Tuesday, May 6, 2014

Decisions Can Make or Break Your Company

Every morning when you walk into your modular home factory you are expected to make decisions. Some are relatively easy because you’ve made similar ones before. Others take a little more time and possibly involve others’ opinions.

What you have to ask yourself is “What are the implications of this decision 10 minutes, 10 months, and 10 years from now?”

There is a cause and effect derived from every decision you make. It’s called the Butterfly Effect. In chaos theory, the butterfly effect is the sensitive dependency on initial conditions in which a small change at one place in a deterministic nonlinear system can result in large differences in a later state.

If a builder calls the service department at your factory and asks for reimbursement for work he had to do to correct a problem created at the factory, the service manager has to make a decision. If it seems logical to him and the reimbursement is within the established guidelines, the decision is easy and the builder is kept happy. If the decision is not to pay him because this builder is so demanding, get ready for an ever increasing battle through emails and phone calls. This will not be a happy builder.

A lead comes into the factory from someone looking to build a home and wants to know their local builder; who actually assigns that lead? A secretary, the sales manager or maybe it just languishes on someone’s desk for a week or so until the lead has gone stale. A quick reply from the factory will make a good impression with the prospective new home buyer. Not getting back to them for a week will probably find the buyer has already contacted another factory.

The factory sales rep has worked on this house for months, quoting, redrawing and requoting only to find out that another factory is also quoting the same house using your drawings. They are $3,000 less. Do you ask the sales manager if you can match it or do you ask to see the details of the other factory’s quote and lead time to produce it? One decision means you will lower your profit and still might not get the house to build. The other means that you are putting the builder on the hot seat to produce the paperwork showing he is getting the same home from the other factory and again you might not get the house.

As for bigger decisions having a permanent and possibly adverse effect on your factory’s future; consider this scenario. As the owner, you decide to go 100% into building all your homes using closed cell insulation and Hi-R-11 windows because you want to save energy and get better HERS Ratings for your builders and their customers.

At first you are hailed as a frontrunner in the energy movement in the modular home industry. Then slowly your builder base begins to migrate to other factories that don’t have such high and costly standards. Within 10 months your builder base is almost depleted and your production is suffering. You decide to offer both your old specs and the new specs to builders but it is too late. A few of your builders might return but it doesn’t help. The decision is made to either close the factory or sell it. All because you thought you would set a standard that builders would embrace for their customers.

You can’t sit in your office and second guess ever decision you make and you can’t take forever to make one either. The best way is to make decisions based on your and/or your colleagues’ experience and then run with it. If it goes badly, it usually does so quickly and most times gives you a chance to rethink it.

The higher you are up the decision making ladder, the tougher the decisions.

No comments: