It's odd that it works this way, but during these slowest of times in production home building, it's neither patience nor deliberate thinking that emerge as strategic necessity. It's speed.
Cost and time go together, so if you can eliminate one, you can get at the other. When it comes to the three imperatives that drive us—more, better, faster—a colleague of mine used to say, “pick two of them and be happy with that—you can't get all three at one time.” For home builders, large and less large, faster and better will have to do for now. More may come much later. Do it fast and right the first time.
We're living now with this realization. That feeling we got in 2003, 2004, and 2005, when we thought we were so good at building, satisfying home buyers, managing companies, and buying materials and services–that was euphoria. That also was fantasy.
And the price of all that—as painfully we learn each time a batch of bills and payments come due—is that many of us cannibalized our future prospects to get to the heights of euphoria we felt in the middle of the decade.
Many of us built capacity at great cost in dollars and disregarded discipline. One of the only ways back from the brink has to be scary. But if we were willing to cannibalize our future before, now we'll have to be more than willing to cannibalize past and present structures that block our way to our future.
To get better, and do it fast, we'll need to free our businesses of the deficiency and inefficiency we ourselves designed into them. We grow attached to our designs, and they feel as if they're the bedrock of what we do. Still, we have to let them go.
As we speak, folks at Pulte—which as of Aug. 18, 2009 became the combination of Pulte and Centex—are going through each and every land parcel they own and giving it a litmus test. If the test shows the land is best for an entry-level community, that piece will get the Centex brand. If it is first or second move-up, it will become a Pulte community. If the tract lends itself to active-adult lifestyle community development, it will get the Del Webb name.
This means that many communities currently called Centex will become Pulte and vice versa. It also means that parts of the combined Pulte and Centex organizations will submerge into the whole.
Few national home builders have succeeded in organizing their multi-regional, multi-divisional businesses around an operating company model. The rest are holding companies with limited ability to manage knowledge, processes, and outcomes across their roll-up of semi-autonomous regional or divisional units.
In the Pulte-Centex “combination,” as CEO Richard Dugas likes to call it, we see a story for the moment. It's about being courageous enough to acknowledge that separately, companies can't get the job done as well as they intend to. They need to partner. They also need to disrupt the way things were, even to the point of cannibalizing some of the pet initiatives that once worked well. Change needs to go fast.
Here's what Bill Pulte says of Dugas, the man who would be king of home building:
“When I first met Richard, I saw someone with high integrity, high intelligence, and someone worth keeping an eye on. Richard moved quickly through the ranks because he would win discussions by using facts, not just words, to back up his points of view.
“When Richard was named COO, he took that opportunity to travel the country and meet every division president in the company and build a rapport with them. After seeing his relationship-building ability and leadership skills, along with what I knew of his integrity and intelligence, I made him CEO. The fact that he was only 38 didn't bother me at all.”