Sustainable Digitalisation - Teemu Lehtinen - KIRAHub



Published on: January 19, 2020

This week’s show comes from Helsinki, Finland. I speak with Teemu Lehtinen. Teemu managed the KIRA-Digi programme…

This is one of the most amazing programmes of built environment innovation I think I’ve ever come across!

Over two years the Finnish government invested €12m in 139 ‘experiments’ within the Built Environment.

Inspired by the Lean Startup methodology, companies ran their own experiments in areas such as robotics, artificial intelligence and BIM and tested hypotheses about whether their innovative ideas could be valuable to the Finnish economy.

Now Teemu leads the KIRAHub team and is focused on scaling these innovations to make real-world impact.

In this episode, we’ll be answering some big questions, like:

  • What happens when you run 139 built environment experiments over the course of two years?
  • How do go from experimentation to scaling innovation?
  • What are the effects of globalisation on the Helsinki Digital Construction landscape?

I really enjoyed listening to Teemu in this interview and I hope you enjoy his wisdom too!

Links:

Full Transcript

And we start with Teemu, describing how the Finnish construction sector evolved from grassroots hackathons into the KIRA-digi experimentation program.

What they were actually able to achieve in, you know, 48 hours and then we got to contine discussions. So I wanted to start organizing these hackathons in Finland as well. When I came back and started doing that actually as a hobby as, you know, non-profit. So we did that a few times. There were a lot of company interest as well. One of the companies’ started to be involved with the hackathon. They started to bring technologies to experiment with. They started to bring their own hack teams to do weekend projects. And some of those projects have actually become actual products and services for those companies. And then some of the teams have actually emerged as new startups in the field.

Really? From the hackathons? Wow. I never really hear about that.

Yeah. So there’s been a lot of interesting backed actually, coming coming from this kind of grassroots program thing. And from then, they were preparing this KIRA-digi program project together with ministries, cities, individuals, and private sector.

My plan was actually to… This was 2016 in the summer. My plan was to go back to California to finalize my PhD dissertation but then I started getting people approaching me for this project that they were looking for this kind of project manager and was told, “You know, your background with this kind of hackathon would fit well.” And then I kind of started interested and then I applied and then they selected me to run more tests.

And the rest is history.

Yeah. Yeah. So then we started implementing the project. The whole KIRA-digi was actually… The idea was for you to be this kind of a wake up project for the industry. As I said, the is the biggest industry as a whole. At the same time, the slowest to adopt any new technology so something has to be done. We have so much solutions, new technologies around that could be utilized here. So we set up this kind of experimental program where we had six open calls. Any organization, any company could something an idea for experimentation of something digital within this field.

I mean, it’s a broad field all the way from land use planning as well zoning within the municipalities to design construction, use, and maintenance of our build assets, whether it’s buildings or infrastructure.

Right. So it’s up to the companies to say what you want to research. Give us a good proposal.

Yeah. I mean, not even research. Just have quick experimentation on… Have an idea of some digital process, digital service, digital anything that they want to quickly experiment in practice how it works and to learn whether it makes sense to invest any more money into it or about scaling it up. So that was kind of the idea. We didn’t want to have too much of kind of direction on what to do. We want to have quite open opportunity for them. And this kind of experimental program that had six different calls, we ended up having 500 applications from which, we ended up funding 139 projects. And funny part was 40% of straight government aid for those projects so 60% was on funding of companies that were doing the project.

Oh. Okay.

So that was actually quite good mix. Enough public funding to have a kind of interest but then again, enough own funding to make meaningful…

So it might be projects that that they’re thinking about doing anyway and this is just the nudge that they need to, "Okay, we can get 40% funding. Let’s just go ahead and do it."

Yes. And then other criteria was that there has to be other organizations involved. It has to be this kind of ecosystem perspective, not one single own company’s development, but rather include other players. And then do everything openly so all the results, everything that’s done in the project, can be shared openly to anyone. So those four kind of criteria to get that funding. And it was quite interesting. It was 139 projects in two years. Total budget of all those projects was, well, about 12 million euros. So quite a lot of new experimentation in the field, kind of like a big hackathon for two years.

And we also put quite a lot of effort, on communicating the results. So we had different processes and activities to communicate what was going on already during those experimentation. We also organized a lot of this kind of shared events for different projects to come together so that there would be also a kind of a cross pollination between the projects And then of course we also… When the projects we’re finished and their actual final results, we put our effort to communicate them in Finland in different media channels, but also abroad, mostly with Arnie’s platform.

Yeah, interesting. And did they find out… So I was having a look at the website and I can see the descriptions of projects there. All 139 of them. The actual outputs, is that available freely from each project?

All the projects have their kind of end reports in some form. Most of them are in Finnish, unfortunately. So if you look at the Finnish website, you can find these kind of results reports and outputs from there. But yeah, the language part is always a bit tricky because we didn’t have a chance to do kind of to translate everything. But, yeah. So in Finnish, the kind of reports, project learnings on that level are available for all. Then if when talking about kind of project outcome, if there was some code or software or some kind of solutions developed, of course if the project, if the code is open source, that’s available as well. But then the companies could make the choice that, you know, they could keep some of that proprietary as well, as long as they share what was done, what was learned, what was the outcome.

So the requirement wasn’t too to keep everything open source, even though within the scope of this projects, was not to develop the actual product or service of a single company, but rather to utilize some existing digital asset or develop a MVP level digital asset that could be experimented in practice. The experimentation was in the scope of these projects, but still many of the projects continued to become actual products and services afterwards with further funding from the companies itself or easiest or business fit, not on orange. So that was kind of the idea that here, the funding was meant to boost this kind of experimentation and then after that, this kind of further development could happen.

[10:18]
What kind of companies was it generally that we’re doing these projects? Is it quite well established big engineering companies or was it smaller startups?

I mean, all the way from small, really young startups to mid-sized large companies, to you know, cities, municipalities. Startups were quite strong in the sense we… At some point we did an analysis where 40% of all projects were actually either startup driven or one of the key partners for pushing a startup. And it kind of make sense because if you kind of look at the innovation ecosystems for this kind of disruption, from the bigger picture, that’s usually where it come from. It’s the startups. It’s new companies that actually have ability to think outside of the box to try to have courage to try something radical, something new. It doesn’t usually exist in the established companies. Of course some of them also do that, and are able to do that. But that’s kind of how the dynamics go. But I mean, overall, we had over 550 companies and organizations involved within these projects so quite a big amount of…

Yeah, and that in itself is so valuable. Just getting these companies working together towards the same sort of goal, at least. And that’s followed through to KIRAHub, where you started now.

Yes. So now KIRAHub as a non-profit association was founded just because KIRA-digi was a project that ended and they wanted to continue the work that started in KIRA-digi. So KIRAHub was founded and it’s continuing that kind of ecosystem facilitation. So in KIRA-digi, the focus was on digital transformation of the built environment. We kind of continue with the same focus with KIRAHub but we have also introduced this kind of new term called sustainable digitalization of the built environment.

Of course, we want to look at this development not just from the economical perspective. Of course, the productivity improvements and new business and also one is really important. But we also want to look at the development from ecological and social perspectives as well. We also are providing now new opportunities for the ecosystem for the players - new funding opportunities, new program. We just launched an AI program for the built environment here in Finland, where the first batch is now starting this October. Half a year, six month period, with also quick experimentation on how you realize machine learning and AI within a company’s own business environment to quickly learn where it makes sense to invest more.

[13:47]
Are there many companies focusing on machine learning AI technologies in the construction industry in Finland?

Not that many. There is of course… Some of the companies are; some of them have been doing that for some time; and some of them did that kind of experiments already in KIRA-digi project. But from the big picture, it’s still really early.

[14:12]
And what kind of support are you giving them? Investment to try and experiment new ideas or physical space or expertise from different people or…?

So we’re doing this together with a Finnish AI accelerator, which is financed by the Ministry and Association of Technology Industries. So we’re not able to provide any funding on this program but we are facilitating the process for free. So it’s basically the process. It’s kind of a matchmaking the participating companies needs with AI companies in the field; have kind of quick experimentations together with those companies and then to learn where it would make sense to actually start building scalable solutions. So that’s kind of the idea. So we just facilitated the process but then it’s up to the companies themselves if they want to start scale something and actually implement something. So it’s between the companies to do any contracts then.

So for the six months, we don’t have now possibility to provide any further funding for it. But then, in the future there are different opportunities to do that as well. KIRA-digi was this kind of spearhead projects of the previous government. So now we have a new government. We had the elections in the spring, and they are now preparing a new project where the overall objective is to have a national data platform and registry, for all building requirement data. And now that has already secured quite significant amount of funding – 15 million euros. I mean in KIRA-digi, the government’s funding was eight million.

[16:25]
Is this related to Platform of Trust or is this different?

It’s related to it but this is now kind of the government’s initiative. But it will be done in collaboration with existing initiatives. So Platform of Trust is one of them. So there are already different platforms and different registries in place. So now in the new project, the idea is to start working with what we already have defining, in collaboration with different stakeholders, the national way of data structures and data models and processes of utilizing that data with these different platforms and registries.

[17:14]
And are you working with them? Helping them out in defining this scope or even building it?

So, yes. So we are hopefully helping with facilitating the collaboration of the whole thing. In kind of the best case scenario, because there’s already existing platforms and registries in place, we wouldn’t have to build anything new. We would just kind of integrate and connect what already is, and then kind of define the basic data structure and data models that everybody would then utilize in the future. But probably something needs to be developed as well. But we’ll see what… We don’t plan to or want to do it ourselves. Of course, there’s other organizations that are better in that but our role would be facilitate the collaboration and kind of achieve the true collaboration of all these parties, and having kind of the shared reason and shared objective to it.

Interesting. I was speaking to Lars Fredenlund. If you know him, he’s the CEO of Cobuilder and he’s working with the European Union to define this data model for the whole of the EU so that each country or each government doesn’t do their own thing.

[18:46]
Are you in tune with those sort of EU standards for data models in construction?

Yeah. I mean, definitely within the project, we don’t want to develop any Finnish way. So we will take into account everything that’s going on in the EU and globally as well, when possible. There are or a lot of the Finnish organizations and individuals involved in those processes. And now we’re actually planning to have this kind of group which is, well, translated to English would be something like interoperability group for the built environment.

So we will actually involve all these people that are working with these international standards and data models already to this one unified group in Finland. Also, that work has been done in silos previously. So we want to break those silos and have a common understanding on where we are and where we’re going to. And then you realize that knowledge within this projects will help.

Very exciting times. Lots of work to be done.

Yeah, and also, I mean, for example, Estonia have exactly the same objectives and same similar kind of projects now going on. So we are now also working closely with them to have synergies, and then of course to develop interoperable solutions as well. Because both countries also use the X-Road platform for their public sector data. So it kind of makes sense to integrate all that to the X-Road as well.

[20:50]
Yeah. So for you as CEO now off KIRAHub, what are your focuses? What your day to day tasks? What are you focusing on for the next 12 months or so?

I mean, the biggest objective for me at the moment is how to scale all these great experiments and how to help in adopting all these most impactful technologies. We actually did an analysis in KIRA-digi project that if we were able to adopt all these results or these solutions that were experimented in KIRA-digi as widely as possible just in Finland, we would have benefits of 5.5 billion euros annually. And that’s quite huge potential that we have and on bubbling under here. And that was just those 139 projects. So one of the biggest challenges is how can we make this kind of systemic change? How can we change this kind of existing structures in this field to be able to adopt all these new solutions? Because only then we have actually realized all that value.

Yeah. That’s the most difficult part.

So from experiments to scaling, that’s kind the, what I’m now working on to come up with different solutions to. The whole construction industry and built environment is also becoming more and more global. I mean, construction used to be local business, but now that this kind of digital layer is becoming more and more involved in digital services, that kind of digital layer is, from the start, more global in a sense. Well, maybe engineering architectural design, that has been global also previously. Some of the architects have been doing projects all over the world. Some of the engineering team for companies as well.

But now, we’re kind of seeing some examples of the actual construction and fabrication and this kind of physical materials also becoming a global business. Some companies are actually exporting, for example, timber modules of a building from different parts of the world. It’s this kind of hybrid module that have all the MEP electrical included and you can just stack them up and plug them in. And everything is kind of including more and more of that digital layer. So I see this also as a huge opportunity of companies in Finland to start looking more and more global markets, start kind of increasing their own market sizes in a sense, And that’s where we also kind of want to be a facilitator of introducing those opportunities for these Finnish companies as well.

Definitely. That’s exciting. Yeah. Because if you mention your five billion number just for Finland, if you’ve grown all this this expertise and done these research projects and got results from them, if you can export that to other countries and… Yeah. The possibilities are endless. And hopefully, Future Distributed, this podcast, helps with those aspirations because I completely agree with you.

And there’s already some kind of small examples of that. For example, in one of the KIRA-digi projects, we had an autonomous window cleaning robot developed. And so that was a team of three people from a garage here in Helsinki that started experimenting with this device that could actually clean windows in larger buildings in larger facades. First, it was operated by this kind of a drone controller. They experimented with different kind of brushes. And they experimented with different kind of water. Kind of some worked, some didn’t. They constantly made it better. And now, at this stage, it works. They made it even autonomous. So it actually recognize the facade where it has a glass, where it has something else. It learns how to how to clean the whole facade by itself. And now, they’re piloting it in Singapore, in Hong call, in these kind of obvious places where they have high rise buildings. So that’s a tiny example and still kind of modest example in back twice, but still, it kind of shows you the potential that’s out there.

I’ve actually thought of that. I did. I’ve got that written in my phone, but now I know that someone’s already done it. It’s a good idea.

Yeah. It’s Wall Robotics. That’s the name of the company now.

Okay. All right. So, we talked a bit about KIRA-digi and KIRAHub, where you are now. I guess if I could ask, you’ve got a lot of experience in managing innovation of the built environment.

[26:01]
What advice could you give to other people in similar situations, maybe, in different countries, who are managing similar programs of innovation work. What are the core lessons that you’ve learned over the years?

I think the built environment sector has been quite challenging previously because it’s been quite closed ecosystem, closed market. So as an outsider, it’s been really difficult to come in and start something new, or even start trying to disrupt the existing players. There’s so many of this kind of existing structures in the environment that… or there has been that’s made it kind of difficult. With kind of this KIRA-digi project and other innovation projects, another main learning has been… Because that’s also kind of one thing that has been hindering new innovations. And it’s kind of a new thinking because it hasn’t been too many individuals or companies coming from outside to kind of challenge the status quo or challenge the mindset. So the pipeline has been from recruiting people that have gone through the same study pad and so on.

Now that has changed a little bit. So the companies are actually hiring people from other kinds of backgrounds. The sector is allowing different perspectives to come, and they actually see that, you know, potential in collaborating with different kinds of companies as well. So this kind of closed ecosystem have started to open up and that was one of the main thing in KIRA-digi as well – that everything we did, we did openly and as transparently as possible, allowing for anyone from anywhere to come and show their ideas and show their experimentation. So that any everyone could learn so that kind of new collaboration and partnerships could emerge, that would lead to new thinking and new innovation. And that kind of openness is definitely needed in the future as well.

What we also learned is that you don’t… And I mean, that openness also relates to communication. The companies in this field haven’t been too good in communicating what they’re doing, communicating even the great things, the great results that they’re… or create projects. The overall communication of the built environment and construction, within different media platforms, at least in Finland, has been actually quite negative. So there’s always discussion about budgets that go over budget or… No, I mean projects that go over budget or over schedule or the quality is weak or, you know, things like that. And not much off those positive things get any news coverage. And that’s partly because companies have been so bad at telling anything. Even though they do great things, they don’t really communicate. So this is kind of what we were able to change within KIRA-digi that we actually created these great stories about these results that were really inspiring and we kind of introduced that mindset to this company as well that, “Hey, you could actually start spreading and communicating these great things that you’re doing because that’s actually a really good way to promote yourself.” And that actually would lead to new opportunities in the business. And not just in Finland, but also globally. So that’s been kind of one key learning as well.

One key learning, also from the project was that for new experimentation, it doesn’t really require a lot of money. And this kind of experimentation culture that requires habit learning. So as I said, we had six open calls for this experimentation. During the first round, we actually got a lot of application for this kind of traditional R&D projects. So we actually started to have this kind of awareness-building of what experimentation actually means. It doesn’t really mean that you plan a one year project where you have specific phases and then you execute the project as planned. But it rather… It actually means that you have an idea, really a new idea that you want to experiment in practice with real users and learn fast. If it works or doesn’t. And you’re allowed to fail as well, as long as you learn why it didn’t work. And you can actually do it in weeks rather than in months or years. And many times, you don’t even have to develop anything or code anything. You can just use what’s already available and you can, or you can come up with this kind of really rude ways of getting that experiment all done.

So when companies were actually applying these projects, they had to estimate a budget as well. What we learned was that they hugely overestimate that budget during the application process. Of course they want the money. But then what happened was they actually spent only a fraction of that money and they still got the finished the experimentation and got the learnings. And because our funding was based on the actual amount spent, so that meant that we actually had a lot of money to be spent for other things during the project as well. So we actually ended up overbooking this kind of projects before because of that. So we actually started estimating that that it would happen, but still, we had more money left that way.

Had a big party, Christmas party that year.

Yeah, we were probably supposed to have, but, you know, there wasn’t too much partying or celebrating during the project. I mean, we should have done it more.

Well, great. Very good advice. And something you mentioned there about the diverse teams, getting new people into industry. It’s funny you say that because probably the biggest startup in London construction tech is comically called Sensat and they have two founders that are not from construction at all. They have just completely new ideas and some people see that as their biggest strength because they’re not tied down to the traditional ways that things have been done. So, yes. Interesting that you mentioned that. We’re slowly running out of time but I’ve loved hearing about your experience and the work that you’re still carrying on here at KiraHUB. I want to finish with a few quick fire questions. So three questions. If you could just tell me the first thing that comes into your head, 30 seconds. That sound good?

Sure.

Okay, so we’ve heard a lot about innovation in the construction industry here in Finland.

[33:52]
But if you could change one thing overnight about this industry in Finland, what would it be?

That was too difficult. Willingness to invest? If you look at how much companies actually put in in in R&D in this field, it’s ridiculously small amounts. And that kind of goes hand in hand with the experimental experimentation culture. But on the other hand, you know, it is actually really cheap to experiment with things. But then, if you really want to achieve an impact, you have to learn from those experiments that what should be scaled and what should be kind of adopted widely within the whole organization or project network. And that that’s kind of the missing, usually the missing part that companies in this field… Even when they actually learn that where should be invested in and where kind of these benefits are waiting for it to happen. They don’t have the courage to actually do that investment.

Yeah. It’s difficult. You’ve proven the business case, and you just need this much money to invest now. Okay, good answer.

[35:15]
Are you a reader? Did you read many books? And if so, is there one book that you think everyone should be reading?

I haven’t been able to read too much lately. I’m trying to listen to audio books more, but also even that has been on pause lately. So there’s not really any recent books that I would recommend. For the past couple of years, I’ve been reading or listening to a lot of books on platform economy and kind of trying to understand how that, as a phenomena, would apply within the built environment as well. So that kind of intrigues me in the sense that if we could come up with a actual operating system for our buildings, whether it’s for our living or working or anything, but would allow this kind of easier adoption of new digital services within our homes and our offices – which would then act this kind of… Introduce this kind of platform economy, for the built environment as a larger scale.

This not an easy task. Of course, these kind of huge players like Apple and Google and Amazon have kind of tried to go to that route with their voice controlled Alexa’s and Google homes, and so on. But it’s still kind of just a small, small traction of. But it could be… No specific book.

No, that’s fine. Yeah. A good category for people to look into. Okay, and finally, as you know, I’m traveling to different cities interviewing the most innovative people in the built environment sector and small building and smart cities, that area.

[37:08]
Who is the most innovative person that you know that you think I should go and speak to?

Anywhere in the world?

Yeah, it could be anywhere.

Every country has at least one or two or some of these innovative people that are really pushing for a change. I would say if I had to choose one, I would probably say Brett Young at the moment. I got to know him through the AEC hackathons where he was also… He’s been part of our wbb summit. He was one of the keynote speakers last year and he was also one of the session speakers this year. And he’s been kind of pushing several things, mostly on utilizing machine learning in automating the designer’s work. Having a machine to automatically generate Rudy Groundings, for example; MEP Design; utilizing the game engines in that work, and it’s kind of a radically new way. I think he’s really into something. It’s still a long way from getting mainstream, but he’s been able to gather around a group of like minded individuals in different countries. So I think we’re slowly started to see an impact from that… He’s really an interesting protein.

Good answer. You’re not the first person to say him, actually.

Oh, yeah?

Yeah, yeah. There was Neil’s from HD Lab. He also mentioned him. So, yeah. Very good. So we’re slowly running out of time so I want to say thank you very much for your time today, and you’re really interesting answers. And I wish you all the best in the future for building and growing these companies, and hopefully building a unicorn in the hub in the future. So, good luck.

Yeah, I mean, that’s thank you. That’s been one of our goals. I mean, we’ve had some examples in Finland of building unicorns, even decacorns, for example for games industry, like Supercell. That’s one of the actually first decacorns in the Nordics. So if we can do it in the games, why couldn’t we do it in the built environment as well? We have a great stack of people and kind of a competence here. We have small enough of a market to be test bed for new innovations. We still need a little work in the mindset of thinking big, but, I think we’re getting there. Thanks, and hopefully we’ll see you at the next world summit on digital built environment Vdv either in Helsinki or Tallinn or somewhere in between.

**Great. Thank you very much.
**
Thank you.

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