No pun intended.
Since time has value as money in very real ways in home building's start-to-completion cycles--perhaps, at no time clearer than the 90 days running toward calendar year-end--speed matters a whole lot when margins are the goal line.
What our friend Fletcher L. Groves hammers on in the Velocity Accelerator segment of his Pipeline Workshops is that rushing to get done and velocity are two entirely different and often conflicting things. Especially, when it comes to the value you generate in a home and the economic return to you and your business stakeholders. Do you know the difference? Test your velocity IQ here.
It really effects how you make decisions--35,000 of them we make each day, whether we're aware of them or not. When we become aware of hard decisions--economic return, or making money that is not subject to being clawed back by warranty issues, or other sorts of mitigations or make-goods, depends on real sustaining value creation. Not just for you, but your customers, your trade partners, and your local municipal context.
That a smart choice might run counter to self-evident goals of maximum profitability might seem like a bad way to run a business in home building. Or any other business community, for that matter. The genius of Groves' approach to production and operational productivity and volume comes down to specifics of what happens in each time duration, and the processes and tasks that achieve true value creation vs. appear to increase speed.
Maybe as never before, true value creation, in real economic return terms, includes reputational value. Seth Godin is a master of making the obvious worth looking at, again and again. Here, he writes about reputations, a notion that over the next few months should be constantly on the minds of managers driving to deliver homes on time and on budget, even when trade and labor streams are difficult to manage.
Three things to keep in mind about your reputation
- Your reputation has as much impact on your life as what you actually do.
- Early assumptions about you are sticky and are difficult to change.
- The single best way to maintain your reputation is to do things you're proud of. Gaming goes only so far.
It's a fact of today's society, culture, and economy that a new home builder's reputation can and does have an influence on new home building's reputation. One bad actor can affect perceptions on a much wider level than just his or her own enterprise.
Here's a Harvard Business Review essay worth looking at from Joseph L. Badaracco, who serves as John Shad Professor of Business Ethics at Harvard Business School, entitled "The 'Maximize Profits' Trap in Decision Making."
Professor Badaracco, notes that in "gray area" decision-making, often the standard answer is not the right answer. His focus is on an area that's particularly timely, across many parts of housing's ecosystem of development, design, construction, engineering, real estate, finance, and distribution and is one of the root challenges in housing we'll address next week at our HIVE conference.
It comes down to a difference between "economic success" and "strategic success." We believe that true value includes "today" dollars earned, and future dollars that are earned because we've made ethical, socially responsible, environmentally sound decisions. Ones, as Godin says, we can be proud of.
The way those decisions map to job sites and community construction supervision and cycle times may simply be that spending more time to get something done right the first time, yielding a better quality result, may run counter-intuitively to "maximum profits" on measures of margin. But they may be the smartest choices, and ones a home builder, architect, developer, engineer, investor, lender, or distributor can be proud of choosing.