By: Tim Bailey – Division President of Avid Ratings Canada and Paul Cardis – CEO and Founder of Avid Ratings
There are proven business initiatives that generate profound results and home builders may employ one or more of these initiatives, such as Lean, Six Sigma, or Kaizen, to stay the course towards sustained excellence. Lean initiatives help reduce waste and inefficiencies. Six Sigma practices reduce defects and deficiencies. Kaizen maintains a focus on continual improvement. The core building blocks of all business improvement initiatives are People, Product, and Process. Understanding the interactions of these 3Ps is essential to CX — the customer experience.
A key ingredient in a successful organization is the people. The collective knowledge, attitude, aptitude, and level of genuine caring has a tremendous impact on the success of the organization. Having the right people only solves part of the equation, as they must also be aligned to the right roles. A highly skilled construction manager who consistently exceeds time, quality, and budget objectives, but falls short with customer-facing interactions, should either be provided with thorough training to help excel at customer interactions or be buffered from those situations in order to leverage what he or she does best for the company. Hammering a square peg into a round hole does not create solutions, only friction. Recognizing key strengths of individuals and aligning these strengths with respective roles and responsibilities will maximize success.
Comprehensive and ongoing training will always generate a significant return on investment. Acquired skills and knowledge better equip team members to be trusted and empowered. An organization is only able to scale successfully if people are afforded the trust and authority to make decisions within their area of responsibility. It is important to remember that trades and suppliers form a substantial percentage and integral part of the “people” for a home builder, and must therefore be considered part of that detail in the 3Ps blueprint.
The best people and processes cannot be successful if the product misses the mark. In home building, “product” includes factors such as design, specifications, location, and price. Achieving a successful “product-market fit” is the goal, and fortunately there is a vast amount of data that can be leveraged to ensure product-market fit is not left to chance. Home builders are not building structures, but providing “solutions”. Intimately understanding the needs of home buyers in a target market allows product to be brought to market that meets those needs and provides those solutions.
Product design must consider demographic, ethnographic, psychographic, and economic information for a target market. Home building is a high-stakes industry and including features or specifications that are not valued by a target market adds unnecessary costs. Designing a product that “checks all the boxes” for the target market will maximize value for customers, increase sales velocity, and improve margins.
A well-intentioned team and market-matched product will not be able to succeed without a sound process. “A bad system will beat a good person every time,” according to quality expert W. Edwards Deming. A good process is repeatable, scalable, efficient, and constantly improving. Auditing the current process in home building means digging deep into every area of the company. It is a significant undertaking but reaps great rewards. Process analysis unearths existing bottlenecks, non-value-added stages, inefficiencies, and waste. Layering the customer journey over that process exposes potential “friction points” and allows the process to be engineered to enhance the customer experience.
The effects of process deficiencies are often easy to spot, but identifying root causes is what facilitates improvement. A root cause exercise of “5 Whys” is a common practice in Lean, Six Sigma, and Kaizen methodologies. It involves digging deep into a negative effect by asking a series of “why” questions five times. The answer from each “why” forms the next question and the fifth “why” generally exposes a root cause.
The customer experience is at the core between the interactions of people, product, and process. To “manage with metrics” to optimize the 3Ps, leading companies rely on:
- Employee feedback
- Trade feedback
- Customer feedback
- Production statistics
- Deficiency/warranty data
- Market research
- Financial results
Business excellence designed around the 3Ps will result in teams that are engaged, organized, and advantaged, and a customer experience that creates loyal promoters.