THE HOMEBUILDING INDUSTRY NEEDS A REFRESHER COURSE IN TACTICS AND STRATEGY

There are a great number of excellent tacticians in our industry. We find them in the fields of advertising, public relations and social media, architecture and land planning, merchandising and sales training. Homebuilders flock to their seminars at the International Builders Show, they buy their books and, hopefully, they learn from these professionals what is new and exciting and what they can use to grow their own businesses. I have had the pleasure of working with a number of these very talented people over the years and consider many of them to be my friends.

The terms “tactic” and “strategy” are often confused. Tactics are the actual means used to gain an objective while strategy is the definition of the objective and the overall campaign plan to achieve it. In homebuilding, strategy is based on research and results in a written document given to the team members for execution. Without the strategy, those required to create and implement tactics are often like the six blind men asked to determine what an elephant looked like by feeling different parts of the elephant’s body. 

blind men and elephant - original

The blind man who feels a leg says the elephant is like a pillar; the one who feels the tail says the elephant is like a rope; the one who feels the trunk says the elephant is like a tree branch; the one who feels the ear says the elephant is like a hand fan; the one who feels the belly says the elephant is like a wall; and the one who feels the tusk says the elephant is like a solid pipe.

And, as the wise man suggested in the original Jainist version of this tale, all of them were right to the extent that they understood their specific part of the elephant. But what they could not comprehend was the totality of the creature and how the parts interacted. And the same is true for the tacticians in the homebuilding industry. Without an overall strategy, tactics can only address individual parts of the task and are therefore usually doomed to failure.

Housing demand cannot be created; all we can do is manage and, hopefully, satisfy the existing demand. To create successful residential developments we must design communities and homes that are optimized toward satisfying that demand which is quantifiable by location, by price, by lifestyle, by product type(s) and uses, by buyer profiles and by rate of absorption.

We must research the market, the competition and the players and, based upon analysis of the research, create a strategic development program that defines the target market, establishes the Unique Selling Proposition, and sets the parameters from which the tacticians work their magic to make the concept a reality and a success.

Warren Buffett is reported to have said, “It’s only when the tide goes out that you learn who’s been swimming naked”.

Without an underlying strategy, it’s very easy to see who the builders and developers are who are swimming naked. But that’s just my opinion.

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5 thoughts on “THE HOMEBUILDING INDUSTRY NEEDS A REFRESHER COURSE IN TACTICS AND STRATEGY

  1. Daniel,

    I enjoyed reading your post, and happen to agree that everyone has an opinion as to how and what to built today. I worked for the number one builder in the world, Levitt & Sons, when I graduated from college. Levitt had a “total approach” to community planning.

    I was involved in their prototype design department. I learned never be satisfied with the status quo, but also never try to create a product that the public did not want or was not ready for.

    I truly believe that we need to take a page or two out of the old Levitt playbook, or the use playbook itself. But that’s my opinion!

  2. Hi Dan,
    You’re spot on. It’s reminds me of the guy who loves to make pizza. He loves it so much, he opens a pizza place. There’s no market research, no competitive analysis, and no cost benefit analysis of anything. He just knows he wants to make pizza, and he’s think he’s the best at it.

    Although most don’t distinguish the difference between tactics and strategy, your definitions are correct. The tactics support the strategy. The tactics are the executables for the purpose of the strategy.

    The strategy is the overall vision for your place in the marketplace. The tactics are what gets you there. Many business owners, home builders included, don’t ever map out a strategy. Consequently, the tactics aren’t supporting anything other than making pizza. Making pizza doesn’t equate to profitability. Nor does building homes.

    To be a good homebuilder, you’ve got to do so much more than build homes:)

    Thanks Dan,
    Jim

    Strategy first, tactics second.

  3. Great presentation of a conversation that can be difficult at times. It takes so many skills to be a great builder and completely different set of skills to be a great builder selling homes.
    Marketing is some version of a 3D puzzle and it is key to ask around for ideas then write a strategy followed by implementing tactics.
    Building and selling is not a chicken and the egg conversation rather and egg and bacon one! Got to have both together for things to work!

  4. Hi Dan–
    You made a lot of great points. I would like to challenge one though. You mentioned how housing demand can not be created, perhaps from a particular company it cannot be. But look at it from the perspective of a society. When people buy a house on average they plan to stay less than 10 years so they want to know resale value upfront. What caused this? Was it people enjoying the moving process? Probably not, but there are more TV shows, magazines, websites and information available to show people the options they now have and how often they change. When the options become worthy enough people do go after them. So in an indirect way, yes I think housing demand can be created.

    “To be a good homebuilder, you’ve got to do so much more than build homes.” This is so very true and I wrote a book on this. Being a homebuilder, remodeler or in any form of construction, you have to realize that tactics may get you from point A to point B, but they do not build profit, growth or sustainablilty. They need to understand also that no matter what they do with/for/to the client, that the client will always remember how THEY perceived the company throughout the process. The client will remember this everytime someone compliments or critiques them on the work that was done and that is the word of mouth that the company is getting.

    Great article!

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