(The Saga of RB Builders©, written by Fletcher Groves III in 2007, looks back futuristically from the perspective of 2012. It is being republished this year, as a nine-part series in Big Builder. It is a glance into the process of continuous improvement, a glance into the never-ending quest for better operating performance and higher economic return)
RB Builders knew that it had never really achieved the “more-for-less” proposition its trusted, results-based advisor had helped them envision earlier, in 2007. The best it had been able to do was “more-for-the-same”–more Revenue, more Gross Income, produced with the same level of work-in-process and a slightly higher level of Operating Expense. This was an improvement from the “more-for-more” proposition it started with, but nowhere near “more-for-less.” In the improving housing market of 2009-2011, “more-for-more” had been sufficient; in a deteriorating housing market, it would no longer be sufficient.
The company was curious about what it would take to get to “more-for-less.”
It was curiosity worth a quick call to the trusted, results-based advisor, who had always left the door open. When asked, “What does it take to do ‘more-for-less’ ”– to become a ‘more-for-less’ home builder?”, the trusted, results-based advisor smiled, and simply replied, “Less enables more.”
RB Builders began to take a harder look at ways to “do less, but provide more,” to “do less, while providing more.”
The point of separation was always about value, viewed from the home buyer’s perspective. They simultaneously looked for ways to eliminate waste, and use the resources and capacity that it freed to provide more value.
The company still applied systems-thinking to the cause-and-effect relationships of every improvement it made, but the day-to-day effort became a broader, more Lean-based approach, in part, because of the widespread nature of the improvement, in part because of RB Builders’ increased implementation capability and capacity, in part because RB Builders’ team now believed in the approach. Much of the effort was still organized into short duration projects with measurable results, but there were more projects, run concurrent, and the projects were not restricted to constraints.
In its search for ways to “do less, but provide more,” RB Builders revisited areas it had worked on previously.
The company had earlier redesigned its critical processes, but it knew the new process designs had settled for “should-be;” most of the purely non-value-added work had been eliminated, but much of what was considered only value-enabling work remained. The new process designs had restructured and reordered the remaining value-enabling and value-added work, but they had never truly ventured toward “could-be," where the goal would have been to only do value-added work.
So–one of the rapid-results projects in 2012 focused on process workflow. Another project focused on eliminating all of the ‘things’–the meetings, reports, and policies, etc.– that RB Builders could just as easily do without, particularly if having them or doing them didn’t add any value.
Complexity of any kind was a target for elimination, to be replaced with clear, simple, effective ways of doing things.
They continued to focus on project management, on removing unmanageable float and resolving resource conflicts, so that jobs finished sooner, but now, the company also turned its attention to the amount of work-in-process. When RB Builders looked around, and asked, “What’s still the same? What hasn’t changed?” the most obvious answer was work-in-process.
RB Builders’ intrepid, results-based consultant/advisor had taught the company to think of its production capacity as the rate of closings it could generate with a planned, finite, and controlled amount of work-in-process, and with a fixed overhead. As a result, RB Builders had rigidly maintained its average work-in-process at 2007-levels (100 homes under construction).
Better scheduling and production management had resulted in more than a 60% increase in the rate of closings, from 200 homes in 2007, to 325 homes in 2010. Improved flow of sales, starts, and closings had resulted in a more even spread of the work-in-process.
But–it was still 100 homes.
The intrepid, results-based consultant had shown RB Builders how excessive levels of work-in-process reduced the rate of throughput; it was in the formula she had given them for calculating cycle time. RB Builders reasoned, what would happen if the level of work-in-process was purposely lowered?
No longer afraid of trying, failing, and learning from new ideas, the company decided to reduce current work-in-process and limit maximum work-in-process to 80 homes in 2012.
Part IX: 2012: Beyond Current Possibility (November 2016)
1) The term ‘rapid results’ comes from Rapid Results! (Schaffer, Ashkenas, 2005).