Learn to Pivot From a Founder-Led Organization to a Mission-Led Organization

Speaker 1: Welcome to the Process Breakdown Podcast, where we talk about streamlining and scaling operations of your company, getting rid of bottlenecks and giving your employees all the information they need to be successful at their jobs. Now let’s get started with the show.

Chad Franzen: Chad Franzen here, co-host of The Process Breakdown Podcast, where we talk about streamlining and scaling operations of your company, getting rid of bottlenecks and giving your staff everything they need to be successful at their job. Past guests include David Allen of Getting Things Done. Michael Gerber of the E-Myth and many more. This episode is brought to you by SweetProcess. Have you had team members ask you the same questions over and over again? And this is the 10th time you spent explaining it. There’s a better way and a solution. SweetProcess is a software that makes it drop dead easy to train and onboard new staff and save time with existing staff, not only do universities, banks, hospitals, and software companies use them, but first responder government agencies use them in life or death situations to run their operations.

Chad Franzen: Use SweetProcess to document all the repetitive tasks that eat up your precious time so you can focus on growing your team and empowering them to do their best work. Sign up for a 14 day free trial, no credit card required. Go to sweetprocess.com, sweet like candy, S-W-E-E-Tprocess.com. Don Whetro is chief operating officer at AR Franchising and AR Homes. He is a 25 year veteran of home building who is passionate about people and culture. He is driven to build high performing teams that deliver results. Don, thank you so much for joining me today. How are you?

Don Whetro: Hey, I’m well. My pleasure, Chad, thanks for having me on.

Chad Franzen: So tell me a little bit more about AR Homes.

Don Whetro: Sure. Originally founded 1953 by Art Rutenberg, the company, not long after merged with a couple other companies to become US Home, which in its day was the largest publicly traded home builder. And I think retained that spot well into the 1980s. Art left US Home after a brief stent as president for about 18 months and went off to do a number of joint partnerships. He was consulting with a number of builders and thought, what might be interesting is maybe to, instead of investing in joint partnerships is to provide them the same level of service and input and coaching, but do it under a franchise model, which ultimately he launched in 1978. That’s the business model that we operate under today.

Don Whetro: And as I had mentioned to you previously, our past, just over four years ago. So we’ve been in an interesting transition, which was we had an iconic leader. When you look at the pantheon of great home builders, Art Ruttenberg is certainly in that group of names, but when someone like that leaves your organization, there’s obviously a power vacuum. And so the question that we’ve been confronted with about three years ago was how do we pivot away from iconic leadership, the mission and vision led organization? And that’s the journey that we’ve been on for the last three years. Currently operate in 10 states, about 45 markets. And the luxury home building segment has been booming, which poses its own set of challenges for any operator and maybe we’ll talk about that as we go through the.

Chad Franzen: Sure. How many employees are working at AR Homes right now?

Don Whetro: Currently in the Franchise org, 125 last I looked, about 750 teammates that would exist out in the Franchise world who are obviously independently owned and operated businesses. So they don’t work directly for us, but our job is to provide them with tools and services and influence them to the best of our ability to match this legendary brand that we operate.

Chad Franzen: How would you kind of define your role as COO?

Don Whetro: That’s a great question. On most days, I’m trying to provide the team the guidance to operate. We really want an empowered team. And so I think, one of the things that we try to look at as an organization, I think the saying is the good COO looks down and into the organization about 80% of the time, out and up about 20, the CEO is the opposite in our world. He looks out and up 80% down and in 20. And so I spend a lot of my time just looking down and into the organization, ensuring that the team understands what are the critical things that we do as a company? What are the things that move us towards our annual operating plan, our goals?

Don Whetro: It’s interesting that how easy people can go off track, right? Without guidance, without sticking to here’s really, I like to call them the brass rings. We have two brass rings this year that we’re trying to reach out for. And there are a lot of shiny objects that come along in the daily business. And it’s very easy without keeping eye on that to see them track off for not a brass ring. And so most of it’s been around that. And I am fortunate as I like to say, I’m not really interested in the past, I’m not all that interested in today, I’m super interested in the future. And I’m fortunate because in this role, I’m not really pigeonholed into that 80% down and in, a lot of opportunity to think about and dream about what if, what could be so much more than the 20% is spent in my day looking out and up.

Chad Franzen: You kind of talked already about how you are in the midst of pivoting operations from a founder-led organization to a mission and vision led organization. Can you talk a little bit more about that and maybe talk about where you started, and then how you got to where you are now in terms of this transition?

Don Whetro: That’s a great question. I jokingly say our business model in the past was Art in a corner office with a checkbook. And that was, now that’s not to disparage or diminish the folks who were in leadership roles with our company in the past, in no way is that intended. But I like to say it was really Art’s company and Art led it that way. And so with Art’s passing, the company transitioned to second generation ownership and it leaves the power of the vacuum. There’s no question. And so we really had to go through a very introspective time, I think, as a company, about what do we want to be when we grow up? And we kept saying, we want to be world class. It’s one thing to say you want to be a world class organization, it’s a very different thing to achieve being a world class organization.

Don Whetro: So one of the major things that we undertook was getting to borrow from Jim Collins, get the right people on the bus, get them in the right seat. We took, it was a painstaking process to get the right staff, the right teammates on board with us. We think it started with that. We thought we had to get the right folks in the company. And once we did, then we had to establish what are the most important things for us to find those set up we like to use OKRs, you can use KPIs, you can use SMART goals. We operate under an OKR system, objective and key result providing a lot of clarity for the team around what are the objectives? What are the key results that if we achieve these, we think we achieved the objectives that we’ve set out?

Don Whetro: And we really began once we understood kind of where we wanted to go as a company, we put a three year roadmap in front of us. We just completed the first three years of those strategic thrust, if you will. And really I think accomplish most of what we set out to accomplish. And then it gave us a real clear roadmap for the things that we need to do in the coming year. So at a high level, that’s kind of how we approached it.

Chad Franzen: How do you kind of define world class?

Don Whetro: So again, all great questions. So employer of choice, we’ll just start with one, I would say an easy one. It’s easy to say we want to be an employer of choice, not just in the construction industry, but we think about professionals, whether they’re in finance or training or HR, you don’t necessarily need to know everything there is to know about home building in order to work in an organization, and have that as your functional specialty. And so we wanted to become a place where people who are experts and top of their field view us as a viable opportunity for them to continue their employment.

Don Whetro: And so we began engagement surveys. We had not done engagement surveys as a company. We wanted to understand what was our level of engagement. And as part of that, what we learned was we weren’t necessarily all that well connected with our workforce. And so we went through an exercise in a strategic offsite meeting of identifying companies that we think are world class, your Googles, maybe your Walmart or Chick-fil-A’s. And what did we know about them from our research, or what did we believe to be true about them as organizations. And we listed those organizations and we said, this is what world class, best in class companies do. And this is where we think we are today and then go back to our team and say, here’s where we think we are, what do you all think about that?

Don Whetro: So you have that piece, which then is measured by engagement and the numbers have been good to improving, which is always good to know. And then the other part is how, I think this is important, how are we viewed as our peers? And so just recently at the International Builders’ Show National Awards, we won the award for best website for a builder. So when you’re a builder of our size competing against multi-billion dollar companies, there’s our employees happy, our customers happy based on survey data, that’s important to us. And then how do our peers view us? Are we at the table for the conversation about the best in our industry? And I would say yes, in some cases improving in others, and in some, like all organizations not even close, and we need to pick up our game to get there.

Chad Franzen: You said it was kind of a pain sticking process to get the right people in the right place. Can you elaborate on that a little bit.

Don Whetro: Absolutely. We operate, we’re a franchise org of custom home builders. So it’s a unique model, there are not many franchise org in the world of home building or home. There are a lot of home services, you’re plumbing and electrical contractors, all those exist, but home building per se, it’s a very small market. And so in order to service both the needs of a franchise org and to provide the right services to the franchise builder, and then ultimately make sure the services translate to an end consumer, it’s challenging. And so we’ve created a business model that I like to say requires a few unicorns to run.

Don Whetro: And so we’re look for people who are very successful in their craft, but also at a place oftentimes in their career where they’re ready to give back to the industry. Home building is a great industry, because if you can stick it out, if you have the stomach for it long term, it’s very rewarding. Almost like any industry, I suppose. And I think home building is a very rewarding industry and is cycles like many businesses. And you go through really tough times, you go through really great times and certainly you can get up to a point in your career when we find the right person who says, wow, I’ve done it. I’ve been successful. I’ve made adequate money. I would like to give back. And when we find those people, those are great people to plug into our organization because certainly does take give her the term I like servants heart, servant leader, to really excel in the franchise side of the business.

Chad Franzen: What would you say are some lessons you learned about deciding what’s important when you’re in the transition of going from a founder led organization to a mission and vision led organization?

Don Whetro: So first off, what we learned was communication. I think that was the biggest piece. Communication for us was a key, internally to our team about what was going on, why we were changing, what we were changing and then more so communicating that out to our builder customer and hopefully helping drive that down below franchisee, building company president who actually runs the daily operations to their team. So lots of changing, we offer a very robust franchise offering. It’s a very complex business that we operate in. So it’s not always easy to understand.

Don Whetro: I think human nature, Chad is people will fill in the gaps in the story if you don’t fill it in for them. And I think the unfortunate part about human nature is they almost always fill it in with the worst possible thing that could happen. And so we thought we were brilliant, we were really on this right track for where the future was. And without communication in the early days, we found that it got real clunky. So one of the sayings I’ve probably heard it somewhere, I can’t tell you where, but one of the things that I like to say is the vision bucket is leaky.

Don Whetro: And so just when you think you filled that bucket up enough for your team to understand it, you’re not even close. It just runs out the bottom as fast as you pour it in. And so, the old trainer’s mantra, tell them, tell them again, tell them what you told them is absolutely true when it comes to casting vision for your team and the people outside of organization proper that you affect or impact, you can never cast vision enough for where you’re going.

Don Whetro: I think the second part that goes with that with the team is good leaders provide clarity, not certainty. So we have a pretty clear picture of where we want to go as an organization, but I don’t have any promises about the future. As they say, my crystal ball clouded a long time ago, I can’t promise you that it works out. I think we have a really great senior management team. I think we have the ability to read the market pretty well. Pivot when we have to, try to be agile when we can be, but at the end of the day, clarity around the vision, continue to cast vision, help the team understand where we’re going, why we’re going. And ultimately when we arrive there, as all people want to know, what’s in it for me? So I think those are key ingredients to helping people buy in to vision and then ultimately get you to where you have to go.

Chad Franzen: So you have about 125 employees and also franchisees across, I believe you said 10 states. How do you maintain kind of this communication and the ability to kind of share this vision on a day to day basis?

Don Whetro: Great question. So one of the things… So take this the right way. There are actually some silver linings to the pandemic. It forced us to really reevaluate how we operated the business. People would, if you’d asked me two years ago, could you sell custom homes virtually? I would’ve said no way, not a chance, can’t happen, Chad. But it wasn’t long after the pandemic, we learned that we had to get creative about how we just delivered services and how we communicated. But one of the things that we did immediately, which I think really paid off was we instituted a town hall. And so every Friday, three o’clock town hall for everybody in our organization. And we have really high attendance on Friday afternoons and we communicate what’s the status of the market, what are big movers in our world that people would probably want to know about, not necessarily need to know about what, but would like to know about.

Don Whetro: We recognize our heroes. We also recognize our villains on a regular basis. I’ll tell you more about that in a minute. And then I try to take a little bit of that time and talk about something that happened in our business and how we tie that back to our guiding principles. So we do that on a weekly basis. The first town hall of every quarter, we try to invite all of our franchisees on there so we can talk to them about big movers that really impact how they do business and what might be on the horizon for them. I start every week with a manager’s meeting, I take the first 15 minutes for what I call communication cascade. These are the things that came out of the senior leader call on Monday mornings.

Don Whetro: Me and my peers, what is my next player of management need to know? What do those teammates need to know to be effective? We communicate that directly, same day expectation is their meeting with their teams in the next one to two days, they drive that same communication down through the organization. So those are some ways. When you look outside the organization, we went to a lot of the messages. Funny story I met with one of our builders. We had a vice president of sales, he retired. I met with our builder and for the first 10 minutes, he just went on and on about this person not returning phone calls. And I’ve tried to schedule sales training to have him come up and he won’t return my calls. I’ve just given up.

Don Whetro: And I said, well, Dan, he retired five months ago. I had no idea. So it was in my emails and all that. He said, “Oh, I don’t read your emails.” Well, that’s become clear, right? So we went to video messaging and we found out that our click rate and our watch rate of that, it was much more effective than it was for an email, they’re bombarded. So we went to a different communication platform and it became asynchronous not to use a buzzword of the day. It was an asynchronous communication that they could watch and allowed them to hear directly from me, sort of, and talk about the major things that they needed to know to run their business and to provide them a roll up of what happened in the previous week that they probably didn’t read, but I wish they had. And so those are some approaches we took in order to communicate that.

Chad Franzen: Tell me a little bit more about this hero villain concept.

Don Whetro: All right. So we knew we wanted to recognize people who were heroes, and we think our teams just chock-full of people who go above and beyond every day. And so I think a lot of organizations do that, but what really, we were joking about this idea that an organization we work with, they had a Barbie doll and it was kind of this toy story kind of pieced together, Barbie. But when they have kind of a goof up in their organization, that person got to carry this Barbie around for the week and it was all in fun. And we heard that and we thought, what a great idea.

Don Whetro: And so we recognize heroes and we have this bobblehead of our CEO in sort of a hero, Superman type outfit. And I like to call him approving Jim, and then there is the villain. And this is when we miss. And I like to call that one in the dark outfit, disapproving Jim, but it was the idea that it’s okay to fail. That was the key message that we wanted to drive home. We have to fail. We want to fail fast, to use that term. We want to try a lot of things. We don’t want to be stuck in our deep river of thinking. We want to go out there and try to do some different things.

Don Whetro: And sometimes they’re not going to work and it’s okay to openly admit, boy, we tried this and that did not go the way we wanted it to go, but let’s celebrate the fact that you tried. And that’s where the villain came from. And so on a monthly basis, peers get to nominate people in the organization for both heroes and villains. And we want to have a laugh about it, but we want to encourage people to try things that, especially in the world today, Chad, as you know, the world, it’s rapidly evolving how we deliver services have to change. We have to be willing to some and chances. We have to be willing to try things that are new. And we want to talk about those because it’s a safe place we think in our organization to try and not succeed. It’s totally okay. As my team hears me say often, we succeed or we learn, but we don’t fail. So we take all that information and we slizzle it and we go at it another time.

Chad Franzen: What are some challenges that come with trying to instill kind of the culture that you’re looking for when you have a company that depends both on employees and franchisees rather than just employees?

Don Whetro: Some of the challenges that we face, we’re fortunate, so blessing and curse. We have a lot of tenure. We have people who’ve been with us for decades. Some employees, three decades. Our first franchisee chat is still in our network. He’s been with us for more than 40 years, that’s great. However, that leads to some of the dreaded things such as, that’s not how we do it or that’s not our process or we’ve always done it this way, which are the, those are the kiss of death in building new culture.

Don Whetro: And so I think that is really the challenge. Home building is home building. I’ve heard the term, it’s a frozen industry, it doesn’t change very much. Builders don’t necessarily want to change very much, but we have to move forward. And so getting buy-in, I think the hardest part of what we do is the change management piece. And when you look at it, we’re trying make decisions that affect more than 40 building companies who are independently owned and operated. And so trying to find those right things that we can offer them that are meaningful to them, that help them run their business better, ultimately they get more sales starts in closings, that’s the home building business. I just gave you all the secrets you need to know. Home building is sales starts in closings. And as I like to say, ideally do that profitably.

Don Whetro: How do we convince somebody with 40 years of experience that there’s a better, maybe smarter, faster way to do your business? So those are the things that we’re, I think all businesses are challenged with and in our world, how do you do that for 40 plus and ideally 50 and 60 plus at some point, maybe a hundred someday down the line and still let them be independent entrepreneurs and express themselves in the way they want to express themselves.

Chad Franzen: I have one more question for you, but first, just let me know how people can find out more about AR Homes and AR Franchising.

Don Whetro: Absolutely. ARhomes.com is our website. So that would be the best place to check us out. And then through there, they could acquire information. If you were to Google AR franchising, it would lead you to some additional resources.

Chad Franzen: Final question. Do you have any favorite kind of books that you have found valuable or that you have enjoyed as you kind of continue to venture your way down changing processes?

Don Whetro: Absolutely. I wrote down a few, because I thought you might ask me, this is one of my, you must be reading my mail, because this is one of my favorite questions. Anything by Andy Stanley, I’ll read anything Andy Stanley writes. I think he’s just a great, I love his take on leadership. Mark Miller from Chick-fil-A, anything Mark writes with Ken Blanchard or on his own, I think is always really good. I love Lynn Sheene. A book that’s an older one that I read recently that I really enjoyed was The Fifth Discipline by Senge, which talks about learning organizations. And I think it’s a fascinating view on the world when everybody talks about breaking down silos as we continue to work remote and people can be somewhat distant to be able to step back and connect all the dots in the organization and see things not as a national purchasing issue, but as a more global corporate issue, how it impacts us and how it impacts our franchise customers really, really been a really valuable book to me.

Don Whetro: Last one I’ll share with you is a book called The Goal. I’d like to tell you the author, but he escapes my mind and it’s one of the early books about lean manufacturing. And I read that book not long ago and it was just fascinating, because as we look at supply chain challenges that we’re confronted with today, how to take sort of a manufacturing view and overlay it on home building and how do you take a backlog of sales, which were off the charts great last year and get them through throughput and ultimately monetize them. And so instead of looking at it purely in a home building lens to take that and kind of apply constraint theory to home building actually was a really helpful read.

Chad Franzen: Hey Don, thank you so much for your time today. It’s been a great conversation. I really appreciate all your thoughts and your insights. Thank you so much.

Don Whetro: My pleasure.

Chad Franzen: So long, everybody.

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