Bob Toll is sketching. A tireless 66-years old who plays hard and works harder, he's known as a guy who tends to go almost nowhere without a personal tape recorder, and people who know him have learned not to take offense as he splices in asides and "notes-to-self" amid almost any conversation. But his recording device has been set aside for a moment, while he takes a breath to look back at one or two defining moments that he feels made Toll Brothers the company that it is today, at 40 years old.

He's tracing out a diagram because he's been asked how the Toll Brothers name came to be synonymous with luxury home building. If you want to know, the answer was equal parts architectural fillip, marketing tactic, and construction solution.

John McManus Photo: katherine Lambert "We got to the luxury end of the business on the second community, up in Bucks County [in the early '70s]," says Bob Toll.

In those days, homes were built with a larger downstairs with a living room, dining room, family room, kitchen, and then a garage. For four adequate bedrooms, less space was needed. The master bedroom was tiny compared with what it is today, and two baths were back-to-back in the center of the home.

"My brother and I reasoned, " says Toll, "that roof here is the same roof if I extend it. So if we extend the joists, we can move the wall and the roof out to be the same size as the downstairs. Same thing on the other side. It costs almost no more money to add another 25 percent of footage to the home. That was the beginning of the luxury market for us. I reasoned that ? if I took part of the advertising cost and put it into the building budget ? I could take some of that advertising money and put up a lot of moldings–cove molding, chair rail, dentil moldings–to make it ritzier inside."

"We had less traffic because we had less advertising in the newspaper," Toll explains. "But once the traffic came, we had more sales. Furthermore, we started to sell by word of mouth." The luxury market, for production home building, was born.

Toll still offers home buyers 600 to 700 options during some point of the construction cycle, which is largely why the company structures itself as it does.

The added square footage and abundant moldings notwithstanding, Toll recognized and embraced the potential that the New York to Philadelphia corridor of the 1970s suggested. It took counter-intuition to both be willing to invest the extra dollars per unit to give them Toll-worthy panache, and divert some of the money away from print ads, sacrificing foot traffic for a shot at romancing home buyers who did come by to see the homes.

What we find about Toll after 40 years is that, while organizational structure is institutionalized and codified around the vertical project management business model, almost everything else in the place is full of restlessness. Rules are meant to be challenged and new ways of winning cross-pollinate themselves across the enterprise, thanks to religiously observed weekly Monday evening meetings among regional presidents and officers in which they drill well below the sales, profitability, and comparatives reports into the idea tissue of the company. The equivalent of expanding floor space by 25 percent by extending a joist or two and adding the corresponding wall and roofing is the challenge of Toll Brothers employees every day.

"Even in the beginning, I hired people and told them, 'We'll argue–not in a bad way–our various points,'" says Toll. "'And if we disagree, I ought to be able to convince you. And I think I can, most always. But when I can't, maybe I'm wrong. We'll go to a third party and they'll decide. And we'll move it. The decision will be made and on we go. Because if you don't go on, the world will pass you by."