What does it take for a builder to become a center of excellence? There is the academic formula, which in this case goes like this: Becoming a center of excellence means moving through critical chain management to achieve the capacity to manage multiple ongoing projects effectively, profitably, and sustainably. It means communication, execution, decision-making, and data are precise, timely, iterative, scalable, and measurably improvable.
Like most concepts in business, there are few companies that would neatly fit that description. This is what we found when we talked to four home builders who, owing to their stacks of industry awards and success in the market, are considered centers of excellence. Fact is, they are substantially different from one another, and the drive to become excellent was not necessarily an effort to that end—it was just good business.
EYA—Land Acquisition and Development Excellence
At Bethesda, Md.–based EYA, the mantra is "life within walking distance." The phrase was trademarked in 2006. It aptly describes the communities the company builds and how it builds them. EYA—No. 138 on the latest BUILDER 100/Next 100 list—has built more than 4,000 single-family townhomes and multifamily units in Washington, D.C., Maryland, and Virginia since its founding in 1992, averaging roughly 200 per year.
Because EYA is an urban infill builder, it operates differently from most other home builders, particularly when it comes to land acquisition. "It's hard to get these sites, but there's not a lot of competition once we open a project for sales," explains Frank Connors, EYA's executive vice president and chief operating officer.
Obtaining land often is a complex negotiation with multiple owners, governments, and government agencies; many of the company's communities are public/private partnerships. The homes themselves are a breed apart as well: LEED certified, designed to complement surrounding neighborhoods, and built like a fortress. And not mass produced. "We've never built the same product twice," Connors says.
Operationally, the company is driven by a set of core values that permeate the organization from the hiring process through to the staff's dealings with subs, consultants, planners, the home buying public, and among themselves: Act with integrity and humility; respect and recognize others; perform with excellence and passion; tackle challenges with a can-do attitude; collaborate for success; contribute to a positive and fun work environment; innovate continuously; and value relationships, community, and sustainability.
"We're all accountable to one another—there's not a lot of egos around here," Connors explains. And the company has the data to ensure accountability. "What gets measured gets done," he adds.
To ensure everyone is working toward the same end, there are daily stand-up meetings among senior executives, so named because everyone does indeed stand and the meetings are limited to 20 minutes. The meetings are repeated at the department level. The leadership team is guided by a one-page strategic plan and meets quarterly to establish the "rocks," which are actionable goals designed to achieve annual priorities and the longer-term elements of the strategic plan. This ensures that work on day-to-day activities advances long-term strategic objectives. Once a week the leadership team gathers for a 90-minute meeting where, among other activities, progress on the rocks is reviewed.
"If you're not moving forward, you're moving backward," Connors says, a mantra that neatly describes the mindset at EYA.
DSLD Homes—Built on Process
DSLD Homes in Denham Springs, La. does not have a mantra. But if it did, it might be this: In home building, as in much of life, timing is everything.
CEO Saun Sullivan thinks about timing a lot. Such as when he sold his former company, PCC Home Builders, to D.R. Horton in 2006 for $35 million. The housing market tanked soon thereafter. Freed from the shackles of land, inventory, and debt, Sullivan formed DSLD in 2008, benefiting from lower land and materials prices. "We got in at the right time," Sullivan says, with requisite Louisiana understatement. It is now a top-30 home builder (No. 27 on the latest BUILDER 100 list) and the largest in the region. It operates in three states, Louisiana, Alabama, and Mississippi, and expects to build 2,000 homes this year.
DSLD also could have a second mantra, uttered from the lips of the CEO himself: "Don't do stupid stuff." Sullivan wants his employees to find the best way to tackle any job instead of 20 ways that are wrong, which to him means "we need to be conservative." He also suggests being mindful that in the home building industry, "people's predictive ability has been very, very bad."
The company's philosophy is guided by two core principles: A customer-centric approach to everything it does and, as Sullivan puts it, "humility." DSLD employs the even-flow construction model in which multitrade teams are responsible for a complete process. Each gets a set number of tasks to complete each day and is graded on performance. There are grading sheets at every jobsite. Those grades are compiled, tallied, and analyzed, and contractors whose grades fall are called in for a performance management session.
"They know exactly what we expect," Sullivan says, adding that trades and suppliers are in turn treated like partners and are paid within two days.
"We spend a lot of time on scope of work," he explains, which means each task is specified down to how something is installed or fitted and even fastened. DSLD works with developers to seek out and pick up finished lots; it scrupulously avoids land development and speculative inventory. Sullivan himself, along with other DSLD executives, personally scouts out land. The company cultivates and nurtures relationships with Realtors, and it is near religious in its devotion to maintaining clean and orderly jobsites.