Creating a Lean Culture - Builders Speak Out

More than 20 years ago as a corporate vice president for a large national builder, I spent a solid year going from division to division in the field to determine how best to improve quality while lowering costs during one of home building’s strong growth periods. I saw first-hand how thoroughly disconnected the dozen or so top company officers were regarding our customers, the suppliers and trades that built our houses, and our own people. This applied especially to the roles of field superintendent and service technician, but even internal functions and sales were grossly misunderstood and unappreciated by senior management. To say the attitude toward customers and the people who did all the work that made us money was cavalier is putting it mildly. Our culture was definitely in need of an overhaul.

I had read that McDonald’s periodically sent out its own senior executives to restaurants to work as counter help, fry cooks, and cleanup crews in order to sensitize management to the needs of both the workers who made the burgers and the customers who bought them. I proposed the same thing to our president — that the “gang of 12,” which included the president, CFO, CIO, controller, and a compendium of VPs, all go to the field to work for an entire week as new recruits in construction and service (and no, they couldn’t take an afternoon off to look at a hot land deal). This process closely resembled the format of the current TV hit show “Undercover Boss.” The plan moved forward all the way to looking at schedules and airfares, and then it got shot down with a litany of excuses all masking the real issue — fear.

No one wanted to confront a culture that put short-term return above everything else, so much so that it limited even the short-term dollars we were after. I’m happy to say that much of this was overcome in ensuing years and by the very people who had resisted change to begin with. Yet, I still believe that the “field experiment” would have hastened our transformation toward a new culture, one in which we worked with our suppliers and trades, not against them, to lower cost and improve product without the collateral damage so common with traditional management practices.

The Culture Question

In this ongoing series on Lean operations, perhaps the most difficult Lean essential to get our arms around is “culture,” and I have received many email inquiries on the subject. Having now tested the Lean principles in 65 implementations, the positive financial results are inarguable. Still, the overall impact ranges from acceptable to outstanding. What accounts for the difference? Culture. But how do you describe it? How do you put culture into words?

In a departure from my usual approach, I have decided to let someone else do the talking. I sent the “culture question” to a list of those who are successfully implementing Lean process and methods in the building industry. The response was thoughtful and included both general and specific elements of culture. Read these quotes and consider them carefully. By the end, you’ll be well on your way to understanding what it means — and what it takes — to create a Lean culture.

What's It Take to Create a Lean Culture?

“To be Lean the people in your company must really understand what they are delivering to the customer, then never be satisfied with the level they delivered yesterday. Your people must look at their daily task through the eyes of the consumer. They must understand it is not only about the words quality, delivery, and price, but the resources expended to reach these benchmarks.” — Bill Jagoe, owner, Jagoe Homes, Owensboro, Ky.

“Lean is not a mystery, but the owners, your own people, and trades have to become unhappy with the status quo. The biggest impediments are unwillingness to change, arrogance, ignorance, and exhaustion.” — Mark Gilliam, president, Keystone Homes, Augusta, Ga.

“In Lean operations, if you consider your trades to be partners rather than subs, back-charges make no sense. It’s like a husband and wife billing each other for forgetting to take out the trash. It costs more money to process what you get than what you bill them, and it encourages suppliers and trades to recover the money through VPOs.” — Saun Sullivan, owner, DSLD, Baton Rouge, La.

“Lean requires an open mind and willingness to challenge beliefs, not just about waste but about everything. Pride can be a big obstacle.” — David Walton, director of purchasing, Trendmaker Homes, Houston

“Lean operating philosophy demands continual improvement in all things: hard cost, quality, speed, and innovation. You cannot build a Lean culture with adversarial supplier/trade relationships or the ‘we’ve always done it this way’ attitude. The design team must embrace the goals and participate in a positive way. Recognize that in the beginning, Lean will require time and energy to follow up on everything you discover.” — Rick Moore, region president, David Weekley Homes, Houston

“Lean is not a program, it’s a way of life. It’s about best value, not cheapest price, and if you don’t go into Lean with the goal of helping trade contractors first, Lean will fail. If your attitude is ‘me first’ and to the trades go the crumbs, you will get far less than if you put them first. When trades understand you are working to help them, they put you first and you will get their best efforts. Everyone wins.” — Mike Hammock, VP purchasing, Signature Homes, Birmingham, Ala.

“To create a Lean culture, drive it from the top; allow no sacred cows; provide the resources to facilitate; build on solid relationships with trades; support teamwork and communication both internal and external; reinforce with structured follow up; and celebrate wins.” — Mike Humphrey, senior VP, David Weekly Homes, Houston

“First and foremost, the builder must learn to truly listen to trades, suppliers, and the customer, then ask, ‘what if?’ You have to abandon the ‘if it ain’t broke, don’t fix it’ belief and be open to new techniques and methods. Some builders can’t accept that there may be a better way, but that’s the key to going Lean.” — Wendy Lee, president, Jeff Benton Homes, Huntsville, Ala.

“Lean — learning how to do things better every day — is a highly inspirational concept. You realize the power of the voices and ideas of the people with whom you work every day. There are all sorts of great ideas just waiting to be conveyed, and when everyone has to learn to work as a team, everybody feels valued.” — Doug Halbert, president, Classic Communities, Harrisburg, Pa.

“In Lean, a company needs an honest and open culture where change is accepted and not seen as a threat, but an opportunity to get better. We feel we are good at what we do, but we will be significantly better in six months and even better six months after that.” — Joe Mandola, VP and general manager of homebuilding, Trendmaker Homes, Houston

“Lean must be a part of everyone’s daily routine, with a relentless focus on the elimination of waste, as defined by the customer. It cannot be just another project or activity added on to their normal duties; if so, it gets moved to the back burner. You need team members that expose problems, see problems as opportunities, effectively utilize problem-solving techniques, develop solutions, and implement.” — Brad Jagoe, VP construction, Jagoe Homes, Owensboro, Ky.

10 key ingredients for a lean culture

1. Personal commitment from senior management is critical
2. Suspend the ego — the biggest obstacle is your belief that you are already Lean
3. Face the brutal facts — an honest assessment of your organization is essential
4. Involve everyone who touch the product and process
5. Listen, listen, listen — to your people, suppliers, and trades
6. Adversarial relationships must go
7. Lean must be part of daily routine, not an extra job
8. Measure, track, and provide feedback
9. Lean is not a “condition,” it’s a never-ending journey
10. Always celebrate wins

“Lean requires the desire to look inward and face the realities that are brought out in the Lean process.  Many times our first inclination is to blame others for waste, but that only masks or delays the best solution to the problem. An example is the practice of self-engineering, which results in tremendous waste and over-building. Spend the money on a good engineer that understands waste and watch the return on investment.” — Keith Porterfield, COO, Goodall Homes, Gallatin, Tenn.

“Lean requires a significant paradigm shift. As good as you are, there are major process improvements that will increase profitability for you and your trades while actually improving your finished product. Your entire group, your management, as well as your trade’s management, will have to open up and be brutally honest with you without risk of penalty in order to achieve the maximum benefits of going Lean.” — Mark Dunaway, CFO, Jeff Benton Homes, Huntsville, Ala.

“For us, it comes down to a commitment on the behalf of our leadership to develop our organization through people. This commitment to pursuing the greater good beyond purely financial gains is what leads us to the logical conclusion of driving out the waste that our clients don’t value. Ultimately, this results in better people, better products, and happier buyers.”  — Jason Sherman, supply chain manager, Keystone Custom Homes, Lancaster, Pa.

“You must keep your ego in check to apply Lean. Many of us as builders and entrepreneurs have made it by being self-reliant and hard working. We constantly push ahead even when the plans haven’t been detailed thoroughly (ready, fire, aim!). The old attitude to just fire the subcontractor on the spot because there are others who can replace him is not productive. Changing just to change is very costly. I’ve recognized this for many years with staff, however, it has taken longer to accept this with our trades. We have a disciplined system approach to hire staff. The same is needed for hiring trades.” — Lamar Crowell, CEO, Keystone Homes, Augusta, Ga.

“We found that humility is an essential characteristic to support our core value of teamwork and a requirement for Lean implementation. With trade partners completing 95 percent of the work to create our product, they are critical team members. We must humble ourselves to truly listen to them to determine how to get better, and leaner. Builders may embark on Lean building to simply decrease their direct costs and consider it a job well done, but they’ll miss the culture change that makes it last. Other builders may struggle like I did to implement process change from the top down. We adopted a fierce attitude to get better and become the best builder our trades work for. Some of this evolved from open and direct criticism from the trades, which would not have been heard outside of the forum created during our Lean implementation process.” — Chris Kelley, CEO, Piedmont Residential, Atlanta, Ga.

“The biggest concern of an owner or leader is getting others to buy into Lean. Our industry is full of people with egos and there is a fear of opening their minds to more-efficient ways of building. Home building is different than the high-tech industries where innovation and change is considered the norm. It takes a structured process, involving people from sales, construction, purchasing, and warranty, as well as trade partners.” — Jim Halbert, CEO, Classic Communities, Harrisburg, Pa.

“Implementing a Lean culture takes a personal commitment from top leadership to fully understand the principles of Lean and spending every day modeling to employees and trade contractors an absolute disdain for waste in process and product. Once you do, you’ll start seeing waste everywhere you look and it will drive you nuts until it’s eliminated. Lean requires an all-in mentality and commitment. Just as using FSC wood products and low-e windows alone won’t make you a green builder, using process mapping and Kaizan tools alone won’t make you a lean builder.” — Tim Rethlake, VP of new construction sales, Hearth & Home Technologies, Lakeville, Minn.

“Discipline is key. Without it, Lean stops after a company’s managers sit around a table and brainstorm to create real answers to waste, yet the answers stay on a scratch pad and never make it to the field. Perhaps the biggest obstacle is a company’s belief that it is already Lean. Their premise is that Lean is a status, not a process. Unless a company understands that Lean is a never-ending journey, they will never be able to start down the path.” — Matt Collins, director of internal operations, Keystone Custom Homes, Lancaster, Pa.

If your goal is to develop a genuine Lean culture in your organization that includes everyone who touches the process and product, you have now read what it is and much of what it takes. All of these companies started at the same place you sit now. Now is a good time to begin.