Home builders in action

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Part III of Scott Sedam's series on the seven responsibilities of leadership

September 20, 2013

Since I began this three-part series on leadership in the July issue of Professional Builder, I have become even more aware of the ways and means of leaders I observe both within and outside of home building. The more I study them, the less validity I see in any trait-based or attribute models of leadership. There are common outcomes of leadership to consider, however. At the forefront is the ability of a leader to get a group of people, whether they are family or they work in the public or private sector, to willingly do what they likely would not do?work at a higher level than thought possible and achieve things beyond their previous imaginings.

This leader is Herb Brooks, who coached the 1980 ?Miracle on Ice? Olympic Champion USA Hockey Team to perform far beyond the sum of their collective abilities, and it is your first boss out of college who had you working 70 hour weeks and actually believing you were having fun. This is Prime Minister Winston Churchill, who instilled a sense of shared sacrifice among WWII Brits  beyond what anyone in England had previously seen, and it is that pastor who got you to step up and work so many cherished days-off to help build a much-needed rehab center in the inner city. This is Bill Pulte, who sat on the roof of his first house at age 18 and dreamed he would be on the New York Stock Exchange as the largest builder in America, and it is that now-retired construction manager who by his example converted you from an abuser of relationships to a cultivator of deep business partnerships with your suppliers and trades.
Great leaders can be found at every level, every day, in every walk of life. The Seven Responsibilities as outlined in the first article describes an amalgam of what the very best leaders I have known actually do, what they take care of, and what they take responsibility for. In the second article in August, I described personal examples where I learned about each responsibility firsthand. For this article, let?s look at builders who accept the responsibilities with great aplomb. I had the privilege of working with so many strong leaders from that well that choosing just one for each responsibility is difficult, but here are home building leaders who demonstrate these responsibilities in action.

1. Responsibility to Self

Nelson Mitchell, History Maker Homes, Ft. Worth, Texas

I met Nelson Mitchell nearly 15 years ago, still in his 20s, when he was taking over the reins of his father Brian Mitchell?s high-volume, mostly entry-level building company. Begun by his grandfather years before with the audacious name, ?History Maker,? stepping into this position was a lot to shoulder. Yet even at that age Nelson stood apart from the pack. A dyed-in-the-wool Texas A&M Aggie, when I caught up to Nelson he had just returned from his annual physical at the renowned Cooper Clinic. Nelson was frustrated, feeling he had backslid a bit on health and fitness. Although compared to the average American, Nelson is a model of fitness and health, his doctor reminded him, ?You are the weakest link. If you don?t take care of yourself, you cannot take care of others.? Nelson stated emphatically that to do otherwise is ?just fooling yourself.? He went on to describe the stress of running a significant building organization and the pain of presiding over multiple rounds of downsizing that took the company from a peak of 185 people down to 45. ?You go from cutting fat to meat to bone, finally severing entire limbs. There is no training for that.? History Maker, a former winner of National Housing Quality Award Gold, is now coming back strong, expanding into new areas and product lines. Nelson is one of the most genuinely spiritual building executives I know and, for him, having a sense of higher purpose is everything. ?I believe I have a deeper purpose, God-given, and that drives how I relate to my coworkers and the relationships I create with my wife, three kids, and extended family. The family keeps me grounded. Without that I am nothing.? Nelson is the epitome of Stephen Covey?s admonition, ?First things first,? and his company is that much the better for it.

2. Responsibility for Strategy

Keith Porterfield, Goodall Homes, Gallatin, Tenn. 

Keith Porterfield is one of the most instantly likeable guys you will ever meet. Make no mistake, Keith is an executive with his eye always on the ball and not much gets past him. Yet his open, receptive manner pulls the best from everyone. During the worst housing recession in history, Goodall Homes grew from No. 13 in the super-competitive Nashville market to No. 2 today. When I ask Keith how Goodall jumped 11 spots competing against a boatload of national builders, what I get is a long list of ?things done right? that add up to a consistent, purposeful strategy that takes advantage of opportunities that fit Goodall?s strengths. During this time Goodall tripled in volume without taking on additional debt. Just how does a builder do that? Purchase finished lots? Check. Develop your own land? Check. Structure complicated deals with developers to share risk and profit, thus reducing investment levels while building more homes? Check. The down times forced Goodall to get creative and the results are nothing short of spectacular. They were the first in their market with an easy-living concept to serve the move-down market, with wider doorways, zero-step entries, and complete living areas on the first floor. Designed with seniors in mind, they found everyone loved them. Another genuine strategic advantage is Goodall?s adherence to true even-flow scheduling. That brings them the best trades, the best crews, and controls cost. Yet while describing each of their strategies, Keith is quick to harken back to having great people and taking care of them as the most productive strategy of all.

3. Responsibility to People

Rick Betenbough, Betenbough Homes, Lubbock, Texas

On my first visit to Lubbock I wasn?t expecting much; I mean, Lubbock is not exactly a destination city. My shock when finding the coolest offices of any home builder in America was not surprising to Rick Betenbough and his team because everyone reacts that way. A veritable oasis in the desert, I will not reveal any more other than to say that providing their people a beautiful, stimulating workplace is merely a physical manifestation of one of the strongest people-centered cultures I have ever encountered. Rick and his father Ron Betenbough look at everything they do with a sense of stewardship. They consider everything they have, whether a piece of land, their office, or a new associate, as a gift they have been entrusted with and their sacred duty is to care for it and tend to its growth. As Rick tells the story of two former truck drivers he hired about seven years ago, Eric Miller and Brock Baker, you can feel the excitement in his voice. The entire team worked to develop these two guys and today, Eric runs their Midland operation while Brock runs Odessa, each doing around 250 units annually. ?We made the mistake of hiring a couple of managers from the outside. They had a ton of experience but could not adapt to our culture. Eric and Brock were ready, we made a change, and everything turned around.? Rick then emphatically stated as he would several more times in our conversation, ?Good leadership changes everything.? The positive things Betenbough offers to support its people at all levels represents a laundry list that could be the subject of a whole other article, but suffice to say that Betenbough is one builder where the people know they are valued because that point is reinforced every single day.

4. Responsibility to Customers

Saun Sullivan, DSLD Homes, Denham Springs, La.

If home building had its version of ?Ripley?s Believe It or Not!? I would nominate DSLD Homes, which grew from zero to 1,200 units in four years with both very high profit and top customer satisfaction scores. I have seen a few builders grow that fast but either profit or satisfaction takes a serious hit, usually both. Charlie Scott, a Partner in Woodland, O?Brien & Scott and one of our industry?s best-known customer satisfaction measurement firms, cites DSLD?s remarkable 98 percent ?willing to refer? level and a sales referral rate of 44 percent. According to Charlie, ?They have expanded our Top Performer ratings to higher levels, setting a new standard for home building.? Saun Sullivan, who has led DSLD from the beginning, described their strategy?really a daily operating philosophy?that largely explains why DSLD stands out from the pack. Saun explained that most builders get it backwards, spending most of their time focused on the prospects, followed by customers under contract, then finally the existing customers. DSLD does exactly the opposite. According to Saun, ?Our number one focus is our existing homeowner. Then we worry about those under contract, then the prospects. You get that straight and everything comes together.? Sean added one very practical tip that changes the nature of your customer relationships. ?We try to have no conversations internally that the customer could not be a part of.? Ponder that. Now think of the conversations you have internally about your homebuyers. If they could overhear, would you be comfortable with that? Radical? The results speak for themselves. If you purchase a new home from DSLD, one thing you?ll never have to worry about is the builder abandoning you after your check is cashed. That?s a responsibility they?ll never forget.

5. Responsibility for Systems and Process

Brad Jagoe, Jagoe Homes, Owensboro, Ky.

I have known Brad Jagoe long enough that I was not surprised by his response when I called to interview him for the systems and process part of this article. ?We stink!? Brad exclaimed, although if former Builder of the Year Jagoe Homes stinks, then most other builders smell like a keg of spoiled fish on a hot summer day in Gulfport. It is Brad?s nature to never be satisfied with the current state, and that?s what makes him so good. Jagoe Homes, in fact, was so frustrated with their inability to find a true schedule-based builder software system (the majority are accounting based) that they spent years and a lot of money developing their own, called ?Dynami.? This system is one of the key elements that enables Jagoe to build 300 homes a year and keep three diverse locations all in balance with a release-to-complete cycle time in the low-to-mid 70 calendar days. That?s better than five asset and overhead turns per year, compared to the U.S. average of around three, and that means profit. Brad is emphatic that the answer is ?a strong process with discipline and accountability. For us it is a relentless, day-in, day-out search for opportunities to improve. We never get there. When you find something wrong, research it back, find out why, then ask what are we going to do to prevent this from ever happening again?? Brad goes on to describe their standards, scopes, and QC checklists for each component. ?We have developed a group of suppliers and trades that give us very high first-time quality.? As for proof that it works, on any given day 95 percent or more of Jagoe houses will hit the target completion date with zero open items and two-tenths of one percent variance. You cannot accomplish that with turnover, and at Jagoe, turnover among their suppliers and trades as well as their own staff is virtually nonexistent. I can?t imagine any environment I could find that would be more demanding, and more rewarding, to be a part of.

6. Responsibility to Community

Jeff Rutt, Keystone Custom Homes, Lancaster, Pa.

How does a dairy farmer from the Eastern Pennsylvania Amish country become CEO of a multiple-award-winning home builder and leader of one of the most effective ?uncharities? in America? It is impossible to have a conversation with Jeff Rutt without being moved by his passion and dedication to helping his worldwide community and doing it in a way that has profound, long-lasting effects. Jeff says, ?Even as a dairy farmer, I was always a systems and process guy, figuring how to do it better, how to be more efficient, and I applied that to both home building and Hope International.? Jeff launched Keystone Custom Homes in 1992 and Hope International in 1997. If you really want to understand what it is all about, go to www.hopeinternational.org, click on history, then read how the microfinance concept, making loans as low as $20, has helped lift tens of thousands out of poverty. On this call, Jeff was most excited about Jose Ricoln from the Dominican Republic, who with a $400 loan built a 100 unit/month wheelbarrow business employing people from his village. That money, like more than 95 percent of microloans, was paid back on time and is now used to help others start small business to support their families. It is the ultimate ?hand up, not a hand out.? To date more than 35 builders and 6,000 suppliers and trades have volunteered to build over 90 homes raising more than $11 million, which has helped improve more than 500,000 lives in 16 countries. That?s community. Every builder I know who has built a ?Home for Hope? has described it as a remarkable team-building experience. Now go to www.homes4hope.org, the dedicated builder site for Hope International, and read how you as a builder can join in.

7. Responsibility to Investors

I originally intended to focus on a single builder here, but as I wrote the leadership series it dawned on me that each of the six above could be featured on this point as well. Here is the big secret that is not so secret after all, but it is quite different than what those of us with MBAs were taught in B-school. If you do these six things right and fully accept your responsibilities as a leader, by definition you will be taking responsibility for your investors. You will build a sustainable organization that produces profit long into the future.
This series began with the true story of a young vice president of a large company lamenting his boss?s focus on rank and its associated privileges over its requisite responsibilities. In the art and science of leadership, there is no more important word than responsibility if you desire to become a leader who genuinely makes a difference in the lives of others. In my research for these articles, after each phone conversation I stopped to absorb what each person said and pondered how fortunate I am to know and work with such leaders, such people. I was struck most by the genuine sense of stewardship that each displayed. That it was their solemn duty to carry out these responsibilities, almost as if they had no choice in the matter. Some of these leaders are quite outward in their religious beliefs, while some hold their spiritual leanings close to the vest. But all in their own way echoed the oft-quoted ?parable of the faithful servant? which was important enough to appear in three of the four Bible Gospels, ?To whomever much is given, much will be required, and to whom much is entrusted, much more will be asked.? Whether manifested by taking responsibility for customers, employees, suppliers and trade contractors, your community or the systems and process that enable good work to get done, this is what leadership is all about. You have the rank. Forget about your privileges, those will take care of themselves. Now get about answering the call of all of your responsibilities.
Scott Sedam is President of TrueNorth Development, an internationally-known consulting and training firm based in the Detroit area. Scott welcomes your comments, questions, and feedback at scott@truen.com. For a single PDF of this three-article series including a worksheet to analyze your own pursuit of the Seven Responsibilities, email Scott and please specify ?7 Responsibilities PDF? in the subject.
Find Scott?s LeanBuilding Blog on www.ProBuilder.com or www.TrueN.com, where you will find archives of past articles. To keep up with the latest on Lean Building & Design, join ?The LeanBuilding Group? on www.linkedin.com.

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