“Does the world really need any more average homebuilding companies?”

(the second post ever made on Escape from Averageness®, on January 27, 2009;  updated and reposted here, to once again raise a stark question)

“As RB Builders did its planning and budgeting for the then-upcoming year, 2008 looked to have market and economic conditions very similar to those in 2007.  In 2007, RB Builders produced Gross Margins of 22%, earning Gross Income of $11 million, down significantly from the 30%+ margins it enjoyed during the final, halcyon years known as The Age of Homebuilder Entitlement.

“In many ways, RB Builders was a product of that age, another average homebuilding company, satisfied with occasionally trying to adopt the best practices of other builders, content to be good enough, no-better-but-no-worse than the other builders with whom it competed.  It was a homebuilding company with a middle-of-the-road approach to delivering the value homebuyers demanded.

“RB Builders’ owners knew what severe housing cycles were like, but its management did not.  Terms like TEFRA and RTC were faint acronyms from a different era.  For the past 10 years, life had been good . . . and it had also been easy.  Now, there was a growing sense that this approach was dangerous.  As they reminded themselves with ever-more frequency, ‘the only thing in the middle of the road are yellow lines and dead armadillos’.

“They were in 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 looked-alike and sounded-alike.

“Indistinguishable from other builders, unable to create any type of sustainable competitive separation, RB Builders was now trapped and sinking, like a modern-day dinosaur, into the tar pits of average-ness.”

That was an excerpt from the opening of The Saga of RB Builders©.  RB Builders is a mythical homebuilding company whose story we use at every Pipeline workshop™, during consulting engagements, in IBS education sessions, at Housing Leadership Summit and other conferences – really, at every opportunity that presents itself – in order to get our points across more effectively.

The question we always ask: “Does the world really need any more average homebuilding companies?”

Think about it.