How “Traction” is working for Tim O'Brien Homes
Hey, Dave Molinda, here. Positive polarity podcast. I hope you're doing awesome. I'm honored to be hanging out with an old friend, Tim. O'Brien from Tim O'Brien Holmes. How are you today?
I'm doing great, Dave. Awesome.
So it's been a while, but I can remember back to when you, you, and I were involved in the MBA way back in early two thousands. And so Tim O'Brien Holmes, why don't you fill me in on now where things are at with you guys now and what's going on exciting over there?
Yeah, we are revving up even with everything that's going on with COVID. Housing is still pretty strong, which is a good thing. People are looking to make changes in their lives, but whether they need more home or need less home. The good thing is though is our industry is still in a position that we have household formations that are going faster than the new homes that need to be built for them.
So that bodes really well for us. And then we continue to focus on high-performance homes and energy efficiency, healthier indoor environments for people. And we continue to partner with really smart people at the department of energy and the great building science consultants across both the US and Canada. So, we've positioned ourselves pretty well to continue to innovate. And that's one of the things we don't sit still. And continuous improvement is embedded in our culture. So, for us right now, we're in a really good spot.
That's awesome. I've been in the industry my whole life like you have. And so, we hear the word green, and for us, back in the day, people would say they want it to be green until it's kind of cost them green, so to speak, right? Everybody was all energy conservative until it costs money. And at the time back when I was involved in it's been a while, it, there was a pretty significant jump. Has that kind of leveled off to where you're seeing more people open to investing in lower emissions or lower carbon footprint? Do you see that more prevalent than before?
Yeah, I think a lot of it they've reached people early on, even still today, people don't really understand what makes up a green home, and there are really four major components. And then there's a fifth one, which is renewable energy, which can be added later. But the main ones are your focus on the energy efficiency side. So, you drive down that conservation, and that saves them money. You have to be able to demonstrate that value. So, there's that initial cost. And then there's the of building a home, and then there's the operation costs, right? We like to talk, bring both of those together and call it the total cost of homeownership. You may pay a little more to build your home, but you're going to have lower utility bills. You're going to have a healthier indoor environment for your family. And you're going to feel like you have more control in the peace of mind. And we have to demonstrate that value because if you don't, people don't understand it.
Indoor air quality is the second after energy efficiency. If you drive down that consumption, you have to focus on keeping that indoor environment a healthy because the big part of energy efficiency is reducing air infiltration. So, the tighter you build a home, the less kind fresh air coming into the home that you can't control. Right? You have less of that now. So, we have to introduce a fresh air system and filtrate.
Well, the third piece is water conservation and also water distribution. People don't want to wait. A lot of waste comes from waiting for the shower to get hot. We want to get that hot water there quicker, and we want to reduce the amount of water.
And then the fourth thing that goes with that is really how we use our resources. We want to reduce waste. To your point about carbon footprint and being good stewards in the environment, we want to find materials that are ideally come from products that can be replicated quickly or products that come from recycled materials. Products that come from a smaller geographic area rather than shipping across the country.
Those are your four main things, the environment, energy efficiency, indoor air quality, water conservation, and the use of resources and materials. And then, as I mentioned, the fifth one is renewable energy. So, we continue to drive that value in and demonstrate that value to our customers. So, they feel better about paying that incremental premium, which isn't as much as it used to be in the past if you dial in the right ingredients.
When people come in, are they aware of like those things that you just talked about, or are you investing additional time and energy to educate people, or are they coming in pretty well educated now? Since the green movement, so to speak has been around for a while.
Honestly falls into kind of the 80/20 rule. Most technical people in which would be the 20% side, have done some research, and they know enough. They just need to figure out how to connect the dots. But the greater group that comes in just knows that there's some benefits there, but they've not sure exactly how it ties in. And so we have to do more of the connecting, greater connecting to the dots and really talk about the emotional side of what can happen with a building, one of our homes, and then tie it back to logic. Like how do you save money? And how do you ensure that you have a fresh air makeup system in your house that allows you to breathe better and allows you to control if you will control a fresh air rather than allowing mother nature to drive is dependent on which way the wind is flowing. When you have those conversations, people start to get it.
People thought they knew what was going on because of the internet. They read a couple of articles, they knew a little bit about solar, or there was like people just kind of dabbling in that. Have you seen this green piece is kind of the separator for Tim O'Brien homes? When you talk about it in comparison to other builders that you compete with?
We've done pretty well establishing ourselves in the marketplace as being that. And I want to quantify it really. It still has to be value to the consumer. Across the country, where you read, you have a survivalist green buyer. You have a fashionably green buyer, you have the economic green buyer, which is primarily what we believe our market is. We demonstrate that value. And then you have the ones that it's kind of a parent figure of, I got to take care of my children. I want to make sure my kids are healthy. I'm really focused on indoor air quality. So, we've kind of taken the economic reinspire and that kind of parental, and I want to take care of my family buyer. And that's kind of what we based our, our program around because people buy with their wallets, right?
I mean, they buy based on what they said as value, and they're not going to pay more for something that if we can't demonstrate that value, right? So, we really focus on that value-based approach. Then instead of building that 10 or 15, really what I call dark green homes a year, we decided why can't this be more mainstream? Why can't this be more available to a greater demographic in the marketplace that wants this stuff but doesn't want to get too dark? It either becomes too confusing for them or becomes too costly for them. So, we still have to be sent to that value proposition and make sure that they truly see its value. And of course, once they're in their home, they see the utility bills drop versus the last moment. If they feel comfortable in the home, there's no hold spots or so hotspots, then they're saying. It resonates with them. They get it, and they talk about it.
I remember we did some work together years ago on some zero-based energy homes that you guys did. Do you still have people coming in saying either I don't want to be on the grid or don't want to pay for utilities? Do you still see that type of consumer out there?
We see people that are frustrated with the grid, right? But it's really most cost-effective at least today to stay on the grid. The thing is, how can we drive that consumption down? So, they don't feel like they're just anchored to that utility bill. But the net-zero energy home that we did in Berlin sold out really well. And we've got just a great response from the customers who live in those homes. And that is something that we're positioning ourselves right now in the next 12 to 18 months to make a standard for our building product going forward. There's a lot of moving pieces that we need to bring in together, but we really believe that's the future on building. We've found some great success in that, in that community red Fox crossing in new Berlin with the 34 home sites we had there. We believe if we can really dial in all the pieces and with our trade partners, the education with our trade partners, education with our, our team, that we can make that a standard in the next two to three years and all of our ability product lines.
You brought up the word education. That was one thing I think that really sets you apart. When I would look at different builders that we worked with over the years, that education piece really stood out for you. I mean, that was really important for you. So, I'm assuming today, and it was such a team, it felt like such a team working together an educated education was so important. Is that still at the forefront for you as trying to educate yourself as well as your clients and the rest of your team?
Dave that gets back to that continuous improvement mindset. We spend nearly two times more on training per employee than the average company who had already invested in training. We spend around $2,000 per employee per year, where the average company spends about $1200, $1,250 per employee. We really believe in that investment in our team. We also believe that because of the product that we built, it's critical to do that, especially for sales training, and just for growth. We're really focused not only on the growth of our organization and the growth of home building in the industry, as it relates to green and green building, but also growth as it relates to personal growth and professional growth for our team. We do give both a personal side of growth. We give them our team opportunities to grow personally, as well as professionally. And I think it's important to have that balance because they appreciate that. Then they really know that you're investing in the growth, and you're not just telling them this is what you need to do in order to be effective in our organization. We also want to say, here's an opportunity for you as an individual to grow no matter what you do, whether it's a home building or anything else that you want to do, we believe that that investment in them pays dividends to us in terms of their appreciation for who we are as an organization.
Where did you learn that, Tim? That doesn't just happen in organizations, and I've worked with them over the years, and some people get that, and some people don't get it quite frankly. Where did you learn that? Where did you learn that your team was important to the success of your company?
It goes back to kind of how I was brought up. I mean, both my parents, my dad was an educator. He has a Ph.D., and he continued to learn. He was a continuous learner, and I would watch him; he was writing books, and he's written over 10 books at that point. He was just a continuous lifelong learner. My mom has a master's an MBA. She, too, was involved in just a continuous learning cycle and they encouraged me to continue beyond college, your college education, and your high school education. You don't stop growing. You're not done.
You have to find a way to continue to grow yourself. And for me, I grew up with seeing how important that was. It just became part of who I was because some of the companies that I've worked for in the past had real strong training programs. I just, I ate that up. I gravitated towards that. I saw the benefit, and I said that we have to invest in our people for us to be different from other companies. They're not human capital, they're there. And they want to grow. Nobody comes here and says, I'm just going to check it in. I'm going to leave my brain at the door, do my thing, and go home. They want to grow. And if we can provide that opportunity, we know it'll pay dividends to us at some point.
Wow, that's so cool. And it is rare because I said, the national statistics show that one in three people show up and engage and are engaged employees, which means two out of three aren't engaged. That means two out of three people are sitting there saying, Hey Tim, this isn't my job. I'm going to skate under the radar and see how little I can get done today. This research that's out there from Gallup that this is the state of our workforce. So, you have to really kind of maneuver to find the right people and weed through a bunch of those. So, are you actively involved in the hiring process, so to speak for your team? Or have you been able to train someone else to take over that for you?
No, I am actively involved, but I think that's so important because I think it makes an immediate connection with that person to know that one that I'm engaged and I'm not somebody you can't talk to. Unless it's like a direct-hire for me, I'm typically not the first interview we have. We have an interview process, and it's fairly detailed. And so, depending on the position, I might interview that person at least two times, but the other team members and those that are leading are usually involved in interviews in between. So, we try to get that we've identified a group of people in our company that have great interviewing capabilities and the great ability to read people. So, regardless of what position we're hiring, there's always a couple of people in different disciplines that are always involved in an interview process.
We really drive home our core values. And I think that's key to making sure that we hire the right person. In the first interview, we typically hand them our core values at a nice eight and a half by 14 glossy piece of paper. I mean, it's not printed out black and white or photocopied. I mean, this is a professional printing. We hand that to them. We say, here are your core values. Not necessarily now in this interview would take an opportunity to kind of go through these and then we are able to kind of figure out who's in and who's out when they come to the next interview, we asked the question, well, we gave you the core values the first year. What ones really kind of resonated? With those that are engaged, we'll dive into it.
We don't expect all seven to ring true. We would like a good portion of them to resonate with you. And we'd like to hear what's important to them as to why it's why that value is important to them. And then that is a good next step. But if they come in and they're like, ah, gosh, what? Yeah, you did give me that one sign right there, that this is probably not going to go any further.
And so funny, you bring that up because one of my clients works for you, and they actually have those taped on their wall in their office because whether they are trying to instill that in themselves, or they're trying to align their clients with you guys or your clients with them, it just is really important to have written goals. And it's crazy how many companies don't have a vision. And that's why I wrote my book called Growing on Purpose was because I ran into and still do run into so many companies that are growing by mistake. They don't understand that type of situation, vision for them visions, making it to five o'clock to the end of the day, right. And I'm assuming that you've been able to kind of lift your head up and you're focusing more on working on the business where strategically where it's going to go and what our customer experience is going to be like, I'm assuming, but I want to make sure that that's kind of where your daily routine lies for you?
Dave, you're spot on with that. I mean, it's so important to you. We can get trapped in working in the day to day. I could tell you; I get trapped working in the day to day. I actually time block in my schedule throughout the week, time to focus on project-related things, vision-related, things that get us towards our goals. So, we use Traction, and we have a one-year plan. But also, what is our three-year picture, where do we want to be? And we pick a date, and we say by this date, which is three years out, this is what we're going to look like. And so, we have to kind of say, okay, we have to say if this is where we want to be, what are the steps that we need to take?
And that year one and year two, to ensure that when we get to that end of year three, we're at that point. And if you don't have that out in front of you, you can't get caught up in the day to day, and you can miss a lot of opportunities. And then, that three-year plan is also based on a 10-year target 10-year target. So, it's kind of like the good to great, the big goal, right? You may not get there, but the actions that you take towards that is progress. If you're growing as an organization, you're ensuring that you're positioning yourself for the future. So, you don't have this great growth. And then this immediate fall, as you've been so blinded by being in the business, that you don't see where the future of your business is going. So for owners, entrepreneurs executive-level people who have a real sense of where you are going and then ensure that you're communicating that your team. So, they don't go off of different paths.
So, in the Traction book, one of the topics of that is vision. So, my first tough question for you today is there's your vision, and there can be their vision. I mean, you can have multiple visions, but that doesn't really help the team. We got to align ourselves with one vision. What do you do when people you've identified somebody who's not really on that vision, their vision, doesn't align with the company vision, what's your strategy?
Yeah. And that happens for us. It frequently happens because it gets back to hiring, communicating, right? Your core values and getting the person you're hiring for two things, one to make sure that they understand your core values, can get around it. They can get excited about it, right? So that's the first step towards success. The other piece is making sure that they get a chance to truly interview you because it's important to make sure that they know what they're getting into. So, if you do those two things, right, you minimize that vision or mission that a person may go through when they come and join your organization. But yes, it does happen. And so then what is required is you got to sit down with them and kind of start off with the why who you are as an organization.
So, when we onboard someone into our company, we have a formal process they go through. And one of the last steps that they have is with me, and that's sitting down, and really after they have a chance to kind of see what each functional discipline is, I sit down and go over the why, and we spend about an hour. We'd go through our vision traction organizer, which is one page eight and a half of by 11. That goes through, here's your core. Here's our core values. Here's our core purpose. Here is our mission vision, our tenure core target here is our marketing strategy who we are and who we want to communicate to as terms of what our buyers are, who are the people that we're looking for, that we feel fit best. What is our key unique value? What are three key unique values?
And then what is our vision for where we want to go? And when you paint that upfront, they get around it. And of course, we communicate it more formally every in our annual meeting, which is coming up here in the next week, what we call our halftime report. And we go through that, and we continuously reinforced that we do annual planning and performance reviews. We do midyear performance reviews, and those topics are all embedded in there. So, keeping it out in front so people can understand it. I think it's so important to not only explain the what and the how, but the why. And really a lot of the why really starts with your core purpose. Why are you here? Why, why do you do what you do, right. And how does that impact them as an employee? How does that impact the customers and, and your surrounding anybody else that you impact? And so, you need to get that person to kind of bring them back around. And usually, it's just something that disconnected, right? If we hire right and we onboard correctly and they're still not in their head after that 90-day probationary period that they get it, we may have missed something in the communication of something that disconnected. We just need to rewire a little bit, and we're back on we're back on the path.
It's interesting that you talk about that because of the vision. When I train teams on employee engagement, just the team, understanding the vision can increase their productivity by 26%. So if I said, Hey, Tim, do you want 26% more productivity out of your team? I mean, who in the world is going to say, Nah, I'm good. Oh my gosh, I've got too much productivity right now. So, you look at that, and it doesn't really cost any money. And that's why I think it's so helpful for you is to have your vision. Each person that's aligned with that vision that understands that vision. How many companies have a big paragraph of vision statement or mission statement, and nobody knows what it is, nobody's following it? It's just kind of words on a wall?
I've seen and talked to people in our, in our industry, and a lot of people have those good things to say like that about your team. So, it's one thing when you think it right, it's completely different when outside trade contractors and different people like that think it. So, I commend you for sticking to that because I'm sure there's a ton of entrepreneurs that are thinking "Tim 10-year plan, really. I mean, I'm on my 10-minute plan right now." I know that a lot of people and I include myself in their struggle thinking, what's this look like in 10 years. So when you want to deviate from that, how do you talk yourself back? Or what's that process look like to stay on?
Yeah, that's a great question. Traction says, you look at a 10-year target, and again, it's just big picture. It's three points. It's like three or four things, and they got to be a big picture because they should be inspirational, and they should help guide you. We do a two-day offsite retreat, every annual fall planning. And we go through that every year, we say, is this still the right 10-year target for us? And we have made changes to it. We have adapted based on either a direction that we've decided to go on based on how we've done with some of those pieces already, are they embedded in our three-year picture? But you have to check-in, it's not something that you just set and say in 10 years, I'm not going to deviate from that.
And so, you review that every year. And maybe for the next two or three years, we say, yup, that's still our 10-year target. That's still our tenure target. But then all of a sudden something changes, your product changes, you're going into a different market. The industry is changing. Like right now, in our industry automation is becoming a big thing in terms of component building. So we adjust and say, we see based on what's happening this emerging market, that's happening in our industry, we know that we need to be involved in this. So we're going to put that out there as what we want to be, but that's why we do that tenure port target to really help us look at the big picture of where we're going as an industry and how we as an organization can start moving in that direction. Even if we never get there, we're moving in that direction towards that beacon.
Is that why the green came up for you because you see it as the future of home building? Or do that kind of align that your 10 year thought process aligns with the fact that you see an, an in an uptick in that green building?
Well, actually we believe when we founded the company back in 2007, that because we had in my former life, we had already been working with energy star and I really thought, my gosh, this is a great program. It's structured. It's, science-based, its case studies based. There's good data here for us to gravitate towards. And then when the recession hit and the company, I was working for decided that they wanted to strip all of that out. I'm like, you guys are missing the big picture. This is where things are going. So, when we started Tim O'Brien homes, we said we want to find a value-based green building platform that appeals to a greater demographic than just 15 to 20 homes a year.
So, what we did at that point is we said, okay, if we know this is where we're going to start, we're where do you go from here? Well, one of the things we said is we want to build a net-zero community. So, we put that up on our 10-year target. And that was back in 2010, we got attraction, put that up on our four targets. That was a 10-year target in seven years. We engaged in that net-zero community, which is new Berlin. So again, having that tenure target got us to what we did in new Berlin. We never had that if we ever had that, we would probably do in roughly the same things that we did in 2007, but maybe with just different colors, so to speak.
I'm assuming that the Traction book was really instrumental in helping you along with that.
I think Traction is one of the best business application books ever written. In my opinion, it is a book that you can read, and you need to read it all the way to the end, because I know I got excited about halfway through it. And I started telling people that you need to do this, and then you get to the end, and it says, but don't go telling everybody they need to do this. But no, it's, it's, it's been wonderful. We've been doing it now for roughly 12 years. We really kicked it off. We've really finally got to kick it off by about midway through 2011. And we used a facilitator to help us get it off the ground. And we already had a couple of pieces already in place, but I had led one of my builder peers.
I was part of the builder 20 club at that time. And that's roughly 20 builders from all non-competing markets across the country. And one of our builders in that group was introduced to the Traction concept and said, guys, we got to read this book together as a group. And I was the chair of our ability group at the time. So, I was charged with leading the conversation, and I had never read the book before I dived into that book. I took notes. I came up with like a little notes on the entire book. I summarized it. And I got so engaged in that. And then, we had the conversation of the discussion. And by then, a couple of them are already got started in the organization doing it. And just rang true. And like I said there's such great tools for that book online. There are great implementers. Now at that time, there wasn't a lot of implementers out there was relevant.
Now there's more professionals out there that can help a business get going. But my gosh, you want to talk about giving yourself a platform it's called the entrepreneurial operating system, just like our computers as an operating system. We think of how much control you have in your computer and how much organization you have. That's basically what this book helps you do. And it makes if you want to grow, I don't know how else one can draw without putting this concept in place.
And that's where I think it's so interesting because if you're a leader and can't be vulnerable, it's really hard to expect your team to be vulnerable. And so, when you think about those sorts of situations, people tend to sometimes have blind spots and they don't know certain things. My next book I'm writing right now is on business blind spots because they're so prevalent. And yet they're so hard to work with because if I don't know something, how do I fix it? How do I change it? So that's part of the thing with coaching. I think that comes with me. You come alongside people, and you help them. I got to believe part of your whole process here. I got to believe that your mentoring, your coaching, it's less of a manager, employee type relationship. And it's much more of like a mentor-mentee relationship. Is that accurate?
You definitely need to have that in your bag of tools, so to speak. Because you still have to manage a process, and you still sometimes have to manage people. But ideally, you want that, as you said, you hit on it. I think the best leaders have a level of vulnerability, and they're home, and they're humble because that, then, people feel like you're a genuine person, a real person.
You're not somebody in the corner office. You're not somebody I can't talk to. I've seen you make mistakes. I've seen you admit you've made mistakes. I've seen you tell others, Hey, it's okay to fail. As long as you learn from it, it doesn't make you a failure. If you fail it, just look at it as, as an opportunity to learn. Right? And so, you create that safe environment for people. But there is that mentor piece that a real good leader has to bring in. Cause otherwise, if you just tell people what to do, you can call that giving direction, but you're not helping them understand why they're doing it. And we're also not helping them understand how they can get better by asking good questions about a coach.
So, when I was looking through your website, and I've heard you talk family and stuff like that in the past, family becomes a really important word to you guys. But that can take on a negative connotation because if you don't like your family, then it's like, Oh, is it going to be just as dysfunctional there as it is at home? So, I'm assuming that there are certain people you have to untrain on what your business is, and what it isn't is that part of that education process too.
I think the core values really help kind of define that. And I think the communication of making sure a full understanding of that core values and again, kind of where you're going as a direction. But we have people sometimes that'll come in and based on experiences that they've had in other organizations, whether it's culture or whether it's the tactics, right. I know how to do this job. I'm going to come into your organization, and you're going to watch me just light it up, and I'm going to be the best thing ever for you. And so, first, we always focus the attitude versus aptitude. Cause I could train people, right? We could train people to do things, but what we can't train them is on attitude. But one of the things we talk about as it relates to culture is, we want to get them to have conversations with other teammates about the company who we have our teammates tell and kind of share what they feel.
The company is, what the culture is to make sure that we get that alignment. I really believe that if we do that correctly upfront, Dave, that we won't get a culture mismatch. But one of the things that we do have is when people come in from, from the industry, like we've got a gentleman that we're hiring coming to Texas and working for some really well-oiled company machine. These companies he's coming from are really well managed. They're publicly traded home building companies. And so, I know I've got a wild horse kind of coming in. One of the things that we've talked about in the interview is the importance of understanding these three principles. When you come into a new organization, the first thing that we've talked about is you, and you have to, you have to adopt the culture, you have to adopt the processes.
You have to understand that you're not going to come on the first day, you're going to change things. So, adopt it, bring it in and embrace it. Then work to adapt to adapt yourself to it. And once you understand it, once you get it, then you can improve it. So, adopt, adapt, and improve. Those are the things that we talked about when people that have experienced that feeling that they know everything that they need to know, and they're going to fit just perfectly with you. I just say, Hey, take a step back a little bit. Just kind of embrace it. Adopted, just float for a little bit. With everybody, take a view of what's really going on around you.
I'm not expecting you to be the superstar right out of the gate, just adopt it. And then I want you to immerse yourself into it. I want you to adapt to it. I want you to take it on. I want you to do it. And once you do that, then you can see, then you can see then your experience kicks in. You say, okay, I do get what you guys were doing. I know how you're doing it. I've done it. I get it. Now I have an opportunity to improve.
Is that part of Traction?
It's not; actually, it's a quote out of the Knights of the round table.
So, as we start to come in for a landing, I got a question for you. For the entrepreneurs listening and we were going to do like a tip of the week, what's something right now, that's really applicable for you?
One of the things that I wish I would've done much sooner was to identify a mentor or a coach and not think that I can do it all on my own. And that gets back to the vulnerability piece, right? That gets back to, this is mine, I'm going to do it, and I'm going to go, and I know what I need to do. I mean, I wish a long time ago I would have done that much sooner than I had. And I think it's important to identify that individual that resource that you can that you could talk to. Cause it gets lonely at the top, right. Suppose you're running your own business. There really isn't somebody that you can like to open your soul to. Isn't somebody that you could say, Oh man, I'm really struggling with this. You deal with that. Or you take it out on somebody.
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