U.S. home builders were immensely profitable during the housing boom but did little to improve the efficiency of their operations, according to a book just released by the Harvard Joint Center for Housing Research. In “Bigger Isn’t Necessarily Better: Lessons from the Harvard Home Builder Study,” university professors and researchers examine the period of housing growth between 1999 and 2004, relying on a detailed survey of large home builders. What they found, the authors said, is that builders were more focused on growing their companies than improving their products and operating procedures.
“Large home builders were very effective at attracting capital for expansion, assembling favorable land positions and developing a consistent corporate brand,” said Kent Colton, a senior fellow at Harvard’s Joint Center for Housing Studies. “However, since much of the growth over this period was through acquisitions, there was little opportunity to fully integrate them into practices and procedures of the parent company.”
The home-building industry still has gains it can realize from improving basic on-site building operations, the researchers concluded. The book exams the experience of companies in other industries, from autos to computers to retail, to provide insight into how American home builders might better cope with operational challenges going forward.
“Many other industries have faced these same challenges,” said David Weil of the Boston University School of Management. “Home building is an unusually decentralized industry, and for that reason typically has not been a leader in implementing new innovations. Still, there has never been a more important time to introduce new practices into this industry.”
“Bigger Isn’t Necessarily Better: Lessons from the Harvard Home Builder Study,” is available through Amazon.com and Lexington Books.