 Eiffel Towers per day that is generated as waste.

Tim Butara: Wow.

Mateo Zimmermann: So it's kind of, that's why I always say kind of that innovation in our industry is not a nice to have.

It's really an imperative.

Tim Butara: So it's, yeah, it's very closely tied to, to what we said before about being, being tech savvy, being tech literate. It's, it's not just a nice to have, it's not just a perk, but it's a requirement for doing it right. And yeah, as you've now highlighted, it's, it's especially important in this industry, you know, also because it's been kind of lagging, but also because of all the other factors and inherent danger of this sector.

and balancing that with the, you know, really, really high importance of construction for, for basically society in general. And I, I'm wondering, you know, based on all this, do you have some interesting stories to share from your own work, you know, about, about how, how this has improved for a certain construction company or a certain project?

Mateo Zimmermann: Yeah, of course. I mean, as I said before, we're we've been working here at semi expenditures for the last Eight years, very hard on, on obviously changing also the, a little bit, the culture of the, of the company to adopt more technologies, to adopt more innovation and obviously improve as a company, but also looking at the future of what are the biggest pain points?

What are our customers suffering? But also what are kind of the, the, the planet is suffering, right? And as I said before, and, and, and I think that's, that's very, very important also in terms of innovation, finding that purpose of. Why we need to innovate. It's not just as an innovation because it's it sounds good.

It's because obviously there is challenges that we need to solve on and having that finding that purposes is has been great as a journey as a company. Right? And just to jump into some examples. So it's difficult to explain some of the pain points that we suffered As a company, and then we continue to suffer as a company and why we find those solutions.

Right. But just to understand concrete, which is our business. So we do cement, concrete and aggregates, but concrete is really a a mix. So it's a, it's a, it's a living material that is mixed within the ready mixed trucks. So it's a drum that is rotating that you'll see on, on the streets. And that actually the production of the concrete happens within the drum.

And, and just to make sure that obviously. Quality is the best that the product, the end customer receives the product as well as it was batched at the plant. You need to control what is happening inside the drum, right? So you need to be measuring the quality of the concrete inside the drum and also knowing what are the different events that happen in, in kind of in that journey between the plant and the Renamextract until it arrives to the customer.

Before kind of using a technology that is called cloud cycle, we were really blind on what was happening in terms of quality. So you did, you do actually some tests, obviously, when, when you deliver at your customer, but we were really blind on what was happening. And with this technology, it's a company that actually went through.

Our acceleration program, which is called leap lab. We tested this technology and the results have been great in terms of quality for the customers in terms of also costs avoiding a return concrete. So actually also very helpful for the planet because we, we, we have less, less waste waste generated by, by the plants.

That is one example that something we're testing in the UK right now. And we're testing knowledge. We're expanding that. Which has been great. And obviously with with everything that happens with innovation at the very beginning, everyone is very skeptical. Like, no, I mean, this is not delivering value to our customers.

No, we can't. It's too expensive. It lacks functionality. The customer won't pay for it. And I have to say now our people love it. It's more transparent, the quality is better. There is less disputes and return concrete with customers. And that results in actually happier, happier customers. Another example that I wanted to mention is also kind of with regulation, which I think regulation has One good piece, which is that it drives innovation because it shakes a little bit up the system, but at the same time, it creates a lot of complexities for, for the companies.

And, and one complexity is obviously around CO2 measuring of the construction industry. As I mentioned before, we're responsible for 40%. So obviously we need to do something. And, but, but obviously the problem now is shifting to the real estate developers. Who need to measure when they're building a building, they need to measure in advance how much co2 it will generate.

It's not just co2, so it's, it's, it's water consumption, it's, it's a lot of other things, but co2 is obviously something that everyone understands. But the complexity is before when you were designing a building, it was just about costs and design. Now it's also about CO2 and a lot of other variables, right?

So these companies need tools to be able to measure in advance the impact of the building. And that is only possible through technologies to be able to plan and make decisions to reduce the carbon footprint. And then there's the combination between, okay, that's what the real estate developer is doing, but it needs a connection with the suppliers.

So that suppliers, so like Cenex. Can provide the best solutions to the real estate developers. So we're working with a, with a company in France called this gap that is doing exactly that. It creates that platform where real estate developers and suppliers can interact just to make the best outcome out of their, out of their buildings.

Last example on on different things, not just software, but also in terms of in terms of hardware. So we're we're working with a company in the UK called High Rock, which is a company that produces hydrogen and we have been using hydrogen and operate operations for many years. But obviously there is an evolution of hydrogen as an energy source.

It was great hydrogen is what was common in the past, but it's evolving obviously to become more and more sustainable. So it's evolving to, there is different colors to hydrogen. So it's evolving to blue, turquoise, green, and the carbon footprint improves with, with each of these colors, right? So. These technologies are less mature and have other requirements in terms of technology, technology, but also equipment, logistics partners.

So we have to keep training and keep it acting. And, and the, the output of hydrogen will be much larger in the future. The cost will be lower on the CO2 reduction will be also lower, right? So we're very happy to be, to be also in this environment, this innovation environments where we're. Willing and able to, to test with, with kind of very promising technologies that are not there yet, but we're helping them get there.

Tim Butara: Can you explain it a little bit more about the evolution of hydrogen across different colors? Does it just refer to like what kind of, you know, how it's used? So green, green energy, or is there something else to it or is it actual colors?

Mateo Zimmermann: Yeah, no, it's, it's it's the input mostly. So the input determines the color that you give it just the color, just to identify it very quickly.

If for example, the the gray hydrogen comes from coal or other kind of non sustainable kind of sources, right? Where, whereas for example, turquoise comes from a natural gas and green comes from renewable energy. Energy sources.

Tim Butara: Okay. I, I, I thought it was probably something like that, but I just wanted to be extra sure.

And, and, you know, to, to, to make sure that I'm on the same page.

Mateo Zimmermann: Yeah, exactly. So it's, it's just how you break that into, into hydrogen. So what kind of, what is the input, how you break it into hydrogen? And obviously the complexities of green hydrogen is that it has to be the production of hydrogen needs to be next to a, to a kind of, for example, a wind farm, right?

So that's, that's the complexities in terms of logistics or less.

Tim Butara: Okay. Yeah. I'm glad I asked for the clarification and yeah, Mateo, thank you so much for, for taking the time, sharing your insights. Talking about this with me, if anybody listening right now would like to connect with you, would like to learn more about these topics and about what you can do for them, what's the best ways to reach you?

Mateo Zimmermann: Well, we, you're going to reach us through our webpage, which is, which is CemexVentures.com. We're also very active in network kind of with events, but also kind of, you can contact us through social media, like LinkedIn, for example, is, is also a good, good source. Thank you.

Tim Butara: Okay, we'll, we'll add everything to the show notes for easy access and Matteo, thanks again.

It was a pleasure speaking with you and having you as our guest today.

Mateo Zimmermann: Thank you. Thank you for inviting us. And hopefully this will create a spark for some entrepreneurs to come, come into our industry and, and also change with us the, the, the future of the construction industry.

Tim Butara: Yeah, that's one of the main goals of these conversations, you know, is having these connections, motivating people to move more in the right direction, especially in this, in this industry, which is super important.

So, so I share your hope that, that this, that our conversation will, will you know, spur some people to maybe get in touch with you and maybe produce further awesome collaborations in this area.

Mateo Zimmermann: Great. Good. Thank you very much, Tim.

Tim Butara: And well, to our listeners, that's all for this episode. Have a great day, everyone, and stay safe.

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