|
|
|
|
Read our Strategist magazine online weeks before publication! For methods to contact us, view our Contact Page or our list of International Offices. |
|
CEO e-Strategy Interview
|
|||||||
|
|
|
Mark O'Brien
President and COO
Pulte Corporation
It may be possible to build a house without a blueprint, especially for an experienced builder if he has built a similar structure before. He knows what it will look like, what materials to use, what it's likely to cost, and what kinds of problems he may run into. While it can be done, it's certainly not the most intelligent way to build a house. Unfortunately a lot of companies have tried to do the same thing with their Internet initiatives with disastrous results - cost overruns, overlapping applications and projects that seem to go on endlessly. The fundamental differences between the house and the Internet are that there are no proven Internet models for the business. No one's ever built one like it before. No one knows what it should "look like", how long it will take, what problems will be encountered, what it will cost - and most importantly whether it will do what's needed to support the business strategy.
Pulte Corporation had been quite involved in the Internet over the past three-plus years , implementing a reasonably well-developed plan. Yet early in 2000, the people at Pulte - a major national homebuilder that does use blueprints to build their houses - saw that the time had come to design a comprehensive blueprint for an Internet strategy that would fully support their business strategy. They elected to use DPI's e-Strategy Process to do it. But let's step back a bit in time to see how they arrived at that conclusion.
Building The Business Strategy
In the mid 90's, Pulte Corporation set out to "change the rules of play in the home building market," as CEO Bob Burgess then stated. Through DPI's Strategic Thinking Process, the then $2 billion company committed to several ambitious goals - including doubling the size of the company by the year 2000, which it has successfully accomplished.
The guiding mantra through the ensuing years of extraordinary growth has always been "delight the customer." Most people who have been through the process of building a home know that the experience can be fraught with delays, blown budgets and disappearing contractors. It can be anything but delightful. Pulte was determined to change all that.
First, they trimmed down the company by shedding businesses unrelated to home building. Pulte got down to a solid foundation - its homebuilding and home mortgage businesses. Then it worked to apply more sophisticated marketing techniques for understanding its customers and markets and focused on delivering the highest quality home possible. This work evolved into a strategy Pulte calls Homeowner For LifeTM, which seeks to extend the strong customer relationship Pulte develops over the course of building a customer's new home. The ultimate goal of Homeowner for LifeTM is to sell additional products and services by maintaining that customer relationship long after the house sale is complete. These concepts required the integration of skills not always found in home building - market research, consumer marketing and an obsession with quality improvement throughout its complex value chain and sales process. Pulte's exceptional growth in sales and profits as well as consistently high customer satisfaction marks attest to the success of its strategy.
Enter The Internet
In the midst of all this change, Pulte, as early as 1995, had recognized the emergence of technology as an important tool to improve and grow the business. Its embrace of technology was ahead of many companies in the homebuilding industry. This trend continued as Pulte was an early adopter in using the Internet to support its business operations. As technology and the Internet became an increasingly important part of the business, they felt the need for a cohesive overall strategy and opted for DPI's e-Strategy Process to help them create it.
As President and COO Mark O'Brien recalls, "We began to develop a long-range e-business plan that would help guide us for the foreseeable future. As part of this process, we formed an e-business team to develop a more comprehensive Internet strategy. The preliminary work of this group provided a pretty solid foundation that we brought into the DPI Process. The DPI Process helped us define and validate the strategy and prioritize some of the underlying tactics. That's the junction in the road we found ourselves in. Seven or eight years ago, Mike Robert and the DPI team assisted us in developing a strategic plan. That experience was positive and we thought Mike could provide some of the same assistance in developing our e-Strategy. By coincidence, DPI had just developed a process to help companies formulate an e-Strategy.
"Pulte had already developed a number of e-Business initiatives focused on capturing B-to-C and B-to-B business opportunities. We had established an e-Business team reporting directly to senior management, guiding and implementing our process. We really saw the DPI Process as a tool to help us focus and prioritize our Internet related activities that are designed to support Pulte's core home building business."
People from a wide array of disciplines within Pulte were assembled to hammer out their new e-Strategy. One of the most critical steps in the process is to bring the group to a common understanding of the Internet's potential effects. To accomplish this, DPI has developed a set of twelve e-nablersTM , which represent the Internet's basic business models. These e-nablers demystify the Internet for business people, by identifying specific capabilities of the Internet that can be used to leverage a company's key strengths.
" Understanding of the Internet varied widely," says O'Brien. "We assembled a group of about sixty people to go through this process. Some had great knowledge of the Internet and e-Business, while others are more focused on our traditional homebuilding activities and thus less exposed and conversant with the powers of e-Commerce.
"The e-nabler framework is a great way to present a complex series of concepts. I know the participants in our group who were unfamiliar with Internet-based business models found the information helped focus their thoughts and ideas as we advanced through the subsequent stages of the DPI Process."
Once the e-nablers were understood, the core business and information processes that tie the company together were then mapped in detail. The Process then allowed the work teams to identify the Points of Impact where these different e-nablers may affect these processes, positively and negatively.
A list of specific potential Internet applications was then developed that would leverage the positive impacts and mitigate the negative ones. These applications were then filtered for strategic fit, cost, benefits, and ease of implementation. The resulting short list was deemed to be the applications most crucial to supporting the business strategy.
As O'Brien comments, "One of the interesting results having gone through the e-Strategy Process was that each of the teams came up with applications working independently which had a lot of common characteristics. There were several overlaps and links between one another. As we developed our Internet blueprint, we were able to merge all of our various disciplines and visions into a real value chain of e-Commerce.
"We are in the very final stages of a comprehensive Internet blueprint that will address all aspects of our home building value chain from managing the customer experience to efficiently linking our contractors, vendors and suppliers. We're now working to set priorities and establish the teams that will drive the implementation as we go forward.
"I don't think there's any question but that as a result of going through the e-Strategy Process, we eliminated some applications from our previously articulated strategy, added some others, and, in fact, identified a lot of enhancements that will have value. Fully implementing this program will take place over a period of months and maybe years, but at least we're beginning with the end in mind.
"Having gone through the Strategic Thinking Process seven years ago and arriving at a clear strategic direction for the company, and now exploiting the e-nablers together with our strengths and understanding the competitive environment that we were in, there is every reason to believe that we will get the same positive result from our e-Business strategy that we got for our corporate strategy."
A Look at e-Competition
The Process then gave Pulte the opportunity to look at the Internet from their competitors' perspective. The "Competitor.com" Team used the process to determine how competitors might use the Internet.
"The Competitor Team did a great job of providing insight into where the industry is likely to head, and how specific competitors might respond to our various initiatives at Pulte. Working independently from the rest of the teams, I think the Competitor Team validated many of the strategic initiatives that we are considering, while at the same time highlighting some of the opportunities and risks inherent in our approach. Overall I think it was a very valuable contributor to the process and a necessary one," O'Brien states.
In a similar vein, the "Killer.com" Team was given the assignment of designing a new e-Competitor whose purpose would be to invalidate Pulte's business model and possibly put Pulte out of business. What form would it take? How vulnerable would Pulte be? What can the company do now to mitigate such a threat?
Though he understandably provides no specifics, O'Brien says simply, "With respect to the Killer.com Team, they did some very interesting work. I think as the result of their work, we are incorporating some features into our strategy that will insulate us from The Killer. We have a vision of that Killer.com, but I don't think we got absolute clarity because that Killer may manifest itself in varying ways over the years to come. But I think we have an idea where it would come from and what we might do about it."
Indeed, the flexibility of both DPI's Strategic Thinking Process and e-Strategy Process may be what gives these processes strength and longevity within an organization. As they become part of the fabric of the company's thinking, they provide a basis for continuous re-evaluation as the world changes. This is particularly crucial with the Internet, since the future is filled with unknown developments.
Says O'Brien, "On the other hand, I think there are some knowns. The Internet has touched every one of us. It is changing the way we live on a daily basis. I don't think there is any question but that it is changing the home building landscape, as it is many other businesses. I think we just need to be prepared to develop with it. We're obviously excited about the future. I think the Process we've been through added clarity to our e-Business strategy. As we go forward, we will continue to apply many of the tools that are in the DPI kit to varying opportunities that the e-Commerce world presents to us."
Perhaps the most important result is that Pulte now has an agreed-upon e-Strategy that fully supports its business strategy, which has proven to be successful throughout the last decade.
"Our vision is to effectively link the entire home building value chain from customers to contractors and suppliers," O'Brien states. "We recognize that this is an ambitious undertaking. It will require an enormous investment of people and financial resources . The DPI Process helped us be more specific and precise about the potential benefits associated with these various programs, as well how best to prioritize the initiatives.
"Pulte Corporation is a homebuilder. We will continue to focus on our core home building business, delighting our customers with every house we build and the entire home buying, building and ownership experience. e-Business is not a separate activity. It needs to add value, must add value in fact, and be integrated into our day-to-day operations and support our core home building and mortgage businesses. It's the function of technology to support and enhance communications with our customers and our business partners before, during and after the home is built. And I think the DPI Process helps ensure that we will retain that focus."
