Thursday, December 5, 2019

Time for the Modular Industry to Innovate, Generate and Reinvent Itself

There are many modular startups and established factories that may soon start going south, not because they are poorly managed or under-funded. They had a business plan and lots of potential business but now the business plan they worked on so hard isn’t meeting the type of business outlined in it.


When this happens, business leaders face a critical dilemma: They can stay the course and see if their current strategy just needs a little more time, or recognize that a change in direction is necessary for the business' survival.

Many modular factories are finding a changing landscape. The Residential Modular Industry started as the need for more single family and multifamily housing. Over the past decade that need has shifted away from both of those areas and a lot of traditional and almost all the new startup modular factories are going into the project business. This includes multi story affordable housing complexes, hotels and apartment construction.

This evolution in what modular factories are building today compared to what they used to build was forced on the industry because commercial investors wanted a shortened time frame to completion because of on-site construction’s labor shortage.

Changing horses in midstream meant changes and innovations in how factories did business had to be made. Factories soon found they had new strengths and weaknesses as they changed what they built.

Innovations in production require factories to start listing both their strengths and weaknesses in order to better understand the impact change is having on them. Listing what your factory does well should be easy but listing and admitting to what you factory doesn’t do so well is a lot harder. And there are also the things that keep you awake at night that you just don’t want to admit in public.

Without a full list of both, you will never move successfully in the right direction. Start by having internal conversations with everyone that works with you to produce product including your builders and investors. What they may have wanted when they first talked with you could also be changing.

Recreating and innovating as you uncover changes is a key to success. Being locked into what you’ve always done or what you thought they wanted can lead to stagnation and an erosion of business.

A veteran of the industry says that he is not afraid of someone following in his footsteps, he is more concerned about the person t-boning his plans that he never saw coming.

Encourage everyone in your company to look for external threats and opportunities. This is healthy paranoia for a company just starting out and for established companies that thought they owned their market.

To learn who is planning and maybe even executing a process that could challenge your company you need to spend some time reading industry journals, attending conferences and talking to your customers and investors. If someone has an idea they want to sell, you can bet your bottom dollar they are talking to your customers and investors.

Try not to get distracted by the small stuff, and figure out which threats or opportunities are actually worth action.

If and when you’ve pinpointed a threat significant enough to warrant a change in your business, it’s time to sit down with others in your circle and talk strategies.

If someone were to build a modular factory just down the street from you building the same product as you and sending out their reps to your builders and investors, I’m sure you would react quickly, probably by doing what you’ve always done...give discounts or lower your prices. But there are other strategies you can explore, you just have to look a little harder.

Now imagine that factory was a hundred miles away and you knew nothing about them until they opened their doors and t-boned you by stealing your builders and investors. Now those purposeful strategy meetings you should have had with your staff will become panic meetings.

You must be constantly working to recreate and innovate. The modular industry is changing and being one of the last kids on the block doing it the same way you’ve done it for decades just won’t work today.

Once you and your team have decided on what strategy you are going to implement, you have to generate a company wide “buy-in”. A best practice when making company-wide changes is to talk to each department head personally and find out what he or she may want to know before putting your final vision into motion.

Generating support throughout the company means you will be stronger and more able to fend off those t-boning competitors.

And finally, remember that the need to evaluate threats and opportunities, and to change your approach, is ongoing. This isn’t 1990 where everything was butterflies and flowers. Today the pace of change within the modular housing industry is more like survival of the fittest with the loser closing their doors simply because they couldn’t figure out how to implement the changes necessary to stay competitive.

With less recruiting and training new ‘single family home builders’ to become modular builders and more investors wanting 40, 60 and even 100 or more modules for a project, the look and feel of modular is being forced to change.

Let’s hope you begin looking at what is changing in our industry and take steps to innovate, generate and reinvent your factory to meet tomorrow's modular needs.


Gary Fleisher is a housing veteran, editor/writer of Modular Home Builder blog and industry speaker/consultant. Contact modcoach@gmail.com

1 comment:

Edward Hicks said...

Building an in-house sales force which is equipped to support new customers (builders and developers) is a lengthy, complicated, and expensive process. To some degree, existing mh retailers have been tapped but are a vanishing breed. Traditional custom home builders outside urban markets seem to be a viable source but factory technical and marketing support is not available. Long term capital commitments to improve market penetration is non-existent, hence the few factories left in business are all scrapping with each other for the same few customers.