As at least three long-established Japan-based global enterprises–Sekisui House, Daiwa House, and Sumitomo Forestry–make themselves more and more at home in North America, and more specifically, United States single- and multifamily housing markets, the opportunity to learn from and seize on processes, building technologies, and business cultural practices becomes almost achingly clear.
Still, any expectations that these organizations would take the same kind of immediate character-altering measures to integrate U.S. operating partners typical of most endemic domestic acquirers are unfounded. That’s not how strategic executive teams in these world wise companies work. Instead, Japan-based parents become students of the American market–from procurement channel issues, to construction operations, to customer insight, to long-range business model development–choosing to learn before they deign to teach.
At the same time, the reason that practices and solutions from organizations who cut their teeth and built success in other markets is so compelling right now is that many U.S. residential development and construction companies are slamming up a high and thick wall of cost barriers to serving a potentially bigger part of the United States housing market profitably.
Typically, an economic or housing cycle’s gift to investors, developers, and builders are periods of time that give an adrenaline boost of financial mojo and accommodation to would-be home buyers in relatively the same timeframe that stakeholders in construction have access to cheap land, labor, or construction and development finance.
Today’s market–and the housing recovery to date–has provided anything but those conditions, and now with intensifying pressure on interest rates, materials prices, and local land use encumbrances, the cost imbalances threaten to kill the “goose that lays the golden eggs.” Demand.
This is why companies revert to a norm of low productivity levels at their own peril, and why so many organizations are looking for ways to outsource research and development on productivity-improving processes, products, and practices to operators with successful track records in historically constrained markets–like Japan, mainland Europe, the U.K., and Scandinavia.
Thing is, although it may be tempting simply to migrate what’s worked in one market for a long time into the American marketplace–either a building process such as offsite fabrication of panels and other framing systems, or a strategic planning or operational method like lean manufacturing disciplines, or even a particular building technology–chances are pretty likely that that approach will not work out.
One of the reasons for that traces to execution, and another to accountability.
Here’s an important passage from McKinsey’s important piece of analysis on what’s broken in the area of direct input resource allocations to construction, and how best-of-breed companies avoid the pitfalls of an industry in need of a productivity transformation.
Build structures to cooperate on project performance.
To encourage an environment in which problems are addressed head-on, it’s important to have timely and consistent feedback. All too often, though, the area supervisor, the project manager, the planner, and the owner have different views on what is going on and where the problems are. Usually, this is because they are not getting the right information in a timely manner; sometimes, they are not getting the same information. In effect, they are operating from different versions of the truth. The better approach is to agree on a standard reporting system and then to devise ways to ensure timely feedback, such as daily discussions with on-site staff and weekly reviews on project status, pace of progress, and risk management. The underlying purpose is not to create more paperwork but to create a transparent environment that fosters quick issue resolution. Some companies are exploring how to track performance using handheld devices that report completion levels on a daily basis to planners.
We had an opportunity to witness first-hand, an internal meeting whose intent was to do exactly this, to “build structures to cooperate on a project performance,” as Sekisui House International Business Development executives met with strategic team members of the company’s Salt Lake City-based Woodside Homes unit.
The questions were basic. Like, how would Woodside adopt and execute some of the design, construction technology, building science, and operational practices that Sekisui House has been putting to successful use in its other markets–Japan, Australia, Singapore, and China?
The answer and resolution involves far more rigor, scenario planning, project mapping, and organizational structure than simply saying, “we’ll do what we’ve shown we know how to do in other markets in the U.S. market.”
Instead, disciplines that run deep in the Sekisui House business culture around collaboration, clarity, and careful detailed planning orbit around assumptions of “who’s got the expertise?” “who will execute?” “who is accountable?” “what if things don’t go the way we think they’ll go?” and “who owns what?”
In the Sekisui House-Woodside Homes case, it means understanding and deciding, for instance, who from the U.S. market team needs to come over to Japan for an immersion and training of proper installation or other technical background. By the same token, it means also answering who from the Japan-based organization needs to parachute into the North American operations to oversee, to serve as a resource, and, ultimately, to be accountable for the outcome.
Even something as basic as pouring a slab foundation–one area of increasingly critical importance, especially in an era that’s pivoting toward offsite framing and construction–gets the third degree of exploration, analysis, discussion of local expertise vs. home office best-practice etc.
Authors the Heath brothers talk about two ways people can change and improve the way they do things. One way is to lower the barriers to change. The other way is to raise the desire-level and belief system of the one(s) who want to make the change.
So, when U.S. companies make the smart choice to import at least some of the R&D investment in transformation from global partners who’ve proven out building technologies in other markets, it’s critical to work vigorously and down to the nitty-gritty detail, not only on who’s able to execute, but on who’s accountable, whether or not the execution is successful.
