Are we there yet? How much longer? Yes, it’s time for summer vacations. But those are not questions emanating from the backseat of the family SUV.
Rather, they are the irritated and exasperated murmurs that emerge from teammates during the quest for what is termed “operational excellence.”
The quest for operational excellence, it seems, brings more questions than answers. What does it mean? Why is it important? What does it involve? What does it require? What are the choices? How is it measured?
Why Should We Care?
As builders, you need to figure out the answers to the questions surrounding operational excellence.
What are the outward signs of an operation that has achieved operational centers of excellence? Your home building company—your team—will have achieved some measure of operational excellence, when the preponderance of this evidence exists:
1. When your teammates care as much about the business—i.e., have the same savviness, accountability, and motivation—as your shareholders. They know the numbers, they understand the connection, they have the authority and responsibility to take action, and they have a financial stake in the outcome.
2. When the working capital required to support your building operations is zero because you are turning your inventory six times a year, and cycle time in your start-to-completion process is 60 days.
3. When there is not a single house plan in your portfolio that accounts for less than 5% of the sales.
