TrueNorth Development
President

Scott Sedam, president of TrueNorth Development (www.truen.com), spends most of his time working in the trenches with builders, suppliers and trade contractors. His Lean Builder blog appears weekly at HousingZone.com. He welcomes your feedback at scott@truen.com.

Lean Building Blog: Who has the edge on innovation?

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? Where would I go to find the best innovators?” I said I’d tell him, but he wouldn’t believe me, because I knew he was thinking my candidates would be big builders in cities like Atlanta, Dallas and Phoenix, similar to his own company. When I told him that to find genuine innovation, I would send him to places like Lancaster, Owensboro, Lubbock, Baton Rouge and Birmingham, he reacted as if I had just told him I preferred White Castle to Ruth Chris.

Yet I was utterly sincere, and really it should come as no surprise. Although great minds with time to ponder can produce great ideas, the most aggressive innovation occurs when creative force meets crushing need. Although hardly a builder in America has not experienced crushing need since the crash of 2007, the entrepreneurial spirit and instincts of the strong local builders provide a tremendous advantage in supplying creative force. I liken it to rewiring circuits with the power still on (something I have a bad habit of doing,) there is no insulation from the risk when your personal assets are on the line – not merely those of the corporation. It’s just different, as anyone who has made the switch from corporate life to entrepreneurship can attest. Any member of a large corporation who claims genuine entrepreneurial spirit in their company hasn’t had much experience as an entrepreneur. In their defense; how could they know? When your primary concern has to be producing sales and profit numbers that meet the short-term expectations of stockholders and Wall Street Analysts, there is little time left to get creative. Out of the box thinking is rarely rewarded in Fortune 200 companies. As a veteran of three such firms myself, I can report that radical thinking – the kind that produces real innovation rather than mere tweaking – often gets you fired.

The facts remains, the primary drivers of innovation in American Homebuilding are the strong local builders and a few of the regionals that have fought to maintain their entrepreneurial instincts. In our industry, you will find these builders ranked roughly in the 25 – 100 rankings of America’s top homebuilders. In the May issue of Professional Builder, I will provide a review of a number of these innovations from builders around the country. This blog post is actually from the introduction to that article, and I hope you will read it and find it compelling. In my research for the article, I found I could easily write a book on what these firms have done. (Perhaps I should?)

Almost all of these builders are up substantially in 2012, some as much as 30% or more – and all have survived the housing recession with aplomb. For many of these builders, I could write an entire article about their innovations, but they might balk at giving a comprehensive prescription to their competitors. They were gracious enough though to give us a look at some of their innovative gems. Coming in May.

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