Building Urgency Towards Results®: Part I: Assessing Current Reality

(introduced on builderonline.com in November 2014;  published on Escape from Averageness® in June 2016, as the first in a two-part series about a new consulting deliverable we were launching;  updated and republished here as part of our latest retrospective, “Still Above Average: The Best of Escape from Averageness®, 2009-2021”)

From time to time on Escape from Averageness®, we share high-level outcomes from selected consulting engagements, in order to provide different insights.  In this case, the insight is into how a focused, prioritized process of continuous improvement should work, a process that starts with a complete understanding of current reality.

Building Urgency Towards Results® is a two-part series summarizing the analysis and initiatives from one of the first Current Reality Assessments® we ever conducted [in the years since, we have conducted almost a dozen CRA®s].  Part I, what follows, is about assessing and understanding current reality;  Part II is about determining the best way forward from that reality.

Together, these two parts present a summary of the process.  It is also a picture of the candor and directness that must exist to make the process work.

The purpose of a Current Reality Assessment® is to:  (1) set forth a focused, prioritized, and measurable process of continuous improvement, with targeted economic outcomes;  (2) create a forward-looking plan, consisting of consecutive initiatives with short durations aimed at achieving the targeted outcomes;  and (3) build a sense of urgency towards the achievement of those outcomes.  That sense of urgency is held by everyone on the team, fueled, in part, by everyone having an economic stake in the outcome (stakeholders are not stakeholders if they don’t have a stake).

It is also a picture of the type of urgent, focused, rapid-results process of continuous improvement that is one of our requirements for working with clients – and being compensated – on the basis of the progress achieved toward a specific financial outcome;  in a Results-Based Consulting® arrangement, we have exactly the same stake in the economic outcome that our clients have.

The proceedings of any Current Reality Assessment® are determined by the particular situation and the period, and reflective of the specific business model.  However, those particulars and specifics notwithstanding, the principles of continuous improvement never change.  This client happened to be a $25 million, semi-production builder that strives for a 50/50 mix of inventory and presale homes, all in communities that it develops, communities in which it is the exclusive builder, and its CRA® reflected those circumstances.

Current Reality Assessments® require advance planning, preparation, data gathering, and analysis, but the onsite portion of the assessment can be completed in a matter of days.  This client took an aggressive stance, by agreeing to our recommendation that all three elements of their CRA® be completed in the course of a single day.

Those three elements were:  (1) the assessment of the current situation, the current reality;  (2) the plan forward from that current reality (the series of initiatives based on an Intermediate Objectives (IO) Map and Current Reality Tree (CRT), two of the logical thinking processes in Theory of Constraints practiced by Goldratt, Newbold, Kendall, and others);  and (3) the development of a team-based performance compensation plan (a progressive series of payouts of a reserve created from the milestone achievements related to a single business outcome targeted above an agreed baseline).

The one-day onsite schedule was intended to break complacency and force a sense of urgency.  We also knew that it might prove to be an impossible achievement – which it did.  So, we had to help the team complete the unfinished elements of the CRA® remotely over the course of a week.

The assessment looked at 12 operational areas, with the functional team from each area establishing their performance and current situation, and identifying what they felt were the symptoms of root-based, core problems (Theory of Constraints refers to these symptoms as the visible, undesirable effects – the UDEs – of problems that, while not-yet identified, will nevertheless have to be addressed and solved, because treating the symptoms of the problem will not work).

UDEs emerged from every operational area, on a range of issues, including:  the rate and consistency of sales;  the lack of clarity concerning strategic direction and purpose;  the mechanism and resulting pattern of starts;  the lack of synchronization between sales, starts, and closings;  the excessive level of work-in-process;  the excessive length of cycle time;  lower-than-desired Gross Margins;  vague branding;  and the lack of documented workflow (prior to the CRA®, we had done a private channel Pipeline workshop™ for this client, so they were well-aware of the production issues).

Mindful that UDEs only reflect the symptoms of the real problems, the team required a couple of iterations of the IO Map to define the system and its goal, establish the Critical Success Factors (CSFs) for achieving that goal, and establish the Necessary Conditions (NCs) for achieving those CSFs.

From the UDEs and the IO Map, the team developed the Plan Forward, the roadmap that would get them from where they were then, to where they wanted to be.  As such, it represented a planned, purposeful commitment to a measurable outcome.  As required, it was a series of initiatives with short durations, conducted in consecutive order, aimed at producing rapid, targeted, measurable improvements in areas of operational performance that drive improvements to a specific business outcome.

Fully-defined in terms of order, relationship, responsibility, completion dates, requirements, and outcomes, their Plan Forward met the necessary conditions of being a focused course of action that addressed the cause-and-effect relationships between problems and symptoms of problems, and being tailor-made for use with an open-book, team-based approach to performance compensation.

All of the so-called P-initiatives in the Plan Forward flowed from the assessment of current reality, the UDEs, the IO Map.

Next:  Part II:  Developing the Plan Forward