Innovation in Interesting Times

(This was originally published in the December issues of Building Products Digest and Merchant Magazine.)

This dismal year is almost over and most people won’t be sorry to see it go.  On the other hand, if apocalyptic 2012 predictions are correct, the New Year will see the Mayan calendar coming to an end and so, apparently, will the world.  Yikes!  There’s a curse, reputed to be Chinese, that goes, “may you live in interesting times.”  Well, we’re living it.

But even in these interesting times, I still find reasons to be optimistic.  You don’t have to be green to do well in our business, but green dealers tend to do better.  That’s encouraging.  This year, there were several innovative products and materials that were either launched or found traction in the market.  That’s also encouraging because innovation is exactly what the home and shelter supply chain needs – in products, materials, merchandising - the whole package.  And it seems to me that’s exactly what’s in the pipeline for next year and beyond.  Here’s what I’ve got my eye on.

For several years, we’ve seen small independents roll out green-only retail concepts and doing well in their respective niche markets.  But this year Green Depot (www.greendepot.com) took a step into the “big leagues” when they acquired EcoHaus on the West Coast, making them the first coast-to-coast green home improvement chain.  They’ve demonstrated that green can scale.  Who’s next?  It might be new, Austin-based TreeHouse.  It’s big, well designed, focused 100% on green building, and is an easily replicable concept.  These are but two examples of the shape of things to come.

On the product front, it’s hard not to get excited about the innovations in energy efficiency.  Perhaps there’s no better way to gauge what’s happening here than to look at the least sexy product category:  insulation.  There’s a place for mass-produced  formaldehyde-free, high recycled content fiber glass, but for a paradigm shift, you’ve got to look at what small companies are doing.  For example, we’ve talked about hemp as a building material, but now there’s hemp insulation, too.  American Lime Technology’s Breathe™ Insulation is made from hemp and flax fibers, is breathable and functional, with obvious green benefits over conventional materials.  And then there’s insulation made from fungus and agricultural waste – hard to get greener than that.  Designed by Ecovative Design (www.ecovativedesign.com), Greensulate™ is currently undergoing testing and may come to market next year. 

If insulation is the least sexy product category, then thermal mass, as such, is the least commercialized.  As passive solar designers have known for decades, properly managing thermal mass and solar gain results in efficiency and comfort.  For example, a granite south-facing wall absorbs heat during the day, keeping interior spaces cool, re-radiating that heat at night, keeping interiors warm and comfortable. 

Imagine if, instead of logistically unfriendly granite, thermal mass was a product that came in rolls, like bubble wrap, that was easily installed in walls and ceilings like, well, bubble wrap.  Turns out someone already has.  Phase Change Energy Solutions (www.phasechange.com) has developed BioPCmat, a roll of bubble wrap like material that is essentially thermal mass in a roll.  Properly installed, BioPCmat can result in 30% energy savings.

Products like these offer radical new approaches to products and materials.  And this is just the tip of the iceberg.  Philips recently unveiled the Microbial Home design concept including a kitchen that produces its own cooking gas – methane – from bathroom and kitchen waste.  Whether these product innovations take off in the marketplace is an open question.  But innovation breeds innovation.  If this pace of new product development continues, 2012 could well be very interesting, but in a good way.

The New Paradigm: Zero-Carbon Shelter

(This was originally published in the August 2011 issues of Merchant Magazine and Building Products Digest.)

In this industry, there are three areas of opportunity that remain relatively bright given otherwise stagnant economic conditions.  Obviously, one is green building.  The other two are renewables and retrofits.  These three areas are deeply interrelated and will continue to grow, working to reconfigure the supply chain.  Dealers who ignore this fact, waiting for the old days to return, do so at their own peril.  On the other hand, given the buoyant performance of these sectors, dealers that develop and expand their core competencies to incorporate one or more of these areas will likely thrive.

The question of how one should go about approaching these opportunities remains.  Clearly, the pursuit of these opportunities must eventually translate into products on the shelf, retail floor or yard, or in services.  But should dealers expand current categories, diversify into new categories, or streamline operations down to one speciality?  All good questions every dealer must judge based on their own set of circumstances.  But even more fundamental, dealers must once and for all abandon the old “sticks and bricks” paradigm and adopt a new way of thinking about their business.

I mentioned above that green building, renewables and retrofits represent the brightest sectors in the supply chain.  At the core of each is energy - reduction of energy consumption and/or the generation of energy from carbon-free and renewable resources.  In fact, what they represent is the new paradigm that will dominate this industry for the rest of the century:  zero-carbon shelter.  When dealers comes to grips with what that means in terms of the products and materials they stock, the services they provide, and what their customers need, the proverbial LED lightbulb goes on and the path forward is illuminated.

Translating the “zero-carbon” view into products and services that may benefit dealers and their customers becomes straightforward.  For example, analysts project that demand for insulation and installers is going to grow by leaps and bounds in the coming years, whether or not new homes are built.  The existing housing stock – millions of homes - will remain standing and occupied for decades to come and most need improved insulation in order to survive rising heating and cooling costs, especially in the context of weather extremes. 

There are now many formaldehyde-free, recycled, and natural products already on the market which can be stocked or drop shipped.  Big companies like Johns Mansville, Knauf and Bonded Logic provide a range of these products and will serve the needs of production builders and retrofitters.  For those looking for natural products, smaller companies like Oregon Shepherd and their wool insulation, or Ecovative Design (www.ecovativedesign.com) and their rigid panel Greensulate products, which is made from mushrooms, can round out an insulation merchandise mix. 

Even if demand for insulation is apparently strong, it doesn’t hurt to have the tools to sell it.  Thermal imaging cameras, such as those from Leica and Flir, can be used to create a picture of where a house is leaking valuable heat.  This technology is indispensable for installers and retrofitters, and should be for dealers, too.  Stock these devices; sell, loan, or rent them, and sell more insulation as a result.

There’s much more that goes into a zero-carbon shelter and many more opportunities to expand, diversify or specialize.  In the building shell, super efficient windows and doors are important energy-conserving components.  Inside, LED lighting and ground source heat pumps can also be part of a zero-carbon building system; on the roof, thermal solar and PV.  Of course, sticks and bricks will remain part of the picture, but now the context has changed.