Stuart Miller
Stuart Miller

Innovation has an enemy. And, you’d be surprised who Lennar Corp. CEO and President Stuart Miller thinks that is. “Success breeds stagnation… Success is the enemy of innovation,” he said.

For a public company, like Lennar, the imperative to produce results every three months makes it even harder to focus on long-term goals. “We’re racing on our racetrack with quarterly results that we have to hit,” he said. “It’s hard to get off of that racetrack to innovate.”

But Miller decided that he needs people running off that track, at least part of the time, so Lennar created a team to focus on customer experience. That team meets for two-hours on a biweekly basis.

The future, according to Miller, is to use digital media to lower its customer acquisition cost.

“As a company you need to get to the future first,” Miller said. “If you don’t, your customer will leave you behind.”

But Ivy Zelman, CEO of Zelman & Associates said the industry isn’t always forward thinking. She offers research, which is valued by many builders and investors, to independent builders who will fill out her survey. But many builders pass on the opportunity, saying responding to her questions will take too much time. “They’re stuck in their silos,” she said.

“We think we’re more immune because we buy land and build with real materials,” Miller said.

Silos and a feeling of immunity aren’t the only reason builders haven’t aggressively innovated, said Michael Dickens, partner & Chief Marketing Officer at IBACOS. “In the early 90’s, I thought home builders were going to change housing,” he said. “But the recession hit and nobody could sell anything. Innovation stopped for 10 years.”

The past recession slowed innovation as well. “In the downturn, we couldn’t do innovation,” Miller said. “When things are good we don’t want to do innovation.”

Sometimes there are dangers with innovation. UDR CEO Tom Toomey pointed out that the connected house could be susceptible to a dangerous hack. But those fears didn’t deter Miller.

“At the end of the day, we’re going to jump into the water and learn to swim faster,” he said.