In his book The Wisdom of Crowds, James Surowiecki looks at the idea of group intelligence, that the many will answer questions correctly more often than will a single individual. The "crowds" need not be homogenous and, depending on the issue, may not need to have much specific knowledge.
In general, most remodeling professionals seem comfortable with and see the importance of asking advice from others, but they don’t seek answers from outside the business world or outside their trusted circle, which might include customers, accountants, and consultants. The "crowd" they attract is perhaps not as diverse as it could be, but it offers a level of knowledge that may override shear numbers. In other words, they believe in quality responses over quantity.
The Crowded Web
In trying to discover how and from whom remodelers seek advice, I went where I could quickly find a crowd — the Internet. Through LinkedIn, an online networking service, I posed the question: How can remodeling company owners use the "wisdom of crowds" — seek answers to business questions from a wide range of people including customers, random consumers, employees, vendors, and distributors — to better their businesses? And in what ways — through technology such as LinkedIn, Facebook, MySpace, Web 2.0, or in face-to-face meetings, direct mail, etc. — should remodeling company owners try to connect with those inside or outside their companies and/or industry for answers?
A small crowd responded: Susan Serra, a certified kitchen designer from Northport, N.Y., felt that social networking is useful to "create a more ‘human’ image for a remodeling business." Although that sounds paradoxical, it makes sense when electronic interactions are often anonymous, annoying, or both. "The ‘wisdom of crowds’ can serve ... to present new ideas to a business owner if one is open to them and flexible in seeing new ideas as potentially positive."
Jane Scammon, president of the Northern New England chapter of the National Kitchen & Bath Association (NKBA), thinks it important for those in the industry to "partner well." She’d love to see architects, contractors, and designers get along and support one another. "The more we unite," she wrote, "the more we support one another, the more the clients will perceive the process as a smooth one ... and convey this to their friends."
Ways to Connect
Gathering information from outside sources and networking has been around pretty much forever — what were the Disciples if not a board of directors? Using the Internet is just one of many ways to connect.
Tim Burch, owner of Burch Builders Group, in Warrenton, Va., belongs to the National Association of the Remodeling Industry (NARI). He wrote that networking was the number one reason members joined a professional association. "After a NARI dinner meeting I hear stories of member-to-member interaction that resulted in some knowledge shared, leads exchanged, and professional relationships started.
NARI and the National Association of Home Builders (NAHB) each have small-group networking options. There are also remodeling peer review groups such as Remodelers Advantage, Business Networks, and Executive Business Approach, and groups made up of diverse business owners such as The Alternative Board (TAB) and Vistage (formerly TEC, The Executive Committee). Another option for learning from other business owners is the Small Business Administration’s SCORE.
Gary Demos, president of Dave Fox Remodeling, in Columbus, Ohio, relies on a board of directors — himself and vice president Bryce Jacob, along with two people from outside the company, Harold Gutnick, a commercial contractor, and Pat Manley, an architect.
DFR is structured as an ESOP (employee stock ownership plan) company; like a corporation, an ESOP needs a board of directors. The board meets twice a year and usually discusses new ventures and financials. "It is there for high oversight and a different point of view on major business issues," Demos says.
Some remodeling companies have clients on their board of directors. DG Liu Contractor, in Dickerson, Md., is one such company. Its "board of advisers," which meets quarterly, includes the management team, their former Sandler Sales coach, their attorney, an elected member of their field staff, and a client who, Liu says, "is a financial adviser and able to understand the financial reports we review at the meeting without being abashed at markup of costs." Terry Ensor, Liu’s production manager, says that the client on the board has "provided a whole host of ideas on increasing sales." He adds, "Sometimes you don’t see the forest for the trees. [Outsiders] think in a way we don’t and offer a fresh perspective. But you probably need one who has some business sense."
After a project is done, of course, customers are a good source of advice. About three years ago, DFR wanted to find out what was important to clients and asked them to fill out a questionnaire. "We created a manual based on the information we got and did 13 weeks of training on it with all our employees," Demos says. He discovered that "communication was a problem." The company came up with methods to pass information to clients that included using a dry-erase board and e-mail. "We decided to make sure that at the pre-construction meeting we ask clients what their preferred method of communication is."
Getting advice from clients can be difficult and time-consuming. Many remodelers use a third party to gather information. Jeff Rainey, owner of Home Equity Builders, in Great Falls, Va., uses Facebook — one account specifically for business networking and another for social networking — as well as the social networking site MySpace. He also makes use of LinkedIn and Plaxo online business networking services. His wife and co-owner Sharon Rainey has developed her own Web presence as the creator of My Neighbors Network, "an interactive resource for referrals and community connections."
The Raineys are on top of what clients and prospective clients might be saying about them or about remodelers in general. Both Raineys ask and answer questions and blog, "spreading seeds of information" as Jeff likes to say. Their company Web site has a pretty sophisticated back end where clients, employees, vendors, and trade partners can interact on specific projects — but not on their own. "We don’t want them to talk without us being in control," Jeff says.
Despite all the modern connections, Jeff uses Guild Quality to conduct client satisfaction surveys and to get information about clients’ needs and feedback about the quality of the company’s customer service. But can drawing on customer feedback help you gain insight into your business, into how you can grow? Only if, like Demos, you make a commitment to using that gleaned information to shape your plans for action.
The same goes for suggestions made by employees. If you’re going to ask employees to help make the business better, you must be prepared to use those ideas. Leif Jackson, owner of Jackson Remodeling, in Seattle, offers employees $20 for "green" ideas, which are then put into action. On a larger and more formalized level, Hanley Wood, publisher of Remodeling and dozens of other building-related magazines, holds an Idea Factory every few years, in which employees are asked to submit feasible ideas for future ventures. At an off-site brainstorming session — the collective efforts of selected employees — the best ideas are chosen and then voted on by a larger, selected group. In both cases, company culture plays an important role in putting these programs in place.
Some remodelers find success by creating small groups on their own. I sit in on such a group in Rochester, N.Y., and am always amazed at the level of discussion. At one recent meeting, someone asked how he could get clients to pay for design. Several others who were charging for design offered specific suggestions, which could be acted upon — or rejected. A similarly informal remodeling company owners’ group begun by Tom DiBenedetto, about 25 miles north of New York City, began with information-sharing and has started to organize politically to affect local legislation.
Vet Your Crowd
All of this wisdom, all of this information-sharing can only be good, right? That depends, says consultant and business coach Michael Stone. "If all the information was good, we wouldn’t have the failure rate [in this industry] that we do." Stone cautions that you need to know who the information givers are. "The guy who told a newcomer two years ago to price jobs at cost plus 20% is now out of business, but the newcomer who followed that advice — and doesn’t know why he’s losing money — repeats it to the next newcomer, and on it goes."
Stone suggests vetting the people you ask for advice in the same way a customer would vet a contractor. "Check out the person’s background and what they’re doing now. Ask friends and associates. Start asking questions." And if you’re in a group, it’s best to be in one that has a knowledgeable facilitator.
Remodeler Bill Smith, principal owner of DAJA NU Design Remodeling, in Arlington, Mass., is not a proponent of the wisdom of crowds either, but for a different reason. At 42, Smith decided to get back into the remodeling business by striking out on his own. The crowd — family, friends, consultants — discouraged him. "I’m not going to wait any longer to prove my cautious critics wrong," he says. "I can almost hear my grandmother say, ‘If everyone else jumped off that bridge, would you follow them?’"
Smith is forging ahead, but despite his desire to break from the pack, he says he’s "networking like crazy" through Web-based social networking services, a Web site, and blogs, as well as NARI, NAHB, and SCORE meetings and events. "They are all a great street-level source of information that can really help your business." Smith found me and my questions through LinkedIn.