When a company's publicly avowed goal is to supply 100,000 new homes to new-home owners–built, delivered, and closed in a single year–it says something about DNA of that organization. It speaks of ambition, of drive, of dominance, and of predictability. Such an accomplishment would have meant that a single company would have claimed to supply nearly one in 10 of the new homes delivered to customers by the year 2010, if all went as planned.
Now, when the (unstated) goal of a company operating under that same name two years later is 25,000 to 30,000 new-homes built, delivered, and closed in a single year, you must to begin to think that an entirely different DNA is at work.
Business gurus–to make a point about the need to constantly reinvent and improve–are wont to point to lists of the top 10 corporations from different eras to show how few of them actually survive in those rankings today. Mission statements, product features, manufacturing capabilities, even balance sheet strengths aside, it's customers who put companies in the business that they're in, and not the other way around.
But if there are a half-million new-home customers in the next 12 months, and more than 1 million new homes already standing, then it is new homes looking for home buyers rather than the other way around. The biggest builders have price elasticity on their side to plow through this issue, and, fortunately for many of them, they've got cheap debt that doesn't mature for years and years to come. Still, the current market displays a curious and painful reality of residential construction–the errors of some have the power to damage many. So, the collective home building industry suffers at least in part because a minority of builders continued to build and buy land at peak prices well into the downturn.
Back to company culture and DNA.
If a 40 percent to 45 percent reduction in forces, commensurate direct costs cuts, and inventory reduction efforts shrink the operation sufficiently, a big builder who was on course to hit 100,000 homes by 2010, might be quite profitable hitting 30,000 by that same deadline. In fact, a 500,000 new-home economy in 2008 will be a profitable year for some home builders–depending on their balance sheet, product offering, price points, geographical position, operational proficiency, and marketing creativity.
Beyond the surface announcements in the industry, other than shedding the numbers of people and chopping the expense lines on the budget spreadsheets, just how radically does the DNA need to change? If a company that was doing 5,000 homes in 2005 can profitably do 2,500 in 2008, then it can say it has its solvency issues managed, and it's most likely working on how many cents on the dollar to bid on desired land positions, or product positions, or operational proficiencies, when the moment seems right.
We've yet to see the definitive Harvard Business Review case study of a professional management best practice business transformation from among home builders–but why shouldn't this time not provide such an opportunity? It doesn't have to be a public builder either to work, as far as Big Builder is concerned.
What people buy from you–a home and a community–is the same benefit, so everybody can play to be the best. It's time to be the best there is in the business, and celebrate that. We'll help you in every way we can in 2008 and for years to come.