Our partners for the 2020 BUILDER Chōwa Concept Home offer a one-of-a-kind perspective on three learning opportunity areas that could empower American builders to improve their business outcomes over the next five years.
This BUILDER Chōwa Concept Home project—which we announced here in March--brings together an international design, development, and construction team from Japan-based Sekisui House and its wholly-owned home building company Woodside Homes. This concept home will introduce technologies, best practices, and a new approach to “improving society through housing,” to North America-based home building enterprises.
To understand “the why” that underlies these design, engineering, and technical innovations to Chōwa’s architecture, construction, and operations model, we’ll unpack and clarify some of Sekisui House’s business philosophy and values, as they’re so deeply embedded in how the world’s No. 1 home builder, its leaders, and every one of its more than 20,000 employees focus on what they do every day at work.
These principles and values have evolved across almost six decades into bedrock business and value creation practices as Sekisui House planned, developed, and produced more than 2.4 million homes and communities during that time period. From the start, the firm’s leadership put into place performance measures and imperatives that include not just financial profitability, but societal and environmental impacts, all fueled by a core mission and purpose, a “love of humanity.”
In three distinct business eras—two nearly complete, and one just beginning—Sekisui House maps a journey in home building, development, and construction milestones, the first phase emphasizing homes’ safety and security in the wake of post-World War II Japan’s need for reconstruction on a mass scale. This period accounts for Sekisui House’s unrelenting—and ongoing—strategic commitment to innovation around building performance and the durability of structures, especially in light of natural and human-caused hazards and climate events.
Sekisui House’s second strategic stage—beginning roughly with technology and social developments the late 1980s through the present—has centered on residents’ comfort, both at the household level and on a broader, community-wide scale. Here’s how Sekisui House worldwide marketing general manager Norio Adachi describes the inclusiveness of the organization’s strategic commitment to comfort:
“Some of the elements of comfort that we’ve considered--including the Zero Net Energy [homes] that we now manufacture—are universal design, the connections between the interior space and the external space,” Adachi says. That is, the experience of comfort extends not only within the walls and floorplan of a home, but out into a home’s connection with nature, neighbors, and society, addressing the needs for well-being at a higher level.
Adachi goes on to describe Sekisui House’s ambitious strategic commitment to its third phase, officially beginning as we speak, tying the personal health and well-being of home residents to the company’s deepening commitment to societal improvement.
“The third phase, from 2020, will enter us into a period in our society where people will live for 100 years, have a 100-year-lifespan,” Adachi says. “What we’re focusing on in the third stage of our journey is happiness, and making home the happiest place in the world. So, for that, we must consider ‘what is happiness?’ and ‘what is the role of happiness?’ and ‘what is the role that the house plays in providing the happiness?’ And so, we’re really just embarking on that part of our journey right now. We’re starting to think of how the house and living in them can provide that happiness in those homes.”
One of the leaders at Sekisui House who has played a role in shaping the organization’s strategic mission and its core focus on the connective tissue between house construction and the higher-purpose “love of humanity” is Kenichi Ishida. Dr. Ishida serves as a managing officer of the company and heads the environmental promotions division at Sekisui House, responsible for sustainability strategies.
In many respects, Dr. Ishida’s personal goals and professional path and Sekisui House’s journey across its three phases of strategic focus interweave, especially as he came of age in the 1970s, a time defined in part by oil shortages and a recognition that the world’s fossil fuel energy sources and supplies face ever greater constraints. Ishida and Sekisui House “discovered” one another during the early 1980s, he, as a doctoral student whose goal was to invent a comfortable house that didn’t use fossil fuel energy, and Sekisui House, which set a similar objective as a designer and builder of new homes.
Ishida joined Sekisui House in 1985, fresh from completing his doctorate, and he spent the following decade on designing durable, comfortable homes that would stand the test of time, but continued to guzzle fossil fuel sources to operate. Increasingly, he focused on evolving home design from Japan’s historical trends of small room spaces to a more Westernized interior floorplan. This meant more spacious rooms and larger views of the outdoors, which, for most of the 1990s, meant needing to improve wall insulation methods in the design and construction of homes to make them comfortable in all seasons.
Just before the turn of the 21st Century, Ishida and the Sekisui House leadership recognized that the environment—its delicate balances connected with carbon emissions, fossil fuel production and consumption, and climate change—loomed, not only as an important business and economic factor, but as a societal threat. At this time, the company pivoted from commitment primarily to financial value generating goals to one whose profit objectives balanced in equal importance with an environmental bottom line. In 1999, Sekisui House, in essence, re-wrote its strategic plan, making the organization’s environmental responsibility a core element of that new strategic, one and the same in importance as financial or operational performance.
“We made our environmental future plan,” Dr. Ishida says. “The philosophy behind it is that the environment is not ours, it’s something that we are borrowing from the future, and we have to take responsibility for that future.”
This moment draws the bright line for what we call “the New Resilience.” The company saw a higher purpose for itself as a member of society than merely producing homes and communities that people wanted to buy and live in and gain value from. At this juncture, Sekisui House leaders envisioned a company that could do well—on behalf of financial stakeholders and investors—by doing good, for society, for communities, and for the planet earth. The new resilience means not only individual homes that stand up to natural hazard events and climate change, but communities, business processes, and an ecosystem of manufacturing, distribution, and dealership partners all committed to reducing carbon emissions into the atmosphere, preserving biodiversity, and helping to repair some of the earth’s fabric that has been damaged at an alarming rate.
Although many corporations focus and fixate exclusively on sustainably generating profitability , Sekisui House’s focus is somewhat different, achieving regenerative profitability by insisting on sustainability. Dr. Ishida describes this commitment to both financial and higher value as almost self-evident.
“So, it comes to the question of why Sekisui House would want to do these things,” he says. “What do you think Sekisui House actually sells? You’d probably think we sell houses, but that’s not what we sell. What we supply is a happy life for the residents of those houses.”
What higher a purpose and mission could a housing development and production enterprise aspire to than “a happy life for the residents of those houses?”
Having written a sustainability commitment into the company’s essential DNA in 1999, Sekisui House reached another milestone in its embrace of sustainability less than a decade later. In 2008, the Toyako Summit in Hokkaido, Japan, elevated environmental issues and spotlighted corporate responsibility’s role in potentially keeping global warming from progressing. At that time, Sekisui House made its ‘decarbonization’ declaration, committing to remove CO2 from the whole lifecycle of Sekisui House’s buildings by 2050, in line with goals of the 2008 Summit.
Commitments and dollar investments in sustainability innovation have been significant, and looking at them from a “first-cost” mind-set, they can be viewed as expensive. However, Dr. Ishida notes that those commitments—strategic and financial—have paid off in both reputational value and financial profitability, given that customers prefer Sekisui House-branded homes, and opt to pay more for them.
Ishida notes:
“We started our Green First environmental strategy in 2009, and since that time the average sales price our houses have gone up 20%, our profits have increased, and our customer satisfaction rates have increased. Not all of that is purely because of our environmental strategy, but we have seen some great results.”
For Dr. Ishida and the strategic leadership at Sekisui House, commitments to sustainability and social impact are processes to kaizen, or constantly improve, expand, and find ways to amplify. Progress points at the production, or enterprise, or home, or community level are mere starting points on a learning curve that continues into the years and decades ahead, truly mattering when they’ve become more widely embraced, at the household, community, corporate, and industry-wide level.
“Most CO2 emissions over the lifecycle of our houses come from the when people are living in the house,” Dr. Ishida explains. “There aren’t that many emissions from the energy we use in our factories and offices, and a majority of the rest of the emissions come from the building materials we purchase. This is a whole-of-supply chain issue and not something we can improve on or control by ourselves. Home building supply chains are deep and wide and this is one of our greatest challenges moving forward.”
The 2020 BUILDER Chōwa Concept Home reflects the way Sekisui House backs up its commitments—to make its own gains, impact its supply chain, and, if possible, create a domino-effect across the entire business and housing community—with action. Bringing its methods, principles, and values into the North American marketplace through the showcase of a Japanese-designed and built home for the American Generation X-cohort professional household is a step in that direction.
“Climate change doesn’t just impact Japan–its impact is global,” says Dr. Ishida. “So I think we must, of course, bring our strategies to the US market.
