Building Urgency Towards Results®: Part II: Developing the Plan Forward

(introduced on builderonline.com in November 2014;  published on Escape from Averageness® in June 2016, as the second 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 is about assessing and understanding current reality;  Part II, what follows, is about determining the best way forward from that reality.

Continuing from Part I:

From the UDEs and the IO Map, the team developed a Plan Forward, a roadmap to get them from where they were, to where they wanted to be.  As such, the plan represented a planned, purposeful commitment to achieving that goal.  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, the Plan Forward was a focused course of action that addressed the cause-and-effect relationship between the root causes of problems and their visible symptoms;  the Plan Forward was also 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.

The team decided to focus on eight initiatives:

 

P-1:  Strategic Direction:  Confirm the specific direction the company is committed to take, in terms of its value proposition, value discipline, target market, product type, architectural style and design, revenue and closings, and production size and capacity.

Purpose:  Provide strategic clarity.

Prerequisites:  None

Duration:  15 business days

 

P-2:  Team-Based Performance Compensation Plan:  Design and implement a Gross Income Milestone Plan, one based on the confirmed strategic direction, and providing for the payout of a GI Reserve reflecting the difference between a GI Baseline and a GI Target.

Purpose:  Become a company of business-people;  provide teammates a stake in the outcome.

Prerequisites:  P-1 complete

Duration:  5 business days

 

P-3:  Business Process Improvement:  Part I:  Completely analyze the current state of every critical business process, documented as cross-functional flowcharts.  Part II:  Redesign all of those critical business processes to provide significantly improved workflow, and then document them as IDEF0 process models (a hierarchical series of graphic and supporting text diagrams).

Purpose:  Implement elegant workflow solutions:  get horizontal;  clear the fog;  simplify the workflow;  attack variation, waste, and non-value-adding work;  take the freed-up internal resource capacity and deliver higher value work.

Prerequisites:  P-1 complete

Duration:  35 business days

 

P-4:  “Pull” Release Mechanism for Starts:  Implement a Start Release process designed to sequence the rate of job starts to (1) the completion of jobs already in the production system, and (2) the number of previously-released jobs in front of the most constrained resource.

Purpose:  Increase velocity:  reduce cycle time, manage capacity, reduce/control work-in-process;  synchronize starts and closings.

Prerequisites:  P-1 complete, P-3 complete

Duration:  9 business days

 

P-5:  Identify-Exploit-Elevate the constraint:  Identify the external resource that has a combination of the least capacity and/or the highest demand on that capacity;  partner with that resource to optimize its capacity, insure that it is never idle, and then – as a final resort – arrange for more capacity.

Purpose:  Increase velocity:  manage capacity, control work-in-process.

Prerequisites:  P-1, P-3, P-4 all complete

Duration:  5 business days

 

P-6:  Job Schedules:  Reduce current calculated cycle time (see Little’s Law) from 206 days to under 150 days, by removing all of the task duration safety and adding a project buffer to protect the job completion date (see Critical Chain).

Purpose:  Increase velocity:  reduce cycle time, by shortening the job schedule.

Prerequisites:  P-5 complete

Duration:  10 business days

 

P-7:  Plan Portfolio:  Expand and enhance the existing/current portfolio of floorplans and elevations, using the new Plan Review process.

Purpose:  Increase margins:  increase value delivered, by increasing the benefit and/or reducing the cost;  insure that the plan portfolio is a compelling differentiator in the company’s housing market;  strive for floorplans/elevations that are desirable-yet-buildable, buildable-yet-desirable.

Prerequisites:  P-1, P-3, P-6 all complete

Duration:  90 business days

 

P-8:  Job Budgets and Job Costs:  Apply the new Job Budgeting/Costing process to every floorplan and elevation in the expanded/enhanced plan portfolio to produce accurate and complete job budgets.

Purpose:  Increase margins:  produce accurate and complete job budgets;  use better specifications;  obtain better pricing.

Prerequisites:  P-3 complete, P-7 complete

Duration:  41 business days

 

Eight initiatives, to be completed in nine months.  Focused.  Prioritized.  Manageable.  Measurable.  Results-Driven.

Expected Results:  strategic clarity;  better processes;  everyone with a stake in the outcome;  cycle time reduced from 209 days to 150 days;  Inventory Turns increased from 1.7x to 2.4x;  Gross Margin increased from 17% to 22% (albeit on a useless absorption costing, NAHB-comparative basis).

Not too shabby.

I told our client it was a good start, but it is too modest;  I told them not to stop there.

Based on the UDEs and the IO Map (and we suspect the CRT had it been developed), and in the midst of developing the Plan Forward, I warned them that there remained a lack of clarity, boldness, and urgency, and advised them to address the deficiencies.

I told them that they understood the current situation, and they had a plan, but that is all they had.  It was up to them.  I told them that the hard work lay ahead, and it had to start right then.

If it was a different client, in a different situation, under different economic circumstances, it would have no doubt have resulted in a different plan.  But – whatever the situation – this is the type of urgency that continuous improvement needs to foster.