Charter Homes & Neighborhoods’ Seeds of Success

It’s always good to see your clients recognized for their achievements. For 2011, Charter Homes & Neighborhoods won its second silver National Housing Quality award, an accomplishment that is highlighted in the November issue of Professional Builder. Beyond the sheer effort and determination required to win multiple NHQ awards, the notable part is that the seeds of Charter’s success were sown more than a dozen years ago, and the company has remained true to that strategy and vision.

SAI Consulting was fortunate to participate in the development of that vision and strategy. In 1998, Charter became the third homebuilder client in SAI’s fledgling consulting practice in the res-con vertical (our second builder client was Jagoe Homes, which was named PB 2010 Builder of the Year). Before the back-to-back engagements with Jagoe and Charter, Service and Administrative Institute (as it was then known) was a TQM consulting practice, operating mostly in the transportation, logistics, steel, and aggregates spaces.

Ostensibly, our engagement with Charter was about business process improvement, but improving operating performance and business outcomes does not restrict itself to matters of process and workflow. As we always point out – to every client, at the beginning of every engagement – processes are not the only issue, they are not the only opportunity, nor are they the only answer; processes are a piece of the puzzle.

We encouraged Charter to go further, to take a hard and open look at the other parts of its operating model, to match that integrated operating model to the requirements of a specific band of the homebuyer value spectrum, and to look at how team performance was rewarded and compensated. We advised Charter to subordinate some of its policies and beliefs in those areas to the outcomes targeted in this and future projects. We told them that process mapping – focusing on the design, documentation, and improvement of workflow – tends to be a catalyst that drives the effort into other needed areas.

In keeping with the advice we offered, Charter produced an implementation plan with 15 initiatives, formed from a set of business performance and operating requirements – things that had to happen, things that needed to change – all flowing from the work performed in mapping their process workflow. I recently spoke with Charter’s President and CEO, Rob Bowman, about the long-term results of what Charter, at the time, termed “a look into the future, and a vision of pursuing excellence”. Looking back, over this many years, it is remarkable how closely the PB article and the discussion with Bowman track to the outcomes envisioned.

For example, Charter implemented a plan to mold its operating model – its processes, systems, organizational structure, culture, and human resource talent – around the implicit promise to deliver a “best product” value proposition. “It is still very much the focus of what we do”, said Bowman. The company also revamped its organizational structure around horizontal workgroups, instead of the existing functional hierarchy. “We are still organized that way, right down to the team names”, he said. To that end, Charter converted its entire sales force from outside real estate brokers to associates that are employees of the company, a move that was required in order to have the community-focused building team that Charter wanted in its organizational structure.

Charter also established the process for gathering and analyzing detailed data, information, and research on the expectations, requirements, and buying decision of targeted buyers, which directly led to and enabled the company’s “Ready Now” program of offering a conservative number of inventory homes for sale. In that regard, Professional Builder described Charter as a “design-data-driven organization”, an approach Bowman says Charter has “stayed with consistently”.

“The NHQ award is a point on a long [and perhaps, never-ending] journey”, Bowman said. “We see the award for the significant accomplishment that it is and represents, and an achievement in which we have a lot of pride and satisfaction. But, we are also keenly aware that we have a long way still to go.

“Whatever else you say about us”, Bowman told me, “communicate the humility that comes from knowing that we are not there yet. We do think, however, that what we have managed to accomplish began with the process focus that we had in 1998.”

In times like the past five years, you look for the lights that shine in the darkness. Everything that Patrick O’Toole (and the NHQ judges) write about this company is true. In 1998, Charter made up its mind about what its value proposition would be, and designed a value discipline around it. Having made up its mind, the company consistently stayed with the strategy.

Charter Homes & Neighborhoods, congratulations – well-done, richly-deserved.