My last article defined collaboration as a structured process where individuals work together to solve specific business problems. I outlined the framework needed to make this work successful and offered some examples from my consulting experience with home builders. The examples showed how collaboration yields concrete results like faster cycle times, higher profits, reduced waste and happier customers.
The point is that collaboration is a powerful tool that offers great benefits. So how well are home builders taking advantage of this tool?
Unfortunately, not very well. Getting people to work together on common problems requires a base level of trust, and our industry as a whole isn't the most trusting place to do business. We view one another primarily as adversaries even if that attitude isn't fully conscious. Negotiations tend to be hard and a lot of home builders try to shift risk from themselves to their trades and suppliers with win-lose contracts, some of which actually pressure trades into assuming more financial risk than their balance sheets will support.
In this adversarial model, builders spend lots of time trying to slash short-term prices but put very little effort into making shared business processes more efficient, even though such work would lower costs for everyone over the long run. (That's in contrast to commercial contractors, many of whom have switched to an Integrated Project Delivery model where all parties agree to shared rewards if the project performs well and shared penalties if it doesn't.)
In my experience, few people in the home building industry have thought much about this model, let alone looking for ways to make it different. We have a transactional culture where the dollar amount each sub or supplier charges gets more attention than lifetime project costs. No, I'm not saying that all builders are adversarial, but I am saying that overall industry culture is.
The good news is that this creates an opportunity. In an adversarial industry the company with a collaborative culture has an edge. Its internal departments work together more effectively, its trades and suppliers are more willing to sit down together and solve shared business problems, and its customer satisfaction scores tend to be higher And of course such companies have more success attracting talent.
A Cultural Inventory
If you want to make your company more collaborative, you need to start by taking stock of your culture. The following questions are good discussion starters if you answer them honestly and if you get members of your team involved. Each answer is worth either one or two points.
- Do we seek more to understand or to blame? If there's a shortage of lumber in the field and the framer says it's a takeoff error, do we reflexively blame purchasing (potentially raising costs for all homes by adding lumber to the standard lumber package for that plan that really isn't needed) or do we work with the framer and purchaser to figure out what's happening? Score: Understanding = 1 point; blame = 2 points.
- When people make mistakes do they feel punished or coached? If our estimator makes a takeoff calculation error do we scold and criticize or do we coach the estimator in a way that keeps the problem from recurring in the future? Score: Coached =1 point; punished = 2 points.
- Do we incent the purchasing department to achieve the lowest price or the best cost? Is the purchasing director measured on the ability to get low bids or on how those purchases affect the total project? To get the best total project cost, the purchasing department may need to evaluate suppliers on not just on price but on other metrics as well, such as whether they consistently make deliveries on time and how many returns for defects their materials require. Score: Best Cost = 1 point; lowest price 2 points.
- Do we solve problems collaboratively or by edict? If there's a last-minute schedule crunch do we demand that trades work overtime as a cost of doing business with us or do we as for their input on how they can respond most effectively to such changes? Score: Collaboratively = 1 point; edict = 2 points.
- Are we more likely to promote people by individual achievement scores or by consensus that they are the best choice for the position? For instance would we automatically move a high-performing sales rep into management or would we think it better to get the sales team together to determine what candidate would best serve the company's overall sales goals? Score: Consensus = 1 point; individual achievement = 2 points.
- Are our key performance measures mostly departmental/functional/individual or are they team-based/organization-wide? Do we measure construction managers on cycle time and quality alone or do we also analyze how their work affects the total project cost? Do we measure purchasing merely on cost or do we also consider the quality of the materials they are purchasing? Score: Team/organization-based = 1 point; departmental/functional/individual-based = 2 points.
- Does our culture promote internal competition or internal cooperation? Do we encourage rivalry between lone-wolf salespeople, or do we incentivize the entire team in a way that encourages them to work together to meet overall sales while improving customer satisfaction scores? Score: Cooperation =1 point; competition = 2 points.
- Do we look at customers as one-time transactions rather than as ongoing referral partners? What kind of reviews and referrals are customers giving and how are these score determined by how we treat them? Score: Partners = 1 point; transactions = 2 points.
- Do we view architectural and engineering service providers as business partners or as vendors? Asking an architect to draw a set of plans is the path of least effort, but your homes and communities will be more successful (and less costly) if you partner with an architect and engineer to help with planning. Score: Partnership model = 1 point; vendor-model = 2 points.
- Do we view material and product suppliers as business partners or as vendors? The rewards of contracting with one supplier to provide all the stock for a community include more consistent pricing and better delivery schedules. The supplier will also be more willing to help value-engineer plans and deliver lumber packs in ways that make the framers more efficient. Score: Partnership model = 1 point; vendor-model = 2 points.
- Do we view trade partners as business partners or as vendors? I discussed the value of trade councils in my last article. Here, suffice it to say the many rewards of working more collaboratively with trades show up throughout the build process. Score: Partnership model = 1 point; vendor-model = 2 points.
Now add up the scores and divide by 11. If the result is closer to 1.0 than 1.5, it’s a pretty good bet that you have a mostly collaborative culture. On the other hand, a score closer to 2.0 than 1.5 means you likely are more adversarial. While not scientific, the results of this short survey will give you a head start on thinking about this issue and deciding if you want to change.
The obvious question is what to do with those results. I'll talk about that in my next column. Also, register now for the Housing Leadership Summit, where SAI Consulting vp Fletcher Groves and I will be running a workshop specifically on this issue.
