Over the better part of the past decade, CEO Ken Krivanec has had to reinvent Bellevue, Wash.–based, TRI Pointe Group–owned Quadrant Homes three times.
First, the company built starter homes, which seemed to make sense in the no-frills years coming out of the Great Recession. But then, as the American economic landscape changed to favor the more affluent, Krivanec and his team made Quadrant into a provider of high-end, luxury houses with myriad options to please the whims of even the most discriminating buyers. When option overload turned its Evoke brand into a moving target of ever-changing floor plans and one-off items that still needed to be built to a tight timeline, it changed course yet again. Today, Quadrant has settled back into a space where it builds upscale homes to fill higher niche demand, but with standardized "flex options" for various floor plans.
"Now, we get the best of both worlds through this discipline and business strategy. We allow people to come in and choose their site, and choose a plan that best fits their needs and then go to our design studio to walk them through the flex options that allow them to live the lifestyle they want," Krivanec explains. "Those options are based on the best ideas we've come up with after years of research and development and time in the marketplace, and without mass customization."
The result has been a fine-tuned delivery machine, where homes are built to either a 62- or 72-workday timeline on an "even flow" production schedule, with each home completed within its prescribed, allotted number of workdays, guaranteed. Customers aren't given a start or completion date, but instead are notified once construction on their home begins, followed by weekly progress reports. On the surface, it seems like Quadrant's centers of excellence are a model that others in the industry would want to emulate. But for a variety of reasons, creating centers of excellence remains an uphill battle for many builders.
Process Over Product
Quadrant's journey from a low-cost provider to an any-option-you-want, high-end customizer and then, finally, to a purveyor of choices that work for both itself and its customers illustrates a flexibility to follow the market, a willingness to change its product to fit its processes, and a commitment to maintaining, above all else, the processes by which it schedules and builds its homes.
By using the centralized processes and administrative infrastructure developed within its construction division, Quadrant has been able to hone its focus in other areas—such as its marketing department, land buying group, and design center—to ensure that all parts of the whole function seamlessly together, while also delivering on the production schedule it has promised its customers with a product that meets and exceeds the expectations that have been set for them. It's this philosophy that has helped it weather the vagaries of the home building market, to become even more successful, over the past decade.
Long used in industries from technology to finance and manufacturing, and similar in scope to the "Six Sigma" management process, centers of excellence provide leadership, evangelization, best practices, and support within an organization. And yet, while widely used in other industries, centers of excellence—at least those that are explicitly labeled as such—are hard to find among home builders.
"When it comes to centers of excellence, manufacturing, sales, software development, health care—you name it—they've already been down this path and figured it out," says Fletcher Groves III, vice president of the home building practice at Ponte Vedra Beach, Fla.–based SAI Consulting. "For home building, it's not that it's not important as much as that it's been missing to this point. But that also means it's a huge opportunity. It's just that home builders need to craft a solution that fits for them."
It's Not About the Homes You Build
In an industry that can be hyper-focused on the finished product—a completed home—developing centers of excellence to pay attention to processes instead of product can be challenging. And yet, for companies who have had initial success building homes but find their processes begin to break down as they reach a critical threshold in terms of volume, the process can mean the difference between failure and success.
"The finished home is not what you should focus on," explains Mike McElroy, president of Charlotte, N.C.–based home building consultancy The McElroy Group. "You've got to focus on the incremental pieces of the process because that will lead to the quality building and profits you want. You'll never be able to paint and caulk your way out of bigger problems if the fundamentals aren't there."
McElroy ought to know. A 30-plus year veteran of the industry, he's built more than 10,000 homes in his career, and he grew Centex's Charlotte division from building 300 units to more than 1,000 homes annually. Like Krivanec, he says it's a commitment to process, not product, that makes the difference when building at scale.