Fellows who quite clearly are going to the top in business sometimes have to go someplace else to get there. That's the way it's worked three times out of four at The Ryland Group–from the 30-something huckster and Pittsburgh native who breathed first life into the company in 1967 to the long-time No. 2 senior executive for a Fortune 500 building materials supplier who built Ryland into a top tier player nationally to the former "Big 8" auditor who whisked it away from death's door in the early 1990s. Hitting a wall seems to be an unavoidable precursor to hitting the ball out of the park at Ryland.
Today, what industry observers like about the 40-year-old, $4.7-billion, 16,700-or-so home building company that is Ryland–its conservative land strategy, its financial liquidity, its deep bench of regional and divisional talent, its geographical diversification, its organic growth, its sales-oriented culture, and its rate of inventory turn–traces to three gut-wrenching moments in three separate decades.
At Ryland, Kipling "Kip" Scott is a tad shy of four months into his new role as COO, which likely will lead him to the CEO suite at Ryland's Calabasas, Calif., headquarters at some point in the future. Scott's coin in the realm is a signature land wizardry he refined as a real estate developer in Kansas City, Mo., pre-Ryland, and to a knack for migrating something called "best practices" into his and other operations. As much as he's respected by the other guys passed over for the COO spot, Scott wouldn't be the first new chief to need help from just one person to clear the long angelic shadow of a predecessor: R. Chad Dreier, who's been an indomitable shaper of all things Ryland for 14 years and is turning 60 in September.
"I can't imagine not doing this for a while," Dreier says of a less expansive role in running the company's day-to-day operations. As Scott steps up and takes charge of the coveted land strategy and marketing and sales initiatives, Dreier will focus more on managing Ryland's profile on Wall Street and nurturing people throughout the company's footprint of four regions, 17 states, 23 divisions, and 28 markets.
For more than a decade, Dreier did it all, and learned the names and schools of most of his managers' kids, as well as their interests while he was at it. Now he's taking steps, measured ones, to share the load. "You need somebody new to come in and take good looks, more critical looks, and a different angle or different perspective."
As the No. 8 home builder, and barely a third the size the industry sector's top three or four players, Ryland's eventual ranking, or even very existence, in an arena that will most likely shrink into fewer larger players is anybody's guess. Still, if the company is going to emerge from the current decade, let alone another for Scott, what may stay the same at the company could be every bit as important to its future as what must change. It may be home building's nearest example of the public company with the private company heart.
If the scenario at Ryland sounds familiar to some, that's because it is: "My objective was to bring a large, publicly traded company perspective and experience to the task of improving operational and financial performance without making changes to the essential culture of Ryland, which was a people culture, and one based on achieving growth and at the same time avoid risks associated with landownership," says Charles E. "Ted" Peck, who was chairman and CEO at Ryland from 1982 to 1990.
Peck, the son of an Armstrong Cork and Tile executive hailing from Lancaster, Pa., had come to Ryland after a 33-year career at Owens Corning, where he was executive vice president. Peck, his predecessor and Ryland founder James P. Ryan, and Los Angeles native Dreier share some things in common.
BROTHERS AT ARMS
Flash back to the mid-1940s, in the chill of the late fall outside Pittsburgh. In suburban Mt. Lebanon, a high school player, too small for any football future, nonetheless took a blue-and-gold jersey with the No. 1 on it and led his team as quarterback to an undefeated season. Thing is, the record was not flawless. The final game ended in a tie, and the quarterback that led Mt. Lebanon High to glory all season was in tears he couldn't hold back. A gent approached him and extended his hand: "What you did out there on that field today, young Jimmy Ryan, will serve you well for the rest of your life. You'd been receiving the kicks all game, and you were not returning the kicks well, and the only guy running well on your team was Bernie Kelly. And on the last kick, you let Bernie Kelly run it back and he did a lot better than you did. That was a smart decision."
The now 74-year-old James Ryan, who lives in central Maryland, recalls the moment as telling. It drove home the point that, "I never needed to do things all myself and be the author and designer," Ryan says, tying his childhood recollection to the way he would one day bring talent into the company he'd start.
But that's jumping ahead.
Fast forward a few years to a late spring day in 1950, the day Ryan becomes the first male child among his mother's and father's families to graduate from college. In four years, he'd gotten two "As" at Allegheny College–one in art, because he liked making silver jewelry for his wife-to-be Eleanor, and one in statistics, because he was "a damned good poker player."
His older brother Ed Ryan, founder of Ryan Homes of Pittsburgh, attended the graduation and had Ryan on a site, building homes two days later for his company, which was doing about 175 homes per year.
Ryan became Ed's company's rocket-fuel. "We went into Cleveland and Akron, Ohio; and Buffalo, Rochester, and Syracuse, N.Y. And within one year, we became the largest builder in every one of those cities, except Buffalo took us two years. The deal was I could do this, Ed said, if I didn't buy land or buy lots, but optioned them. Ed's where we came up with that format and that really helped my end expand. We got up to 1,400 homes pretty darned fast." When the regions outside Pittsburgh began to make more money than the home division, Ed brought his kid brother in to run Ryan Homes as COO.