Archive for May, 2016

The Pipeline, 2nd Edition: The Escape from Averageness

Posted May 30, 2016 By Fletcher Groves

(the second edition of The Pipeline: A Picture of Homebuilding Production© was published in January 2016)

The Pipeline 2nd Edition Book Cover (VBW)

The second edition of The Pipeline: A Picture of Homebuilding Production© remains a business book.  Yes – it is about the principles and disciplines of production management, as they relate to – and as they are applied toward – the specific conditions, requirements, and parameters found in the homebuilding industry.  But – it is also a business book, because there is a difference between being in the homebuilding business, and being in the business of building homes.

I am told that the Introductions written for business books typically answer this question:  Why should you purchase this book?

In the case of The Pipeline, I would say it is because improving performance on the velocity side of the Return on Assets is the best path – perhaps the only path – to achieving sustainable competitive separation.

Because that path is an escape from averageness.

The issue is not whether the velocity side of economic return is more important than the margin side of economic return;  Gross Income derived from making more on each house you build (margin) has the same contributory value, dollar-for-dollar, as the Gross Income derived from building more houses with a planned, finite, and controlled amount of inventory and capacity (velocity).

Nor is it necessarily a choice.  Sometimes the circumstances favor one or the other, but we don’t have to choose between efforts to increase Return on Sales and efforts to increase Asset Turn;  margin and velocity are driven by different aspects of the business, and they generally don’t react to, or adversely affect, each other.

It is, simply, that higher margin – while as desirable, beneficial, and important as higher velocity – is not a strategy for creating a lasting competitive advantage;  between higher margin and higher velocity, higher margin is the easier, more common strategy.  The same is true of the opposite to higher velocity, which is higher capacity.  Adding production capacity (and the required inventory) is a “more-for-more” proposition.  It’s the easy, more-traveled road.

You can add production capacity, but don’t expect it to set you apart.

As business strategies, higher margin and more capacity can be co-opted.  True, sustainable, competitive separation comes more from doing what your competition will not – or cannot – do.  Like finding ways to become more productive, to “do more with less”.

Consider the situation that confronted RB Builders, the homebuilding company portrayed in the book (and chronicled earlier in The Saga of RB Builders©), facing the world at the close of 2007, at the end of the halcyon period known as The Age of Homebuilder Entitlement:

“In many ways, RB Builders was a product of that age, just another homebuilding company satisfied with occasionally adopting other builders’ “best practices”, content to be good, no-better-but-no-worse than the other builders with whom it competed, a building company with a middle-of-the-road approach to delivering the value its homebuyers demanded.   

“The previous 10 years had been good for RB Builders.  But, it was becoming a dangerous approach to business, because – as the saying goes – “the only thing in the middle of the road are yellow lines and dead armadillos”.   

“It was becoming a homebuilding no-man’s land. 

“Locked into an operating model – into organizational structures, management systems, processes, cultures, and employees – that could not deliver extraordinary levels of distinctive value, the company found itself dumped into a teeming mass of homebuilders that all looked the same, sounded the same, and priced the same.  Indistinguishable from other builders, and unable to create any type of competitive advantage, RB Builders was trapped and sinking – like a modern-day dinosaur – into the tar pits of average-ness.” 

The world doesn’t need any more average homebuilding companies;  it has enough of them.

 

The Pipeline: A Picture of Homebuilding Production©, Second Edition is available through the publisher’s bookstore, and from any of the main booksellers (amazon.com, barnesandnoble.com, or booksamillion.com).

https://www.virtualbookworm.com/collections/business/products/the-pipeline-a-picture-of-homebuilding-production

It is always carried in-stock on amazon.com:  http://amzn.com/1621378047

 

The Pipeline, 2nd Edition: More of What Others Are Saying

Posted May 22, 2016 By Fletcher Groves

(the second edition of The Pipeline: A Picture of Homebuilding Production© was published in January 2016)

The Pipeline 2nd Edition Book Cover (VBW)

“I would recommend The Pipeline: A Picture of Homebuilding Production© Second Edition to anyone already in, or looking to get into, the production homebuilding business.  The case study used is easy to follow and you learn through real life examples.  As a company, we learned a lot through the book that we were able to put into action.  For example, after reading the book we immediately started to even flow our jobs starts.  I always understood the concept of a pipeline, but the book helped me to see how it all worked together…and how what we were doing was hurting more than helping the problem.”  (Doug French, CEO, Stylecraft Builders, College Station, TX)

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“When I found out a second edition of The Pipeline: A Picture of Homebuilding Production© came out with additional content, I was excited to get my hands on it.  I was not disappointed.

“Fletcher manages to turn a potentially dry topic into a very entertaining and insightful read and learning experience.  The examples used are easy to follow, and are the best way to explain the principles of production homebuilding that I’ve come across.  The book opened my eyes to the seemingly obvious mistakes homebuilders often make in terms of managing their portfolio of work in progress, both on the physical side as well as the financial side.

“The new content regarding vertical integration with labor providers was a fresh perspective and a new way of thinking about the benefits of this business option.”  (Dennis Shriver, Vice President/Owner, Hearthside Homes of Kansas City, Kansas City, MO)

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“I again salute my colleague and good friend of so many years, Fletcher Groves III, on a noteworthy achievement with the second edition of The Pipeline: A Picture of Homebuilding Production©.  A useful industry textbook has now become an indispensable guide to organizing the universe of important operational and financial considerations that bear on the business of homebuilding.

“Fletcher has added an important section to this landmark opus, to extend an invaluable guide for naming, assembling and measuring economically the constituent parts to the system of homebuilding.

“The innovative first edition of the book used the Pipeline game™ to simulate the complex environment of the business of homebuilding.  The game prompts interactions and insights among the actors in a homebuilding team, and serves to illuminate how to optimize a business set within defined constraints while teaching a vocabulary of relevant quality principles and measurements that should govern all homebuilding manufacturing.

“The second edition further refines components of the game, resources, operation expenses and the income statement, to reflect more closely the real world of homebuilding operations.

“My reading of the first edition of The Pipeline: A Picture of Homebuilding Production© resulted in the conclusion that the book should be used as a textbook, if not a workbook, for all principals in the homebuilding business.  Looking again, and in particular at the addition of the ‘extended’ game, I have now come to think that any homebuilding company owner or CEO who does not adopt and internalize what The Pipeline: A Picture of Homebuilding Production© has to offer is putting at risk ROI, if not his company.

“For an internal homebuilding team, I believe that it should use the book in the same manner as a flight simulator is used in aviation, with annual trips to the ‘box’ as a team, and as the cornerstone of a continuous improvement effort that will generate quality and revenue.”  (Kent Steen, Vice President – Marketing/Sales, Bitrage NOVIS Corporation)

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The Pipeline: A Picture of Homebuilding Production tells the story of how RB Builders learned the principles of homebuilding production in the turbulent years following the end of the period known as the “Age of Homebuilder Entitlement”.  It is a story told in the exchanges of dialog between team members, senior management, and RB Builders’ trusted, results-based advisor/partner.

The result is a deep understanding of a production system with an enduring visual image, the elements of which are crafted to the specific conditions, requirements, and parameters of the homebuilding industry, and a realization that improving performance on the velocity side of the ROA equation is the best path a homebuilder has to achieving sustainable competitive separation.

The Pipeline is about the specific application of underlying principles and disciplines of production that are universal – physics rooted in the laws that govern all production systems.  The book is about using the tools that work for homebuilding production, without regard to the consulting religion from which they come.

The Pipeline makes the connection between operating performance and business outcomes.

Next:  The Pipeline, 2nd Edition:  The Escape from Averageness

 

The Pipeline: A Picture of Homebuilding Production©, Second Edition is available through the publisher’s bookstore, and from any of the main booksellers (amazon.com, barnesandnoble.com, or booksamillion.com).

https://www.virtualbookworm.com/collections/business/products/the-pipeline-a-picture-of-homebuilding-production

It is always carried in-stock on amazon.com:  http://amzn.com/1621378047

 

(the second edition of The Pipeline: A Picture of Homebuilding Production© was published in January 2016)

Pascal and I are friends and colleagues, as he notes in the foreword that he graciously wrote for the first edition of The Pipeline: A Picture of Homebuilding Production©.  Pascal is a professional engineer, and the president of the international consultancy group Lean Pathways Inc.  He is the author of Lean Production SimplifiedAndy & Me, Getting the Right Things Done, and The Remedy;  he is a four-time winner of the Shingo Prize for Excellence.

The Pipeline 2nd Edition Book Cover (VBW)

“When my friend and colleague Fletcher Groves told me he was writing a book explaining homebuilding production principles and disciplines, I was pleased and supportive.

“Fletcher is a man of energy, enthusiasm, and profound experience who has taught me a ton about this fascinating and essential industry (it’s been my good fortune to work with Fletcher and the great Jack Suarez on the Inland Homebuilding System).

“Fletcher is unique in that he combines a deep knowledge of Lean (also known as the Toyota Production System), Theory of Constraints, Business Process Management, and Finance – a powerful combination.  He thereby avoids the tiresome ‘theological’ debates – Lean vs. TOC vs. Business Process Reengineering vs. Six Sigma and so on – that distract and confuse.  As Ernest Hemingway once observed, in a different context:  ‘It is all true’.  The point is to integrate powerful ideas toward achieving prosperity for our business, team members, and community.

“He is also a man of decency and integrity which comes through in The Pipeline‘s sub-theme of what the ancients called Fortitude – the guts to confront brutal facts without ever losing faith in the ultimate outcome.

“I was lucky enough to grow up professionally at Toyota Motor Manufacturing Canada, and to spend extended periods of time at leading Toyota facilities in North America and Japan.  Our (very patient) Toyota senseis emphasized the concept of a system – an organized set of parts with a clearly defined goal.  Absent a system, at best, we sub-optimize;  at worst, we waste our time.

“And so, Fletcher has done us a great service.  He has produced an engaging and accessible overview of what W. Edwards Deming has called the ‘profound system of knowledge’, as it applies to homebuilding production.  RB Builders, our fictional production homebuilding company, faces the very real challenges, and learns a powerful way of thinking and managing.

“Homebuilding has endured a terrible downturn.  But it will come back, as it always has.  If we can learn and apply the principles explained in The Pipeline, if we can learn to think of homebuilding as a system, as RB Builders does in the story, we can blunt future boom-bust cycles, and thereby reduce human misery and preserve hard-won prosperity.

“We’re early on in this essential journey;  a respected colleague suggested that, apart from a handful of progressive companies, homebuilding is where auto manufacturing was a century ago.

“The Pipeline: A Picture of Homebuilding Production© is an invaluable guide.”

Next:  The Pipeline, 2nd Edition:  More of What Others Are Saying

 

The Pipeline: A Picture of Homebuilding Production©, Second Edition is available through the publisher’s bookstore, and from any of the main booksellers (amazon.com, barnesandnoble.com, or booksamillion.com).

https://www.virtualbookworm.com/collections/business/products/the-pipeline-a-picture-of-homebuilding-production

It is always carried in-stock on amazon.com:  http://amzn.com/1621378047

 

The Pipeline, 2nd Edition: What Others Are Saying

Posted May 8, 2016 By Fletcher Groves

(the second edition of The Pipeline: A Picture of Homebuilding Production© was published in January 2016)

The Pipeline 2nd Edition Book Cover (VBW)

“In his second edition of The Pipeline: A Picture of Homebuilding Production© , Fletcher L. Groves III provides another invaluable tool to those who manage a home building production business.  Combining his in-depth experience in the construction industry with a passion for its business aspects, Fletcher describes practical guidelines for improving the velocity side of the ROA.  Fletcher recognizes that this is the best way a homebuilder can achieve what he calls ‘competitive separation’.

The Pipeline: A Picture of Homebuilding Production© Second Edition is a ‘must-read’ for all of those home builders that are determined not just to survive, but to thrive.”  (Carlos Alvarez, President, Alvarez Construction, Baton Rouge, Louisiana)

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“Be prepared to dog-ear and highlight.  Fantastic book chocked full of practical, useful strategies for a production home builder.  It’s like a mini MBA for the home building professional.  I returned today to purchase another copy for a friend who is the most veracious student of the industry I know… I’m sure he’ll love it.”  (David Keller, Keller CDD, LLC, Construction Design Documents for Architecture and Engineering, Orlando, FL)

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The Pipeline: A Picture of Homebuilding Production©, Second Edition, is the latest in Fletcher Groves’ collection of work that uses real examples and lessons learned to educate the reader on the application of principles and disciplines needed to successfully manage a homebuilding production system.

“The story contains a revised Pipeline game™ that simulates the risks and rewards based on the decisions a company can make when navigating through the ever changing environment in which decisions are made. The updated game is more representative of a homebuilding operation in today’s marketplace and it’s worth the purchase. This book is a must-read and it will have a significant impact throughout your entire organization.

“This book is worth the purchase and it will have a positive influence on how your company moves forward.” (Jeff Kornblau, Vice President, Land Acquisition, Eagle Construction of VA, LLC, Glen Allen, Virginia)

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The Pipeline: A Picture of Homebuilding Production©, 2nd Edition, published earlier this month contains revisions to the Pipeline game™ that (a) introduces a shorter game with an operating statement that is a better reflection of a homebuilding operation, and (b) compares an integrated building model to an outsourced building model.

“The clarification of terms to those that are more familiar to the traditional homebuilder makes the game both more interesting and easier for participating in the process.  As with most simulations, being able to compare the game to the day-to-day reality of the operations within a traditional homebuilder provides ‘experiential’ understanding of the process and the results.

“Definitely a worthwhile read and exercise for increasing understanding, if you are intending to continue to improve your homebuilding operation.”  (Hoyt G. Lowder, HGB & Associates, LLC, Tampa, Florida;  former Director, FMI Corporation)

**********

The Pipeline: A Picture of Homebuilding Production tells the story of how RB Builders learned the principles of homebuilding production in the turbulent years following the end of the period known as the “Age of Homebuilder Entitlement”.  It is a story told in the exchanges of dialog between team members, senior management, and RB Builders’ trusted, results-based advisor/partner.

The result is a deep understanding of a production system with an enduring visual image, the elements of which are crafted to the specific conditions, requirements, and parameters of the homebuilding industry, and a realization that improving performance on the velocity side of the ROA equation is the best path a homebuilder has to achieving sustainable competitive separation.

The Pipeline is about the specific application of underlying principles and disciplines of production that are universal – physics rooted in the laws that govern all production systems.  The book is about using the tools that work for homebuilding production, without regard to the consulting religion from which they come.

The Pipeline makes the connection between operating performance and business outcomes.

Next:  The Pipeline, 2nd Edition:  More of What Others Are Saying

 

The Pipeline: A Picture of Homebuilding Production©, Second Edition is available through the publisher’s bookstore, and from any of the main booksellers (amazon.com, barnesandnoble.com, or booksamillion.com).

https://www.virtualbookworm.com/collections/business/products/the-pipeline-a-picture-of-homebuilding-production

It is always carried in-stock on amazon.com:  http://amzn.com/1621378047