The Saga of RB Builders, Part V: Setting Out: 2008-2009

(The Saga of RB Builders is being presented as a nine-part series on Escape from Averageness;  editor’s note:  The Saga of RB Builders was actually written in 2007, and looks back from the imagined perspective of 2012.)


And so, RB Builders set out on the road to improving operating performance and business outcomes.  The company’s owners constantly and consistently emphasized the importance of achieving the desired results.  They shared the financial performance and condition of the company openly with the entire team, and taught every team member what was needed to run a homebuilding company as a business.

Over the course of the next two years (with the guidance of its intrepid results-based consultant), the company designed first one, then another, then several more projects, each with short timeframes and targeted results, each the logical successive step in the pursuit of the overall goal.

For example, one project targeted finding/creating an additional $5,000 in value (price minus cost) per base plan within 90 days, without reducing the net value to a single trade partner.  Another project aimed at an average of 45 days in cycle time reductions within three months (from its current level of 180 days, down to 135 days), by removing unmanageable float and resolving resource conflicts, so that jobs finished sooner.  A third project indexed RB Builders’ processes by order of importance and performance, and set out to completely eliminate non-value-adding work in the most critical processes within 90 days.  A fourth project aimed at completely redefining the product offering portion of the company’s value proposition.

On it went, one project after the next.  Some projects addressed margins, while others targeted productivity;  some targeted scheduling, some targeted workflow, and some targeted product design.  Most of the projects were done in sequence (not in parallel), and the active projects always focused on some constraint, focused on relieving something that limited or restricted RB Builders’ ability to generate higher levels of Gross Income.  Because the projects were perceived as focused, relevant, and do-able, they were widely accepted and enthusiastically embraced.

Along the road, RB Builders embraced flexibility and innovation;  it experimented with different techniques and approaches, but initially shunned major systems or technology conversions out of concerns about its capability to implement the changes.  The company learned from the outcomes of each project, and incorporated what it learned into each successive project.  As RB Builders did more for itself, its confidence in its own capacity and capability to manage change and get results grew;  and, as its own capability and capacity increased, its dependence on the work of its intrepid results-based consultant (now considered a trusted advisor) lessened.

Along the road, the intrepid, results-based consultant kept RB Builders focused on the outcome.  She helped them change their mental models, their way of thinking, in a number of areas.  She taught the company how and when to use all of the tools in the toolbox, without regard to the consulting religion or denomination from which they came.

She challenged assumptions and decisions.  She taught RB Builders how to “see” production, how to look at its production capacity, productivity, and production planning and management.  She shared business principles.  She taught them how to solve core problems.  She helped them design new processes, new production systems, and new measurement systems.  And – because she was invested in the same results as her client – the intrepid, results-based consultant was usually the most reliable barometer for gauging the choices of where and when RB Builders should expend effort and resources.

Throughout the journey, the intrepid, results-based consultant shouldered her load tirelessly, coordinated (as needed) the different roles of other consultants, assumed exactly the same risks and was rewarded on the same basis as her RB Builders partners, and remained transparent, shunning the spotlight and recognition.

By the end of the first year (2008), RB Builders had generated $1.2 million in Gross Income above the GI Baseline, distributed more than $450,000 in bonuses and compensation, and increased Net Income by almost $750,000 (half of which was left in the company as additional Retained Earnings, and the other half distributed to owners).  Net Income Margin and Return on Assets improved by more than 20% (from 5% to 6%, and from 8% to 11%, respectively).

Encouraged by the initial success of their Results-Based approach, RB Builders continued to systematically exploit opportunities to increase Gross Income in the year immediately following 2008, by investing intelligently and sensibly in new technology, in enhancements and upgrades to existing systems, and by taking on additional and more challenging constraints to what had by now become their unifying focus:  achieving year-over-year increases in targeted levels of Gross Income exceeding every year’s baseline.