How to Surpass the Best-in-Class

By Terry Kramer

With the economy undergoing some tumultuous gyrations at the start of 2008, it may be hard to think about how to be the best when many construction firms are just thinking about how to overcome a possible downturn in the nonresidential sector of the industry.

The reality is that the drive to surpass the “best-in-class” is strongly intertwined in how to survive economic downturns. It is the push to set up superior systems as an element of surpassing best-in-class that will lead construction firms to superior work acquisition systems and the capabilities to overcome an economic downturn.

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Patterns & Phases

In observing patterns of how companies surpass best-in-class performance, I have noted that companies pass through certain phases that galvanize them to outperform their competitors:

• Initial business assessment brings companies up to industry standards; functional areas that are not up to speed are addressed, profits may be below average or even at industry average, but there is no confidence in profit sustainability;
• A detailed plan for growth is firmly established although this is addressed in the initial assessment;
• Companies then re-invent and transform themselves; once companies start performing in a stable, sustainable way, company teams start to believe in their value;
• Companies begin to out distance the industry and competition in terms of profitability;
• Companies begin to think in terms of being the best, performing the best, having the best people and buying the best technology.

Don’t Aim So Low

When construction firms aspire to reach industry performance standards, it can be frustrating to observe the low expectations that many have. Industry standards are not established by high-performing companies; they are dominated by companies with average performance. Even when associations develop improved data on the best companies within the industry, the newer, elevated standards do not raise the bar high enough.

Far too often, best-in-class represents average performance. There's nothing extraordinary about these companies. They just tend to implement the basic business functions and strategic plans better than their competitors. What prevents the industry from evolving to higher planes of performance is that companies within the construction industry have always sought to improve and increase competitiveness by copying their competitors. Whoever said the competition was doing something right in the first place? It is always an assumption that someone else must be doing something better.

Helping or Hurting?

To further embed mediocrity into the industry, companies are encouraged to become involved in peer groups, management coaching, minimal goal setting and selective monthly executive information dashboards. The good news is that all of these techniques are helpful, and companies do benefit from them. However, these approaches oftentimes barely nudge companies forward because they tend to lack the predicted openness, overlook the big picture and comprehensive decision-making and don't understand how to connect important company issues.

Becoming one of the companies that surpasses best-in-class performance levels and basks in the glory of sustainable high profits from year to year is not as difficult as you would think. It requires tenacity, perseverance, a willingness to change and a strong belief that your company is doing things right—but not in prescribed way dictated by industry averages. Individual companies should be dictating what best-in-class means, not taking their cues from a collective picture outside the company.

Terry Kramer, president of Kramer Consulting, has been consulting within the construction industry for over 20 years. He can be reached at 480-314-0711, or via e-mail at info@greeningtheheartland.org.

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