Why Not Mass Produce Green Homes?

Rick Lavers of All American Homes wants to do for eco-friendly abodes what Henry Ford did for cars—drive down costs and improve quality control with large-scale production

By G. Michael Maddock and Raphael Louis Vitón

"Those who cannot remember the past are condemned to repeat it," wrote philosopher George Santayana.

Most of us know that, and that's why we study the magazine stories, business review articles, and books written about successful companies. We want to know what worked—and what didn't.

But when a once-innovative company gets into trouble, it's easy to start thinking that its business model was fatally flawed and there's nothing to be learned from the company's history. And that, as Santayana pointed out, is a huge mistake.

An upstart homebuilder, who happens to be a former client of ours, is not making that mistake. It is learning from the once-great Ford Motor (F). With all the troubles Ford is going through, it is easy to forget just how innovative Henry Ford was. To understand just how clever he was, let's go back in time to the late 1800s.

Lessons from Henry Ford

You want one of those new-fangled horseless carriages that everyone is talking about. So you meet with a person who draws one up for you. You talk about the size, what it will look like, what kinds of bells and whistles yours will include, and how it will be nicer than the guy's across the street. You make a deposit. Months pass. Your designer comes back to you with drawings. You make changes. When you finally agree on the design, a team of craftsmen get to work building you a car.

Flash forward to 1908. Henry Ford, with a magnificent stroke of process innovation, puts most carmakers out of business almost overnight with the introduction of the Model T, which was produced on an assembly line, not by hand.

But that was 100 years ago. Today, Ford Motor's executive chairman is William Clay "Bill" Ford Jr., Henry's great-grandson, and the company is in trouble. There is serious doubt about whether it will survive as an independent company. And most people are convinced there is nothing to learn from the company's past.

Not so fast. Consider the housing industry, which like the auto industry, is under immense pressure.

The year is 2008. You want one of those beautiful green homes that everyone is talking about. So you meet with a person who draws one up for you. You talk about the size, what it will look like, what kinds of bells and whistles yours will include, and how it will be nicer than the guy's across the street. You make a deposit. Months pass. Your designer comes back to you with drawings. You make changes. When you finally agree on the design a team of craftsmen get to work building you a new home.

Where's Henry Ford when you need him?

Enter Rick Lavers, a modern-day Henry Ford. Rick is CEO of Coachmen Industries, whose subsidiary, All American Homes, is doing to homes what Ford Motor did to cars. All American may put traditional homebuilders out of business in the same way Ford was responsible for winnowing the car industry a century ago.

You don't believe us? That's because when you think of manufactured homes you think of mobile homes. That's not what we are talking about. You may believe that all quality homes (think cars, 100-plus years ago) are custom-built. How could a quality home (again, think car) be built in a factory? You'll believe it when you see it.

But what does an innovator see?

Shaking Up Homebuilding

"Would you build your car by dumping all the parts in the driveway and assembling it in the rain?" Lavers asks. "Why do you build your home that way?" He points out that the homes his company sells can be manufactured rain or shine, every day. "Building indoors, out of the weather, and under rigorous quality controls, allows us to improve quality [and] productivity and eliminate defects over virtually every aspect of a site-assembled home," he says.

You've probably already seen a manufactured home but you don't know it, because they look as good, if not better, than homes that were built on-site.

This is Lean Six Sigma at work. This is process innovation. There are fewer steps, and the right parts are in line when you need them. Everything fits together with amazing precision. These homes can be delivered just-in-time from a central location. They can be built 24 hours a day. They can employ innovation—like green technology—because the installation and training has been centralized. Sure, other folks can build a customized "green" home. But finding someone who can mass produce them is rare.

Why are we excited about this innovation? Two reasons. First, by centralizing the manufacturing function, innovation can go into warp speed. Think about where the car industry would be today if all the builders were craftsmen spread out across the country. Building cars in central locations makes experimentation, improvements, and learning possible every day.

So the takeaway seems clear: If you don't learn from history, you just may become extinct—an irony that may be wasted on Ford Motor.

G. Michael Maddock is founding partner, and Raphael Louis Vitón is president, of Maddock Douglas, a company that invents, brands, and markets products "for companies driven by innovation." .