Archive for May, 2020

(excerpted from The Pipeline: A Picture of Homebuilding Production, Second Edition©, initially posted on Escape from Averageness® in January 2011, re-posted in May 2018 as part of a series, abridged and re-posted here, now, during what will certainly become a COVID-19 pandemic-induced recession)

The intrepid, results-based consultant turned back to the CEO.  “You know, it is possible to fail, without being the least bit cynical about its prospects.”  Turning back to everyone else in the room, she continued, “Whether you are cynical or not, change is up to you.  Whether any of this works or not, is up to each of you individually, all of you collectively.

“If I didn’t believe RB Builders would make it work, I wouldn’t be here, my firm wouldn’t accept you as a client.  We would not waste our time with you.  After all – by virtue of how we are being compensated – my firm and I have a bigger dog in this fight than anyone else.

“When we started out on this little adventure, I told you that my consulting firm would be compensated on the same performance basis as everyone else”, she reminded them.  “I told you that there was no limit to the time and effort that my firm – and I personally – would expend to achieve the outcomes we targeted together.  I told you that I would work hand-in-hand with you, and do whatever it takes to achieve those goals.

“I assured you that I would do whatever it took to foster the willingness and the capacity for change, create a sustainable capability for implementing the things that would continuously improve operating performance and business outcomes, increase innovation and learning, and make you less dependent on all of your consultants.  I told you, from the standpoint of how credit was attributed, that I was content to remain in the background.

“Those were the assurances I gave you”, she said.  “In return, I sought and received assurances from you.

“You agreed that this was a true client-consultant partnership, and that – because my firm’s compensation was completely results-based, of finite duration, and self-funding – my firm was assuming the higher level of risk.  You agreed that this new, results-focused consulting arrangement we were undertaking provided ample incentive to everyone for taking action, making changes, and improving operating performance and business outcomes.

“I told you that I was as serious as a heart attack about getting results.  I made it clear that I had no intention of wasting my firm’s time and effort.  I told you that you did not have to do everything I told you, but that you did have to come to terms with me, take action, make needed changes, and do whatever it took to achieve the targeted results.  Although I have grown rather fond of you – most of you – I made it clear that, if there was no action, no change, no results, then – out of principle alone – heads needed to roll.

“Trust me, no one outside of RB Builders cares whether you succeed or not.  No one else cares whether you separate yourselves from your competition.  No one else cares whether you keep your jobs.  Nobody else cares about your livelihood or your future.  Nothing new in that revelation.  Back in the Age of Homebuilder Entitlement, nobody cared, either.  It was just never an issue, because being good enough was good enough.  Success is no longer such a foregone conclusion.

“No one cares, and no one is going to blame you.

“But – that doesn’t change the outcome.

“I can just hear it now”, said the intrepid, results-based consultant.  “Poor things.  What a great company RB Builders could have been.  It was just too much for them to handle, housing’s version of The Apocalypse.  It’s not their fault.

“Nope.  Nobody’s going to blame you, if you go out of business.  But, that is just what you will be – out of business.

“Failure is not an option.  Not for me.  Not for any of you.  We are not giving ourselves that choice.”

 

The title to this post is the exact question posed in the first-ever post on Escape from Averageness®, in April 2009.  We have stated it in different ways, more recently, “Does the world really need another average homebuilding company?”

La Brea Tar Pits

It’s a question we have raised for more than a dozen years, from before the start of the economic downturn known as the Great Recession.  Although the logical answer may be clear, it is hardly a rhetorical question.  What the question points to is a more important question:  How do you create an alternative to averageness?  How do you achieve sustainable competitive separation?

Sustainable (permanent).  Competitive (dominant).  Separation (advantage).

Settling for average is the road to extinction.

Consider the plight of RB Builders, the mythical homebuilding company portrayed in The Pipeline: A Picture of Homebuilding Production©, facing the world following 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.

 

We are SAI Consulting.

Our consulting firm is engaged exclusively in the residential construction vertical, on behalf of clients intent on improving operating performance, profitability, and economic return.  We are uniquely qualified to serve our clients’ interests, because we have solved problems and implemented solutions as the senior managers in enterprises just like theirs.

Our knowledge and experience within a specific industry – combined with the depth of our consulting methodology and the choice of approaches we offer in how that consulting is delivered – sets us apart from any and all other consulting firms.

  • We are not a solution in search of a problem.  We focus a distinctive, systems-oriented, constraints-management problem-solving methodology at addressing an individual client’s specific set of operational circumstances.
  • We will work with clients under either a conventional, fee-based consulting approach, or under a results-based consulting approach.  Under a results-based approach, we are compensated exactly like our clients’ owners, teammates, and financial statements — solely as a share of the results that our consulting enables clients to achieve, solely as a share of the value we help to generate, measured in terms of the actual improvements to financial outcomes.  So – if you happen to be looking for a consulting firm willing to be your business partner, you should consider doing business with us.
  • Pipeline workshops™ and Pipeline seminars™, conducted in various channels, feature the type of learning that occurs in a production situation constructed to replicate the competitive, fast-paced, rapidly-changing, uncertain, risk-laden, variation-filled operating and business environment in which our clients must operate.  Visit the Pipeline Workshop™ website:  buildervelocity.com

Our clients engage us because:

  1. We have a firm grasp of the operational performance issues they face, and we structure our work in ways they understand;
  2. We focus the effort to improve operational performance directly on a specific sequence of solutions that rapidly translate into increased profitability and higher economic return;
  3. We are the leading experts in our chosen areas of consulting, including business workflow, team-based performance compensation, and production management;
  4. We synthesize a broad range of widely-accepted management tools into customized business solutions;
  5. We are committed to a type of consulting and client-consultant relationship defined by economic value, business results, and shared benefits, one that is fully-conscious of the existing capacity and capability for implementing change, and fully-intent on producing learning that increases internal capacity/capability and lessens dependence on us.

 

Channels: The Presence of Pipeline Workshops™

Posted May 3, 2020 By Fletcher Groves

(the different channels under which Pipeline workshops™ have been conducted was first laid out on Escape from Averageness® in April 2016, in a post titled “Channels: The Ever-Expanding Presence of Pipeline Workshops™”;  updated and re-posted here)

The principles and disciplines that apply to homebuilding production grew out of decades of work by SAI Consulting on behalf of individual homebuilder clients, designing their production and business systems, mapping their business processes, measuring performance, assessing capabilities, and implementing team-based performance compensation.

In turn, that client work led to the publication in 2013 of The Pipeline: A Picture of Homebuilding Production©, which integrated all of the “pipeline-thinking”.

The publication of the first edition of that book led to the ongoing series of open Pipeline workshops™ that began in 2014 (variously sponsored by sponsored by BUILDER, BuilderMT/MiTek, Continuum Advisory Group, Constellation HB Systems, and most recently by Specitup and Simpson Strong-Tie), as well as the in-depth sharing of pipeline-thinking at Housing Leadership Summits, BuilderMT User Conferences, Epcon Annual Franchise Meetings, CertainTeed Builder Advisory Groups, the NAHB International Builders Show, and NAHB’s Builder 20 Groups.

The first of the series of Pipeline workshops™ revealed the need for a second, expanded edition of The Pipeline – published in 2016 – to codify the enhancements to the Pipeline game™.

It has now come full circle.

In the skull sessions that occurred in 2016 between SAI, its partners, and its sponsors, the concept of workshop “channels” emerged – the idea of Pipeline workshops™ developed to meet the specific needs of diverse participants in the value stream.

Initially, we identified five distinct channels:

(1)  the original, open, sponsored Pipeline workshops™, held each March and October;  Pipeline Workshop™ No. 14 will be October 21-22, 2020, as always, at the Ponte Vedra Inn and Club, in Ponte Vedra Beach, Florida;

(2)  Pipeline workshops™ conducted privately for builders large enough to justify bringing the workshop in-house;

(3)  private Pipeline workshops™ sponsored by manufacturers, distributors, and suppliers (like CertainTeed) for the benefit of their builder customers;

(4)  open, non-sponsored Pipeline workshops™ for the benefit of manufacturers, distributors, and suppliers, to give them insight into the current production operations of their builder customers and the direction of the homebuilding industry towards solutions;  and

(5)  private Pipeline workshops™ sponsored by builders for the benefit of their suppliers and subcontractors.

Simply stated, Pipeline workshops™ are the most intense, demanding, interactive, and challenging homebuilding production management learning experience on the planet.

The two-day Pipeline workshops™ and the one-day Pipeline seminars™ are designed to transfer in-depth knowledge and create an intuitive, instinctive understanding of production principles and disciplines specifically related to homebuilding production management;  Pipeline workshops™ are intended to not just inform builders’ thinking, but to reform it, and to re-form it;  they challenge and test builders’ understandings of how their production systems work, and how daily operating decisions drive business outcomes.

Using exercises from the RB Builders: Lessons from the Pipeline© business case study, the progressive series of production scenarios and business games known as the Pipeline game™, and the deep-dive discussion groups known as Velocity Accelerators, Pipeline workshops™ and Pipeline seminars™ simulate homebuilding production in the real business world, in an environment of variation and uncertainty, where operating decisions produce economic results.

The imperative behind Pipeline workshops™ and Pipeline seminars™ is simple:  a builder that generates a Gross Margin of 24% and turns its inventory twice a year will be outperformed – by better than a two-to-one margin – by a builder that generates a Gross Margin of 18%, but turns its inventory four times a year.  It will be outperformed in terms of Net Income;  outperformed in terms of Net Income Margin;  outperformed in terms of Return on Assets.

That is the comparative performance picture of two builders – one with cycle time of 180 days, one with cycle time of 90 days – that are exactly the same size, when the real measure of size is the amount of work-in-process each has to carry.

These two builders have exactly the same resource overhead, exactly the same working capital requirements, and exactly the same risk profile.

Come.  Participate.  Learn.

More:  www.buildervelocity.com