In a previous column, “The Fragility of Good Things,” I took a broad-based look at the elements that determine success or failure in business, specifically where a fail in any one element spells doom for the enterprise overall, no matter how strong the business may be on the other aspects. A home builder in that situation may stick around and even be somewhat profitable, but they’ll do a lot of damage in the process and leave a lot of money on the table. I’m sure you can think of a few examples.
That column covered essential elements of strategy, market, finance, operations, trade base/supply chain, and leadership, spending a bit of time on each one.
Leadership, however, has come up several times in my columns of late, going back to last spring when everyone was focused on survival and recovery during the COVID-19 pandemic. I suggested leadership as the factor with the greatest impact, and as an avid reader of biographies, noted Abraham Lincoln as the greatest leader I have ever encountered.
Home Building: a Surprise During the Pandemic
Much to almost everyone’s surprise, however, home building has thrived during the pandemic. Home sales and prices are up in most markets, driven by the lowest interest rates in our lifetime and people’s desire to “cocoon” in their own homes. Meanwhile, individuals and companies have learned they can work just (or nearly) as well remotely, but need a good space to do that—which usually means more space, a measure of privacy, and amenities that support a workspace.
We are not, however, out of the COVID-19 woods. Just this week, a client had to push back an event with us because his framer contracted the virus and exposed multiple people. Many economists predict a GDP slowdown lasting years, not months, and that, at some point, it will put pressure on housing, as higher unemployment levels mean fewer dollars for housing, especially at the base levels of the economy. Given that, I’ll stand by my assertion back in May that the ultimate survivors of the pandemic and its fallout will be those businesses blessed with the strongest leaders that have built organizations that can withstand whatever comes.
- What Is the Role of the Leader?
- Leadership and Management: Not One and the Same
- 31 Flavors of Leadership
I was discussing this theory recently with a client who has focused on driving significant culture change in his company. He still has a ton of systems and process-improvement work to do, and he knows that, but he also understands that without excellent leadership, it won’t happen and can’t be sustained.
I was describing how I served a key role 30 years ago with a national builder in much the same situation. Our margins were merely sufficient, turnover was high, quality was poor, and customer satisfaction ranged from barely acceptable to totally abysmal. Our goal was to turn all of that around—quickly. Some divisions came along much faster than others, but within five years we were largely successful, by both internal and external measures.
The client was quiet for a while, then asked me this question—deceptively simple on the surface—“So, forget about character traits and tell me the three most important things you’ve seen the best leaders actually do on a day-to-day basis to lead the change.”
With less than 15 minutes remaining on the call, my first thought was, “There just isn’t enough time to get into this.” Yet the time constraint turned out to be a blessing. I had to be succinct. Thinking back on those days three decades ago and the eight or 10 builders I’ve worked with since then that have truly changed their culture, I was surprised how quickly my words came in reply. Indeed, I was able to boil it down to these three things.
1. Mission, Vision, Values
The best leaders lead and maintain the company’s mission, vision, and values. In many cases, local definitions of mission, vision, and values need to be newly created or significantly overhauled, and if so, that’s the responsibility of leadership.
Mission, vision, and values are elements in every book, presentation, and course on leadership, so much so that they may seem obvious or even trite. They are, however, essential. First, consider values—the foundation upon which everything else is built. Values are what the organization holds dear, what is most important, their own essential truths that guide their actions. When I think back on the many firms I have worked for and a couple of hundred I have worked with, each company is ultimately a reflection of the values of senior leadership, good or bad. This goes for schools, churches, teams, and organizations of any kind.
Mission is understanding what you do and for whom as a business. To describe what an organization does, I have seen everything from “make money” to “build the best windows” to some version of “make the world a better place.” And the “for whom” might range from investors to customers to God. The combinations are endless, but the key is to articulate your mission clearly and make a total commitment to fulfilling it. What the best leaders do is actively reinforce their company’s mission at every opportunity and ensure organizational behavior remains consistent with that mission.
Mission, vision, and values are elements in every book, presentation, and course on leadership, so much so that they may seem obvious or even trite. Nothing, however, could be further from the truth.
Vision is expressed as what you want to become, usually a loftier target, and is often described in terms of becoming the best ..., the most valued ..., or the leader in ... (whatever the field of pursuit). Vision provides that destination out on the horizon; it’s what the organization aspires to, even if it’s never completely achieved. The best leaders go about building the road to that destination, and the bedrock for that road is shared values.
Again, the leader’s job is continual vigilance in support of these essential organizational elements. Most builders have these written down, many even print them out and post them so they’re visible to all. The best leaders ensure the entire organization is aligned with those values in daily operations. Anything less is read as hypocrisy by employees and customers alike.
2. Continual Improvement
Second, the best leaders serve as the standard-bearers for continual improvement in systems, processes, and product—on a daily basis. Such improvement is not an event, a workshop, or something to do once or twice a year. Continual improvement is a way of thinking and a way of working in daily operations.
I’m all for having great people; who wouldn’t be? But you can’t build your company on the backs of heroes who spend their time working around inadequate or broken systems and processes to get the job done.
That scenario is, in fact, the legacy of our industry, and so many of our senior leaders today built their careers on being such heroes. The goal, however, is to build systems and processes so good that the average person can do a great job, which is far more effective than spending time trying to hire the next hero.
Building great systems and processes is something I have watched the best leaders do. Even if they’re not hands-on in the office (physically or virtually), they make sure it happens. Sure, once you’ve established systems and processes that enable success, a few genuine heroes can take you even further. But first things first.
3. Removing Obstacles
The third essential element is to identify and remove any obstacle that stands in the way of your people doing their part in building a great house for a satisfied customer at a profit.
Our TrueNorth team members see this wherever they go, no matter the product type, price, or amenity level, no matter the city, state, or country. We see good people trying to do their best, spending an insane amount of their day working around obstacles in their path that could be removed or at least significantly reduced.
Set yourself a goal of removing one obstacle each day in the path of one of your people or your suppliers and trades. But don’t guess; ask them directly.
A simple example: A builder discovered his field superintendents were spending the better part of a day out of each week in the hot summer months watering lawns to prevent the sod from dying. A hard look at the true total cost of this work made it clear that hiring college kids to do the work would have a huge return. Obstacle removed.
Set yourself a goal of removing one obstacle each day in the path of one of your people or your suppliers and trades. But don’t guess; ask them directly what’s getting in their way. (Hint: bring a legal pad and two good pens.)
Easy as 1, 2, 3?
I’ve noted in past columns how my brain immediately conjures up a song for most anything I write, and now my cortex is being pummeled by the Jackson 5’s “ABC” (easy as 1-2-3).
While I deal with that, let me say that while I’ve cited three essential elements the best leaders pursue daily to create and maintain positive change that gets results, nothing about this process is easy. It takes time, energy, exceptional listening and observation skills, continuous response to needs, openness to feedback, a willingness to adapt, and daily commitment to each element discussed above.
If you’re lucky, you’ve worked with or for someone like that. Think back on what they did, and perhaps just as importantly, did not do. Consider their failures as well, when things broke down and how they recovered. It is so often said you learn from experience. But just as valuable, and often less costly, is to learn from the experience of others. Simple, right? Easy as 1, 2, 3.
Is Your Home Building Business Set Up for Agility?
Why developing an agility-based mindset is critical to effectively manage today’s home building challenges. Part 2 of a series
Housing Market Poised and Ready for 2023
NAHB Chairman's Message: Newly elected 2023 NAHB chairman Alicia Huey builds on the palpable energy from IBS and vows to continue a commitment to strengthening a culture of membership and creating value for members in the coming year
Agility: Your Business's Antidote to Chaos
Volatile market conditions are now the norm in the home building industry. Taking an agile approach can distinguish your business and set you up for success