At our Hive event in Los Angeles, Airbnb global head of hospitality and strategy Chip Conley shared this nugget about people who choose a bold new way to do things. He cited this brief message as a source of inspiration and motivation:
"First they ignore you; then they ridicule you; then they fight you; and then you win."
The quotation befits a Silicon Valley titan speaking about a next generation technological unicorn. But it's actually attributed, all or at least in part, to Mahatma Gandhi, who by all rights, set a course on a radically new pathway to deal with challenges.
In home building, it's hard to change things and go a bold new way. For one, when it comes to making an enclosure and fitting it with systems that become a home, there are proven right ways to do it; and there are many variable wrong ways people choose, mostly to cut corners. For another, most builders work on narrow margins, and any misstep can squeeze that margin away in a flash. Iteration--to what degree it can be achieved--rules.
Now, builders work for deltas, increments of variables of costs paid out, revenue coming in, and ultimately, value they're able to generate repeatedly.
What sets the good builders apart from others is an ability to assure greater predictability of those increments that separate outgo from income, and expense from the value they can generate.
Some do it on the basis of canny land purchase, leveraging systems, process, and selling strengths to expand the distance between how much they ante for lots and the amount that same home site gains in value when the verticle development on the property sells.
Among 4,267 builders who participated in an annual survey of prices and construction costs the National Association of Home Builders this past September, directional trends show that lot costs account for a bigger share of final sales price than they have since 2013, while total construction costs' percentage of the total sales price breakdown have declined.
That's not to say that those total construction costs--about $237,000 for an "average" 2,637 sq. ft. home among the 4,267 builders--aren't too high. It's also not to say that there isn't a great big opportunity area in the 55.6% of financial resources builders expend on total construction costs, especially as costs for land is very likely headed higher.
This is why it is gratifying to see, and actually get to work with, a home builder--one of dozens around the nation--whose DNA drives them to choose a bold new way to do things. Meritage Homes ceo Steve Hilton carries an entrepreneur's fire-in-the-belly belief that separation and distinction amidst a range of choices gives a home buyer and user an elevated experience of value. Hilton's imperatives among team members have to do with constantly remapping architecture-engineering-construction rigidities into a fluid, dynamic relationship that drives evolving values for Meritage Homes residents. Hilton's vision, in turn, became a mission for CR Herro VP-Energy Efficiency and Sustainability at Meritage, which in turn became a set of crazy goals for a Central Florida based team of CR's "heroes" that included Meritage division president Brian Kittle, area construction manager David Lassiter, regional marketing director Jennifer Mountain, and a national and local purchasing dynamic duo of national strategic sourcing director Royal Erickson and Thad Lynch, vp of purchasing, and a village of other valued teammates in design, construction, engineering, story-telling, etc.
Our Meritage reNEWable Living Home sought and found a new path that means operations and construction methods can be managed to a second level of priority to put consumers at the top of the builder's priority pyramid.
The premise was simple. Look at home buyers in a new way and develop a home for them, learning from the notion of UX--user experience--outward. The enclosure, the systems, the finishes and interfaces, including the floorplan and flow all drive to a single purpose statement: today and tomorrow's households can enjoy well-being--that combination of protection and prospering--in a wide-ranging combination of family and non-related family combinations. Renewable in real-time and across time.
Builders planning to gather in Orlando during the 2nd week in January should head over to the Estates at Parkside, Orlando, to engage with, critique, and extract ideas and tactics from the Meritage reNEWable Living Home.
