Archive for October, 2020

Pipeline Workshop™ No. 14 is in the books, completed successfully despite the challenges of holding any live event under COVID-19 restrictions and fears.  We will offer, here, a few observations received from the most recent class of distinguished graduates.

“As someone who has spent a considerable amount of time with a large national builder, I came to this conference thinking that I was already well-informed about how to manage a production operation.  Instead, Fletcher’s insights and methodology on the topic challenged many of my pre-conceived notions and caused me to reevaluate how I view the size of our company, how we approach our scheduling process, and how we incentivize our organization to perform.  I strongly recommend this conference for anyone who wants to improve performance on key metrics such as cycle time and profitability.”  (Paul Hansen, Epcon Communities)

“The BuilderVelocity [Pipeline] workshop is a unique, challenging, and inclusive event that encouraged out-of-the-box thinking and incorporated various, critical business ideas to broaden my knowledge in the area of homebuilding and process management.  I received hands-on training using the Pipeline game™ to help solidify the business concepts and critical thinking skills introduced during the workshop.  I consider myself a more skilled business person after having attended and am grateful for all the knowledge and expertise attained through the BuilderVelocity workshop.”  (Alana Tisch, ON TOP OF THE WORLD Communities)

“I am a numbers guy and I liked being able to tie a number of subjective aspects of a builders business to things that can be measured.”  (Scott Lang, Simpson Strong-Tie)

“This [Pipeline Workshop™] provided new insights concerning homebuilding operations that one would be hard-pressed to discover anywhere else.  I found the Pipeline game™ to be tremendously effective in demonstrating the relationships of key concepts like velocity, margin, work-in-process, etc., in a fun, team-building game!”  (Chris Lincoln, William Ryan Homes)

“This is an amazing workshop that shows homebuilders their industry is manufacturing (many projects at once) as opposed to construction (single projects) and their resources need to be managed that way.”  (Rick Cosgrove, Specitup)

 

Future learning opportunities . . .

Pipeline Workshop™ No. 15 will be held March 17-18, 2021, at the beautiful oceanfront Ponte Vedra Inn and Club, in Ponte Vedra Beach, Florida;  early registration will open December 1, 2020.  Pipeline Workshop™ No. 16 will be held October 14-15, 2021, also at the Ponte Vedra Inn and Club.

Pricing programs and sponsors will be announced this month;  check back here:  www.buildervelocity.com

Questions:  flgroves@saiconsulting.com

 

Despite circumstances that are forcing most business conferences to be held virtually – those both larger and smaller than a Pipeline workshop™ – it is a measure of persistence and resolve that Pipeline Workshop™ No. 14 will occur, as scheduled, live and in-person, this week, at the Ponte Vedra Inn and Club, in Ponte Vedra Beach, Florida.

It is also a testament to our sponsors.  We are fortunate to have Specitup and Simpson Strong-Tie as Pipeline Workshop™ sponsors, because not only do they stand for us under difficult circumstances in support of the teaching of Pipeline principles and disciplines, they also apply these principles and disciplines in their own operations and on behalf of their licensees and users.  And – they now do it together, as Simpson recently acquired Specitup.

Because they are implementors, not just proponents, Specitup and Simpson are particularly qualified to participate in the discussions, contribute to the RB Builders: Lessons from the Pipeline© business case exercises, and help to facilitate the Velocity Accelerators®.

They enhance the learning.

 

Specitup is an award-winning software solution for home builders to get homes to market faster with accurate and profitable selling prices.  Not an estimating or production program, Specitup is a new breed of software that includes plan/options/spec’ing management combined with comprehensive financial analysis.

Any builder that wants to shorten time to market, get deeper insight into profitability, and grow their business needs Specitup.

Specitup’s capabilities allow builder/users to create 7,000 options in seconds, spec the same plan differently by community, option up plans in hours, and analyze competitor offerings.

“If I can’t compete, Specitup has told me that ahead of time, and I wouldn’t have even bought the lot.”  (D Logan, Owner, Logan Homes)

“With Specitup I can add a new plan in a matter of hours. And now we don’t have to engage estimating until the house is actually sold.”  (Dan Kent, Owner Kent Homes)

To learn more, visit specitup.net.

 

 Simpson Strong-Tie uses technology to help builders see deeper into every element of the building process, so they can better achieve operational efficiencies, cost savings and customer satisfaction.

Since 2000, Simpson Strong-Tie has focused exclusively on residential construction and how technology can help manage every aspect of the building and home-sales process.  That focus has enriched the Simpson team with a deep knowledge of the business of building homes, and they are eager to put that learning to work for your organization.

To learn more about the technology solutions, customer support, and training Simpson offers, visit strongtie.com/solutions/builder

 

Come.  Participate.  Learn.

Next time.

The next Pipeline workshop™ will be held in March 2021, at a date to be announced.  As always, it will be held at the Ponte Vedra Inn and Club, in Ponte Vedra Beach, Florida.  Watch here for further details, or contact us:  flgroves@saiconsulting.com

Delivered by SAI Consulting.

Sponsored by Specitup and Simpson Strong-Tie.

Details:  www.buildervelocity.com

 

At every Pipeline workshop™ we have ever done, one of the most important takeaways, one realized by practically every homebuilding company executive in attendance, is simply this:  something has to be done with the notoriously fragmented value stream that defines their industry, if they are going to have any hope of managing their production as a system.

In their landmark 1996 book, Lean Thinking, Jim Womack and Dan Jones defined a value stream as “the set of all the specific actions required to bring a specific product through the three critical management tasks of any business.”

They went on to describe a set of processes, which they termed tasks:  a problem-solving task, an information management task, and a physical transformation task.

By definition, a value stream does not belong to an industry;  it is enterprise-specific;  each value stream belongs to its enterprise;  thus, every homebuilding company has its own value stream;  it owns that specific set of actions.

Nevertheless, it would be a challenge to cite any other industry, in which the sequence of tasks in the most common versions of that industry’s core-critical process (start-to-completion, i.e., the physical transformation task) is performed entirely by separate entities, as is the case with homebuilding.

Look at the value stream of almost any homebuilding enterprise, and you will find a combination of separate, independently-owned, non-proprietary, non-exclusive, unaffiliated businesses, each with their own goals, often at-odds with each other.

We have a descriptive phrase for a completely outsourced building model like this.  We call it “strip-mining the value stream”.

Technology – specifically, offsite manufacturing processes – will improve quality, reduce waste and variation, reduce cycle times, increase productivity.  By all means, consider its application.  But, by definition, manufacturing off-site doesn’t unify the value stream, unless you own or joint venture the facility.

In her final comments to the team at RB Builders, before she left them the first time (The Pipeline: A Picture of Homebuilding Production©, Second Edition), the intrepid, results-based consultant reviewed the components of RB Builders’ production management system – the RB-IPS – and said this, in part:

“It is a production management system that specifies the means by which RB Builders fosters epic relationships of mutual interest with its building partners and supply partners.  The RB-IPS provides both the process and the program for progressively transforming subcontractors and suppliers into true partners, into trusted allies, joined by shared, mutual interests.”

Builders attending Pipeline workshops™ consistently emphasize the need for stronger trade-partnering, better coordination, more cohesiveness, a more unified approach to managing the trade side of production.

They acknowledge the obvious:  they do not have the internal resources necessary to perform “the set of all specific actions” required to bring houses through the start-to-completion process, and they are completely dependent and reliant on skilled construction resources that are in short supply;  they understand that they can no longer dictate the terms.

Is vertical integration part of the answer?  We have been suggesting, for almost 20 years, that builders at least consider that possibility, that they find a way to shut-down the strip-mining operation.  That suggestion usually falls on deaf ears, or is dismissed as a radical, undoable notion.

Which is where opportunity always lies, in radical, undoable notions.

Whether vertical integration has a meaningful strategic role to play in the homebuilding industry going forward remains to be seen.  At recent Pipeline workshops™, the contrast between outsourced and integrated building models has been portrayed in one of the Pipeline games™;  it is an area that we have begun to cover in the Lessons from the Pipeline© business case;  and, it was added as its own section in the second edition of The Pipeline: A Picture of Homebuilding Production© (published in 2016).

The outcome of the vertical integration question doesn’t change the underlying imperative.  Success in unifying the effort of even the existing value stream has profound ramifications, on both the margin and velocity components of Return on Assets;  and success in unifying the value stream has profound implications for creating competitive separation.

With or without vertical integration, addressing the issue will require Epic Partnering™.

Come.  Participate.  Learn.

 

Epic Partnering™ – the attributes of the relationships being fostered, the program, the process – is one of the Velocity Accelerators® (along with Business Process Improvement, Critical Chain Project Management, and Open-Book Management and Team-Based Performance Compensation) that will be addressed at the next Pipeline workshop™, October 21-22, 2020, at the Ponte Vedra Inn and Club, in Ponte Vedra Beach, Florida.

The cost is $895.00 per person;  for team pricing, inquire here (flgroves@saiconsulting.com).

Delivered by SAI Consulting.

Sponsored by Specitup and Simpson Strong-Tie.

Details:  www.buildervelocity.com

 

Pipeline workshops™ do not stop at the “what” and the ‘how-to”;  they also address the “why” and the “want-to”.

There has always been an underlying context – an underlying business logic – to everything we expound in a Pipeline workshop™.  Understandably, the focus is on the principles and disciplines of homebuilding production themselves, but we also give that underlying context – that underlying business logic – the attention it critically deserves.

So – one of the Velocity Accelerators® we do at a Pipeline workshop™ is a deeper-dive into that context and business logic, into two crucial, inseparable disciplines that must work together:  Open-Book Management and Team-Based Performance Compensation.

The efforts of a homebuilding company to improve operating performance and business outcomes will fail, if it does not succeed first in creating a homebuilding team that works toward commonly-held and commonly understood business goals.  This type of team – one that is savvy, motivated, and mutuallyaccountable – stands in stark contrast to what is simply a collection of individuals working toward their own, separate goals.

With most teams, what you would likely first find missing is the business logic that forms the context necessary for understanding everything else.  Understanding the homebuilding business is necessary, but it is not sufficient.  In order to compete in the business world, everyone on the team also has to learn the business of homebuilding.  They have to understand their individual responsibilities as part of the overall team, and they have to understand what is at stake, individually and collectively.

Instilling savviness to the team is the role of Open-Book Management.

But – not just understand the business outcome that is at stake for the company;  they also must each have a personal stake in that business outcome;  they must own the outcome, for the company, and for themselves.  They must have a stake . . . in what is at stake.

Instilling motivation and mutual accountability to the team is the role of Team-Based Performance Compensation.

Open Book Management flows from the work Jack Stack did in the 1980s as CEO at Springfield Remanufacturing Corporation to rescue that former International Harvester (Navistar) division from almost certain bankruptcy.  Following a 99% leveraged employee buyout, he instilled transparent responsibility, by opening the company’s books and making it everyone’s business to improve performance.

Stack recounted that effort in two books (The Great Game of Business and A Stake in the Outcome);  Inc. Magazine’s John Case expanded on open-book thinking in other industries and companies, in two other books (Open Book Management and The Open Book Experience).

And, in Open Book Management, Case described how Steve Wilson developed the basics of OBM-inspired team-based performance compensation at Mid-States Technical Staffing Services (now part of Modis);  Wilson subsequently described this work in a publication, titled The Bucket Bonus Plan.

We take a very specific approach in our application of the principles of Open Book Management and Team-Based Performance Compensation.

We advise our clients to be transparent (open).  We urge them to demonstrate candor (the courage to tell and hear the truth) in the constant internal disclosure of operating and financial data, whether in meetings, or through dashboards and heads-up displays.

We advise our clients to impart business literacy (knowledge and understanding) to teammates, so that those teammates don’t just understand the homebuilding business, they also understand the business of homebuilding, through the teaching of business and production principles.

We advise our clients to adopt a teambased approach to performance compensation, by way of a progressively-weighted milestone plan, centered on achieving targeted performance above a baseline in a specific business outcome, impacted by the actions of every single teammate.

We urge an approach that is simple, easy to understand;  that is visible, transparent, compelling;  that rewards success rapidly and frequently;  that is selffunding, that is paid from income the company would never have otherwise generated, from economic return they would have never otherwise achieved.

In terms of compensation – we urge our clients to make it significant, make it meaningful.  In terms of participation, we urge them to make it allinclusive.

We tell them that their Team-Based Performance Compensation Plan should provide only for winners or losers, not winners at the expense of losers.  It should give the right to lead and to demand results;  it should give the desire to be lead, not managed.

Savvy.  Motivated.  Mutually-Accountable.  Team.

 

Come.  Participate.  Learn.

Open-Book Management and Team-Based Performance Compensation is one of the three, perhaps four, Velocity Accelerators® highlighted (together with Critical Chain Project Management, Business Process Improvement, and Epic Partnering®) at the next Pipeline workshop™, October 21-22, 2020, at the Ponte Vedra Inn and Club, in Ponte Vedra Beach, Florida.

Cost is $895.00;  for team pricing, inquire here (flgroves@saiconsulting.com).

Delivered by SAI Consulting.

Sponsored by Specitup and Simpson Strong-Tie.

Details:  www.buildervelocity.com