According to one expert: “in the construction industry we have product and process innovations but also systemic innovations” (Interviewee 11). Systemic innovations “include organisational and ‘actor-role’ innovations” which, according to the expert, explains the core of systems integration where separate systems and sub-systems become interconnected in new ways. Technologies transcend sectors and cross-fertilise towards new ends, and novel actors as well as new ties between actors and supply chains emerge. Meanwhile, also established players change their roles, adapting to new conditions and exploring new opportunities (ibid.).

Barriers to wood construction discussed in previous chapters point towards structural inertia, which cannot be disrupted without systemic changes to the overall construction, forestry and related sectors, from legislation and policy to market conditions, funding structures, governance and collaboration set-ups, and a profound behavioural and cultural change. For over a century, building systems based on concrete and steel have maintained an unchallenged dominion, where established actors and lobby groups have had very little competition in the market space (Interviewees 1, 11). Over time, material suppliers, construction companies, real estate firms and other players along the supply chain have welded a strong mutually dependent relation making it difficult even for powerful industries such as forestry to wedge between these links. The unchallenged status quo was reinforced by large investments, well established supply-chains, business models, funding mechanisms designed for a specific type of construction, a long tradition of established practices, and a vast accumulated knowledge. Therefore, the well-functioning status quo offers no specific incentive for the established actors to enter a new playing field, which entails risks, new knowledge, new investments, new business models, and a re-organisation of the construction process and partnerships. Introducing wood, represented a leap onto the unknown. On top of that, the infant wood construction industry, while still taking baby steps, experimenting, and solving all types of challenges, be it technical, regulatory, financial, or cultural, appeared far too utopian, unrealistic or at best to serve a niche market. At the systemic level, the effects of structural inertia are visible in a very tangible form: for example, in the slowness and reluctance of actors such as banks and insurance companies to offer more flexible options taking different building processes into consideration. Although this is now changing, the emergence of multi-storey wood building has been possible first, by a handful pioneering companies and also municipalities that have by-passed the established actors and processes, building the first pilots and slowly creating competing business ecosystems. Investing in technological innovation and knowledge-building, facilitating cooperation across sectors, academia, policymakers, and public authorities is then enabling systemic change. In what follows, we discuss some of the issues that humper or facilitate systemic change.

Coordinated efforts in knowledge building are important because the lack of information about wood as construction material is among major barriers hindering the development of the sector. As seen in Ch.4, there has been several efforts in the national level, including several research programs launched in both Sweden and Finland, since the beginning of the 1990s, and state funding has allowed examining in more detail some practical problems such as related to acoustics and fire safety, as well as testing different construction systems (Interviewee 1). However, most work done to develop engineered wood products, or to solve the technical problems, has been conducted either by the pioneering companies themselves, or with their own funding. In addition of technical research, impacting the dominant education system, where for example civil engineers, planners, architects, and constructors gain their expertise, remains an important but complicated task. Unless well informed, these actors still expect wood to behave similarly to steel, for example, which leads to negative experiences that then enforce negative stereotypes about wood as material (Interviewee 3). For example, the notoriously expensive publicly procured wooden music hall in Lahti served for long as an example warning others off wood construction (Mölsä 2021).

In addition to technical research, the wood industry as a collective has played an important role in generating awareness for example by creating open national standards. Going forward, constructors could continue making it easier for customers to make estimations for their plans by setting prices more clearly to reflect the real costs of building in wood (Interviewee 13). Resource banks featuring exemplary solutions or for examples templates for alternative cooperation agreements based on life cycle thinking could be one way to use knowledge building for directing public resources more efficiently (Paavola 2019; Interview with IA). Efforts to synchronise business practices has been far from simple because all Nordic countries (let alone EU members) continue to have their own construction standards and regulations (Interviewee 3).

Since wood is considered a novel material and the layer of knowledge is thin, anything going wrong with wooden buildings can become newsworthy, reinforcing possible negative stereotypes. Therefore, some experts favour safer projects such as multi-storey apartment blocks (compared to tall, experimental buildings) as the best strategic move to increase a market share (Interviewee 11). As an example of negative perceptions, Finland’s key breakthrough in wood construction experiments resulted in mixed results. In 1995, the fire laboratory of the Technical Research Centre of Finland (VTT) succeeded in testing wooden frames against an hour of exposure to fire, which led to building a three-storey apartment building in Helsinki. However, the final costs of this pilot project rose high above initial estimates, leading to the sacking of the CEO of the construction company and general mistrust towards wood as material (Rakennuslehti 2016). Behavioural factors influencing the stakeholder ecosystem have considerable influence and they come in many shapes and forms. In addition to common fears associating wood to fire hazards, mould and moisture, public opposition may also rise in the future because of fear of deforestation or unsustainable forest management. This is especially true beyond the Nordic countries, where deforestation of primary forests remains common (Interviewee 11), but also in Nordic countries where the standard forest management practices are increasingly alleged to be unsustainable. Combating negative associations towards wood construction, the industry, and advocates appeal to a wide spectrum of factors, including broader societal values, perceptions, and attitudes towards the material (either real or imaginary), planning systems and public procurement, general rules and legislation, certification schemes, supply of options (material-wise) from timber industry and their search for new markets, and the interest of architects. ’Wood house safaris’ is one initiative emerging from Växjö and Skellefteå municipalities as a way to challenge the inertia posed by negative perceptions and fears. Beyond simply building awareness, these safaris are an effective way of selling the idea of ‘success’ which can spin-off into a self-reinforcing cycle, where new projects and investments are attracted towards examples of previous success stories – or at least narratives of success.

Not only structural inertia, but also successes in gaining a foothold for wood in the construction market over decades links closely with building and relying on both formal and informal networks and actors. Failures often coincide with a lack of support systems. One of most concentrated efforts to build networks and collaboration in Sweden is the platform established by Trästad Sverige, discussed in Ch. 4. During periods when there has been no state funding, active members have been able to keep the momentum going. Linking to the weight a place has, here we again witness the role of active regional players. Regional and local representatives were closely involved in Trästad Sverige from the beginning of the association, including the governor of the county administrative board of Västerbotten chairing the board. 

The national level is often too big of a scale for driving industrial transformations. Local, place-based initiatives often prove more effective in mobilising local businesses and other actors and creating common grounds. Geography generally determines regions’ industrial legacy, the resources available, the knowledge and skills, the established networks, as well as the ‘tacit knowledge’ or more implicit societal norms or ‘ways-to-do-things’. The local level is a more ‘human scale’ where people know each other and have built trust relations. Skellefteå and the broader Västerbotten region is a clear example of this, where many have referred that the short distance (metaphorically) between and even social relations between people in the industry, local authority, and university has been crucial in bringing them together towards common goals and quickly take solid steps. For instance, the municipality commissioned the first wooden multi-storey building as early as 1995, the same year the new building codes entered into force. Simultaneously, Martinsons, the local wood industry revived the production of Mass Timber products, began piloting, and making long-term investments. Moreover, place-based developments are often resulting from the capacity of individuals of mobilising change. In Skellefteå a visionary and bold politician was a significant figure in pushing forward change. Skellefteå’s ability to tap into its specific strengths, resources and historical roots has been a decisive factor in its successes in promoting wood construction. The municipality is in an advantageous position as the owner of Skellefteå kraft, a large energy company, Skebo, the municipal housing company and is co-owner of Kommuninvest, a bank that offers ‘green loans’ with low interest rates. Much of the land is also municipally owned, as it is common in Sweden. Skellefteå municipality is, therefore, able to lead by example and build many of the city’s wood buildings, including public schools, event halls and parking lots, as well as apartment buildings. Combined with strong industrial legacy in forestry, these reasons have enabled the city to take a less interventional and more organic approach in wood construction policies, possibly lessening the risk of tensions (Interviewee 7).

However, development can also be driven far from the industry where urban areas have taken the lead, highlighting the role that zoning and local sustainability goals may take in supporting wood construction (Interviewee 12; WoodJoensuu 2022). Place is relevant when assessing the environmental footprint of construction as proximity to the material plays determines the emissions from transport. To reviewing the sustainability of material itself, it is essential to assess e.g. what material is locally available and what is durable under the local conditions. For example, the sustainability of wood construction in Iceland, where most construction materials are imported, should be evaluated differently than in forest regions of Sweden and Finland (Palmadottir at panel debate at the Icelandic Democracy Festival, Fundur fólksins,2022).

On the other hand, the global perspective and networks at national and international level also play a key role as it allows actors to transcend the limits of geography. For example, since joining the EU, Region Västerbotten has found it easier to gain allies in Brussels than in Stockholm. As a local public servant explained, actors and networks in the region have benefitted from collaborating and connecting value chains internationally (Interviewee 10).

As a nascent industry or sub-sector, wood construction is (or was in the case of Sweden) in a position as outlier in the market, affecting the possibilities of accessing the necessary funding. In addition, the lack of built experience, at least in early phases, was deemed risky for insurance companies and thus demanded higher fees for wood-based projects. The common financial structure used by banks can also be problematic for wood construction projects because its work phases are organised differently. Often, banks make payments to constructors in different phases of the building process e.g. foundations, framing, interior and exterior, as each completed phase can be used as a warranty of value. Compared to this arrangement, wooden building, especially modular building systems carry most of the work offsite in a factory and then assembled onsite at once. Standard loan structures especially restraints the possibilities of small and medium-sized companies that do not necessarily have the cash flow to invest in the whole building process. In Sweden, municipalities have been able to circumvent the problem of funding by seeking ‘green loans’ from their jointly owned investment bank called Svenska Kommuninvest. Being owned by a collective of municipalities, the bank supports their interests. In this case, municipally led projects that classify as ‘Environmental Buildings’ in accordance with ‘Miljöbyggnad’ certification scheme, can receive lower interest rates (Interviewee 7). In general, however, banks have been slow to adapt. And although companies have found ways around, the increasing number of wood buildings calls for a more systematic change in banks’ funding structures for the construction sector (Interviewee 2).

Insufficient networks and experience in early days made wood construction less cost-effective than traditional construction. This inevitable situation for many emerging industries represent a major customers and contractors will still favour cost-effectiveness over sustainability (Interviewee 11). The differences in market conditions between Sweden and Finland can be partially traced to the lack of a systemic effort to invest in research, development, and innovation in Finland. For example, in the 1960s Sweden accepted a proposition of setting money aside from salaries to research and has used these funds to establish Bygforskningsrådet, which today finances research with hundreds of millions of SEK annually. In Finland, a similar initiative was rejected (Rakennuslehti 2016). Finnish constructors have struggled to build efficient construction processes, and therefore battle with higher costs to a much larger extent than their peers in Sweden. Considering that the timeline of prefabricated buildings is more predictable, successful knowledge building should lessen the burden of perceived risks in wood construction with time. An important factor would be to get more current data for risk analyses, on which financing and insurance decisions are based on (Interviewee 6).

One expert compared operating in a construction market to training an army (Interviewee 2). Both processes are usually carried out in a highly similar way, so that any new components must be carefully assessed and aligned with the existing parts of the system. Since most new endeavours imply taking a risk of not meeting the pre-fixed price calculated with the customers, companies tend to avoid new solutions even if they would be more efficient in the long run. However, things are shifting. Construction companies are presently getting involved in wood construction because they realise that the market demand for it is growing. New involvement entails building more domestic factories for mass timber products and modular units, but also new players and start-ups filling market gaps with innovative products and solutions, leading to rapid increase in volumes. As the market grows, all processes involved are becoming more cost-effective as well. As the same expert puts it, “you just need to shake the ketchup bottle for some time and then it all comes out at once” (Interviewee 2). But who is responsible for shaking the bottle? In this case, municipalities have played a key role in coordinating action and establishing ties between key players. The municipal governance and planning systems can be both a barrier and a useful tool to make things happen. Planning systems and zoning regulations have generally been based on conventional construction systems, which represent a problem for certain wood construction alternatives. Adapting planning systems has been necessary to enable wood construction to compete under the same rules of the game than conventional construction. Indeed, in successful cases, municipalities have used public procurement and planning systems strategically to favour wood construction and circumvent systemic barriers.