At Don Simon Homes, the company measures its progress toward perfection every step of the way. By Alison Rice
"In the absence of measurements, you have myth," David Simon says, quoting Jack B. ReVelle, a favorite business guru. If that statement by the president of Don Simon Homes is true, there's not a shred of myth left at the Madison, Wis., company, where everything--punch-list completion, customer satisfaction, job applicant attitude--is measured and mined for insight.
But who needs myth when you have mastery? Don Simon Homes, which specializes in first-time buyer and affordable move-up product, has run variances of 1 percent or less since 1997. The company has implemented systems that have gained it an enviable reputation for reliability and on-time performance from subcontractors and suppliers and a national reputation for quality construction. And the builder, which closed 247 homes in 2001 for $50.2 million in revenue, did it all while dramatically increasing its profitability.
"Back in 1992 and 1993, when we started on this journey, we knew we needed systems in place," says Jeff Simon, vice president of operations, and David's brother. "We knew how to build a house successfully. The key was, how to do it time and time again."
At Don Simon Homes, they found that key in systems. The second generation to run the Midwestern home building company, the siblings--David, Jeff, and their sister, Karen Simon Dreyer, who runs payroll and benefits--took over daily management of the company from their father, Don, in 1993. (Don Simon died in 2001.)
The Simons knew they wanted to reengineer the then-37-year-old company, but they didn't unthinkingly adopt the latest management fad. Instead, they used process mapping (much like fellow ABB honorees Sattler Homes and Pardee Homes) to document their process, from the first contact with a prospect to closing and beyond. "You have to process-map so you understand where there's value and non-added value," David explains. "Where is the break in the process that needs to be changed?"
|Don Simon Homes|
They also evaluated the company's operations and its needs, not from their perspective as managers but from the viewpoint of home buyers: What were the problems in the process for customers?
David, who used to attend every closing in the early 1990s, lists what he saw as the big four, based on conversations with buyers: (1) new homes that weren't done on time, (2) the "big hassle" of running all over town to make selections, (3) warranty issues, and (4) lingering questions about the final cost. Those weren't all necessarily Don Simon Homes issues, David says, but it did reveal buyers' overall concerns and often negative impressions of new-home builders. "We thought, 'How do we take away that skepticism?'"
The company quickly addressed the selection issue, opening a design center in 1993 that serves buyers and, increasingly, prospects. According to the builder, 10 percent of buyers make their first contact with Don Simon Homes at the design center.
Solving the other issues required more time. "It took us one to two years to get the base systems in place before we were able to take the next step," Jeff says. The foundation of the system is reverse planning, which starts with an agreed-upon delivery date with the customer and then works backward, filling in schedules and deadlines for subs and suppliers.
Photo: Jeff Miller
And Don Simon Homes sticks to those schedules, much to the delight of their vendors. "Things are planned so well, we actually get a schedule three weeks in advance of when they need us," says Rick Hinaus, division manager for Madison Fire Place, which provides fireplaces for roughly 70 percent of Don Simon's homes. Normally, the vendor sends someone to the jobsite beforehand to verify that a builder truly is ready for delivery and installation. That's not the case with Don Simon. "We don't even check to make sure they're ready," Hinaus says. "That's how much faith we have in them."
Measure for measure
Similarly, employees receive questionnaires every 18 months, giving them the chance to provide feedback on pay, job satisfaction, management, and more. Trade partners, too, get their own survey every 18 months, in which they're asked for their impressions of the builder's construction managers, invoicing, estimating, and other topics.
Collecting and managing such a volume of data may sound overwhelming, but it obviously works for Don Simon Homes, which can quickly assess its performance in a host of issues. What percentage of punch-list items are finished before closing? One hundred percent almost every month since March 1998. How satisfied are trade partners with the company's invoicing? Their satisfaction rates average 5.17 on a 6-point scale. How many customers, surveyed nearly a year after closing, would recommend Don Simon Homes? Almost 100 percent.
But the company doesn't just take snapshots of a particular moment in business time, clinging to any positive result. It tracks the data, watching for trends. Customer satisfaction numbers, for example, are reported weekly, allowing Don Simon employees to respond to problems promptly. One problem revealed by the survey: buyers who didn't realize their painted walls weren't washable. "We had to say to the customer, 'The paint we are using is not washable,'" David Simon says. "We had to align their expectations."
The builder manages such issues through "hot spot" lists, which essentially are two initiatives under one umbrella. One hot spot list, which is based on buyer feedback, is for salespeople, who use it to educate buyers and manage their expectations.
The other hot spot list, which concentrates on quality and defect issues, goes to trade partners, who can then direct extra attention to those troublesome areas and, ideally, vanquish those pesky problems. "The biggest benefit and point we're continually making is that it's all about efficiency. If we can eliminate defects or callbacks, that's money that goes back to them," Jeff says. "Fewer defects means more time- savings and more money for them."
Developing that type of relationship with contractors is important to Don Simon Homes. "We don't have large trade contractors [in Madison]. They're mostly smaller firms," David says. "We need them to grow with us."
Vendors says they appreciate the partnership and admit they have drawn on the builder's practices to improve their own companies. "We used to have one rep who would quote, sell, and coordinate [the fireplace and its installation]," says Hinaus, of Madison Fire Place, which now, inspired by Don Simon Homes, has specialists handling each of those areas.
Meeting those guidelines was relatively easy for the builder, which has won national quality awards. "We were already building to a very high level of standard specs," David says. It also made solid marketing sense. "Madison's a very liberal community," he adds. "Quality, Energy Star, TNDs [traditional neighborhood developments]--it plays well within the Madison marketplace."
Photo: Courtesy Don Simon Homes
Most important, though, David says, it was the right thing to do. "We did this not because our customers were saying they wanted Green Built or Energy Star homes, because they didn't [say that]. But what better way to give back to the community than to build homes that save energy and are built in a more environmentally sensitive way?"
Don Simon Homes is also taking the lead on other issues. It's voluntarily asked for inclusionary zoning, a designation that allows homes at multiple price points within the same neighborhood, creating a community with buyers of various incomes rather than a development that serves only affluent customers or only first-time purchasers. Don Simon is also building two of the largest TNDs--Grandview Commons and Smith's Crossing--in the state.
"Don Simon Homes 'got it' sooner than other builders," Madison Mayor Susan Bauman says of the company's attitudes and practices. "Others are happy to build traditional 'how sprawly can you get' [developments], whereas Don Simon is doing things with town centers," diverse elevations, and mixed pricing. "They really do try to create communities--not just build houses."
Don Simon Homes
President: David P. Simon
Vice president of operations: Jeff Simon
Benefits and payroll manager: Karen Simon Dreyer
Focus: Custom production builder concentrating on first-time buyers and those seeking affordable move-up homes, with an average selling price of $203,239 in 2001.
Web site: www.donsimonhomes.com
Don Simon Homes sees high performance goals and frequently exceeds them. This Wisconsin builder: