A single strong thematic current ran constant through two full days of our just completed 31st annual Housing Leadership Summit event, affirmed by the leaders of 70 organizations whose collective 2016 output included 192,000 homes, and $76 billion-plus in revenues for the 12-month calendar year last year.
It's this. Many, many things change. Some things don't.
Attitudes, preferences, behaviors, contexts and capabilities are all changing all the time, and some of them very fast. Still, what people value--safety, health, love, comfort--doesn't.
What home builders do, and who they are generally exist in the vector of the two, what changes and what doesn't. So, what builders, developers, manufacturers, investors, and trade partners have become quite good at is navigating the two. They're good at picking up the signal amid all the noise.
Keynote speaker, author and business strategy and management Professor Joshua Gans counsels this group of 350 leaders from home building, manufacturing companies, developers, investors, and other partners, that if they want to understand the measure of forces that could potentially disrupt their business models, the place to focus is not on "relative" key performance indicators, such as "how well are we doing vs. our competitors."
Rather, Gans advises, heed less relativistic benchmarks--like what consumers, or potential home buyers say and feel and do--as a true-up to keeping a business model aligned with where needs are shifting, new ones cropping up, etc.
When LGI Homes CEO Eric Lipar talks of his business model, it becomes clear that it is not--as many observers might assert--focused on "cracking the code" of the entry-level housing market. It's focused, instead, on a renter who wants refuge from renting.
When Atlanta-based Smith Douglas CEO Charles Schetter shares insight that his organization's strategy is not to compete for the first-time, entry-level buyer either, but to have choice-abundant home and community offerings for FHA-level buyers in five of the Southeast's fast-growing markets--Atlanta, Birmingham, Ala., Charlotte, Nashville, and Raleigh.
Neither the rental refugee nor the would-be FHA buyer is necessarily a matter of "cracking the code of the entry-level, first-time buyer" most of us would assume is both builders' core customer target.
Would-be FHA buyers, Schetter lets us know, may sooner be the 55+ move-down buyer just as much as he or she might be a young adult early career achiever.
The thing is, signals more often than not lead to what's steady, what doesn't change, the bedrock of value. Noise and vibration is all else in flux.
What our Housing Leadership Summit leaders--not just the builders, but the financial advisors and lenders, the manufacturers, the engineering and technology players, and the consultants--recognize is that even as home builders succeed, execute their strategies, and stay focused on their business models, housing has "wicked problems" that impact the builders, and could disrupt them. Wicked problems are very, very hard to solve, but worth solving.
The wicked problems as we wrote in the Builder's Dilemma include:
- The diminishing affordability of their offerings to an ever greater universe of people even as the number of home buyers increases thanks to demographics.
- The stagnant productivity in the manufacturing and operations model due to outmoded processes and technologies.
- The challenge to margins due to labor capacity squeezes that introduce intolerable unpredictability and cost volatility into business models
- The challenge to meet customers' need for delight, for responsiveness, for value
- and, finally, the challenge to attract and retain tomorrow's talent
Clearly, our own theme for the conference, Build, Measure, Learn, was improved by New Home Company ceo Larry Webb, who suggests that to get at these "wicked problems," organizations need not just to Build, Measure, and Learn, but they also need to get very good at listening (having others be heard) and, then taking action.
What began to emerge, whether our topic focus was improving technology, or learning to map to new data on lots, building information modeling, customer segments, etc., or piloting offsite construction processes, or accessing new capital, or discovering new ways to secure trade labor partnerships, or becoming more skilled at finding, winning over, and delighting new customers, or integrating smart home technologies into more energy efficient homes, was this.
Solutions to housing's wicked problems won't come in isolation. They'll come as a result of people in multiple disciplines working together in wholly new time lines, workflows, starting together and setting more aligned and unified goals. Housing's wicked problems reflect sclerotic responses to needs and values that are unmet and unrecognized.
To a person, our conference attendees recognized those wicked problems' solutions come only if disparate parties and cross-purposed interests figure out how to work on shared goals, open-sourced processes, and a new experience of what winning means. Winning together vs. tolerating wicked problems in isolation.
We felt pretty good about the chance of this happening among participants at HLS, as each of them was freshly provoked and inspired to listen and then not fail to take action.