4. When your management technology system is an integrated solution that supports (among other things) critical chain project management scheduling and a contribution income statement.
5. When all of your process workflow has been mapped and the task order, the input and output, the dependencies, and the requirements of those improved processes are so well-documented that the most recently hired, least-experienced teammates can teach themselves everything they need to know about their role, and how that role fits with everyone else’s role.
6 When—regardless of its price point—the architecture of your product stands out as an elegant building solution that retains a meaningful interpretation of historical design. When home buyers describe their decision as having been a distinct market choice when they selected you.
7. When velocity trumps margin as the most important component of return on assets.
8. When the size of your building company is a measure of the amount of work in process, not the number of closings or the revenue those closings generate; when productivity has replaced growth as the objective. When the mantra has become: inventory is the true measure of our size, so we don’t want to grow. We want to become more productive by producing more closings and more revenue, with a planned, finite, controlled level of inventory and production capacity cost.
9. When the only way a job start occurs is when it has been pulled into the system by a completion, and allowed by the capacity of a specific resource. A start should not occur when it has been pushed into the system according to a predetermined pace, without regard to work in process and capacity.
10. When job schedules no longer reflect variation-induced task durations padded to ensure on-time delivery, and when project buffer consumption is what is being managed, not the job schedule.
11. When the capacity of your production system has been switched from a balanced state that cannot be managed to being unbalanced in favor of a capacity constraint resource that can be managed.
What are the outward signs of an operation that has achieved operational centers of excellence?
12. When the deal-driven mentality that pervades the home building industry is relegated to the land side of the business (although even land and lot acquisition is a process), and is tempered with a much more disciplined, process-centric approach to production home building.
13. When your company’s constant, never-ending question is: Does this (activity, policy, practice, process, product, service) create value? And every decision you make is based on the outcome.
14. When strip-mining the value stream—think about what that terminology means—is no longer considered the only accepted approach.
15. When everyone in your company understands and accepts the notion that, in terms of how the workflow is managed, home building is project portfolio management with embedded and supporting processes.
16. When any pre-occupation you might have with industry best practices is seen for what it really is: a satisfaction with some sort of competitive equality, a settling for the expediency of the ideas of someone else, and a stifling of creativity and innovation that works against creating competitive advantage.
These 16 things are the evidence—at least, some of it—that has to exist for a company to achieve operational excellence. Although most home builders will find operational excellence to be the best fit, some version of this evidence will exist as well in the other two value disciplines (product leadership and customer intimacy) that authors Michael Treacy and Fred Wiersema identified in their book, The Discipline of Market Leaders.
All three value disciplines require their own operating model—a particular combination of operating processes, management systems, organizational structures, and culture—capable of delivering the distinct value proposition each discipline promises implicitly to its chosen segment of the market.
Operational excellence. Is your company there yet?
