Last fall the president of one of America’s “Top 10” builders who I have known for years corralled me at a conference. Because I travel this industry about as much as anyone, he likes to pump me for intelligence – as I do him. He wondered, what did I see out there? Who was making it? Who wasn’t? Which cities were ready to emerge and which were not? I gave him my take on things and then he asked a series of bombshell questions, “Who really impresses you? Who truly has the best practices?
The NAHB in conjunction with Professional Builder Magazine launched the National Housing Quality Award (NHQA) in 1993 to encourage and recognize best practices and best builders in the continual improvement of product and process. Modeled after the Malcolm Baldrige National Quality Award, over time the NHQA has become the gold standard of awards in homebuilding.
Let me be straight - I am anti-Net Promoting Index (NPI) in the home building industry and this is why...
When I was a manager/leader/owner of a homebuilding company there was a recurring problem that I often saw (and personally committed). Too often, we would manage our company by average numbers. For example, let's say our Willingness to Refer (WTR) declined 5 points from 95% to 90%. We would become upset and meet with the Sales Team and Builders to tell them "we are better than this!" We were managing the company and staff by the average number.
I often wondered why a consulting friend of mine wrote of his miserable air travel experiences, and now I get it. The airline industry, with its product and personnel scenarios are a reasonable proxy for the homebuilding industry. How? Read on.
As a Platinum level patron, I am often “upgraded” to first class. It is amazing how different the first class experience can be on the same airline, aircraft, and route. All else being equal, what is the determining factor? It is the personnel, of course!
Take for instance
Our business picked up in late 2011, started the New Year off well, and we were deluged at the IBS show, beginning with a standing-room-only presentation on Lean Design. Our first quarter is strong and 2nd quarter looks even better. Builders seem to now have sufficient confidence that they want to get their processes “Leaned-up” to meet current and projected growth. We have a long list of clients who are reporting sales being up way above the national average of 8% reported for January and on into February. Yet the question persists … is this recovery for real?
Peter Senge wrote one of the best business books of the 1990’s, The Learning Organization. It is one of those on my list to pull off the shelf and read again, if I ever catch up with the stack of unread volumes on my credenza now. I even attended his 4-day workshop in Boston in the mid-90’s and it made a considerable impact on everyone there. What Senge laid out was what constitutes the “Learning Organization” and why those companies invariably do better than those whose primary goal is to replicate and execute their existing business model.
The bottom of the market is clearly in and most builders know it, especially those that attended the International Builder Show (IBS) in Orlando, February 7-11th. At IBS 2012, there were scores of great programs on red hot topics like Social Media Strategies, Marketing Must Dos, Lean and Green best practices, and much more.
There is nothing in homebuilding that makes less sense than purchasing by the square foot and it is a big obstacle in Lean implementation. Other than the fact that it makes things easy I suppose, there is very little to be said for it. It damn sure makes purchasing inaccurate and confusing, at best. Not much of a tradeoff. Imagine, for a moment, buying an automobile by the pound. Do you think you could do any meaningful price/value comparisons?
In my blog two weeks ago, I launched into a tirade about how so many residential architects are not doing their job. Each week, I link this blog back to the LeanBuilding Group on www.linkedin.com. Many members posted responses with good points on how to remedy the problem. Here are some excerpts from them. I thought I’d let them do the talking this week. (Note: if you are not a member, go to www.linkedin.com and search “Lean Building.” The group will come up, and join! There are some excellent discussions going on.)
With the February edition of Professional Builder, I begin a series on the evolution of quality management. Here is a more detailed version of an excerpt from that article to come. Be sure to read that.
In the past year, during our LeanPlan Workout process, we had the dubious honor of “working on” plans from 3 of the biggest name, most expensive architectural firms in the country (among others.)
Michael J. Fox and I have something in common (besides the obvious – talent, good looks, irreverence, witty repartee, etc.) We both have an incurable “condition.” Fox has Parkinson’s disease, a well-known affliction that continues to ravage his body despite an astounding amount of medical research dedicated to discovering a cure. My condition is a rare one called Alport’s Syndrome, a genetic fluke that resulted in total kidney failure nearly 12 years ago.
Last weekend was the annual Christmas sojourn to my wife’s relatives in Chicago. On the obligatory trip downtown to Marshall Field’s to see the Christmas decorations, visions of credit card slips danced in my head as my wife and daughter pursued something precious that surely could not be found elsewhere. As they searched, my mind naturally turned to thoughts of Lean, rather how much waste I could find in the store’s products and processes. Yes, it is an obsession. Then my eyes fell upon this plaque, something that Marshall Field himself wrote in the 1800’s. I took this snapshot.
December is often the time of year that many home building companies finalize their 2012 goals and budgets. Management meticulously reviews past sales performances, hard costs, personnel budgets, etc., and set both goals and budgets for 2012. Once each line item is discussed and approved, these bugeteers ask managers to sign off on this plan as their commitment to 2012 excellence. Seldom do we see customer satisfaction goals handled with this same degree of foresight and commitment. Why is this?
One of the requirements in Lean Operations is harnessing the “Voice of the Process.” Your processes can teach you so much and hence save you a lot of cash … IF you know how to get them to talk to you. How do you do that? Metrics, of course, but usually not the old tired ones that don’t provide much illumination. You have to dig a little deeper. Here is a great example. How many of you have ever looked at the ratio of how much business you do under VPO (Variance Purchase Order) vs.
When we look into our car’s rearview mirror we see where we have been, as well as the distant horizon; the vanishing point of times past. In the home building industry’s rear view mirror, I gladly see the depths of home building’s bottom slipping over the horizon. What makes me think so?
First, many sectors of the economy and their metrics are undeniably improving - employment, consumer spending, household formations, and most importantly, consumer sentiment. A long time ago, I remember doing a detailed study which plotted numerous economy and industry data p
Yesterday after presenting an orientation for our LeanPlan Workout process to a group of suppliers & trades in Texas, a contractor named Mike walked up to me and two of the senior managers from the builder. Strong-looking guy, with very alert eyes, about 50 years old with that kind of rugged Texas good looks from a life spent working outdoors that you see a lot down there. He had been very attentive during the presentation, and took a lot of notes.
I am frequently asked, what is the right way to buy labor and materials? Should you use turnkey suppliers and trades or should you purchase and negotiate labor and material separately. Let me be 100% clear about this. I have the answer. I am now into my third decade of looking hard at this issue and have watched more than 200 builders up close and personal and unequivocally conclude based on the evidence that the clear answer is to buy labor and materials separately – except when the best way to purchase is turnkey. Got it?
The 2011 “Black Friday” sales numbers are in and show a pleasantly surprising 16% gain in year-over-year retail sales! Some economists, pollsters, and industry “experts” expected consumerism to be flat or even down this year; proving once again that rational surveys do not accurately capture consumer emotions.
Here are two Black Friday observations – first, asking consumers a rational rating question, i.e.
The Lean Perspective is by no means limited to sticks and bricks issues on the construction site. When we talk Lean building we are really talking Lean operations: providing value & eliminating waste in product and process wherever it is found. Many seemingly mundane issues can have significant implications in both cost and value. A great example came up last week while having dinner with builders from several companies at the Bob Schultz “Serious Management Workshop,” a twice-annual event that attracts senior managers from across North America.