Changing Home Building From The Ground Up
- Sekisui House, the world’s No. 1 company in home building with $20 billion in annual revenue, is working this year with its Woodside Homes U.S. operation on a transformational new-home project, Chōwa.
- To understand the innovative nature of the building technologies, practices, and processes that go into development, design, and construction of Chōwa–to be unveiled in Las Vegas’ Summerlin, in January 2020–it helps to take a brief look a the Sekisui House backstory, and the company’s philosophical core principle: “love of humanity.”
- As Sekisui House explores expansion of its building and development interests in the U.S. and North America, the discovery process can serve as a classic case study of a home building enterprise whose strategists seek to make the organization grow better, not necessarily bigger.
Early the afternoon of January 9th this past winter, in one of the Las Vegas Venetian Resort’s warren of low-slung, thick-pile carpeted, gaudily decorated, and stifling briefing venues set up for the annual CES show, Yoshihiro Nakai, President and Representative Director of Osaka, Japan-based Sekisui House—the world’s largest residential construction company–introduced a home-of-the-future concept in health design and engineering called Platform House.
The moment occurred at an approximate midpoint of CES 2019. The 5-day, 24-hour-a-day hum of announcements, assertions, buzz, rumor, and revelation tentacled with seismic speed across 2.9 million square feet of “what’s next” in consumer innovation. As it happens, the briefing also took place at a moment of truth in the $400 billion business of new home development, design, and construction in North America. Ten years-plus into a recovery, most of the smart money looks at housing’s current run as having reached its end stages—where individual firms focus on their ability to trade-off points of profit margin in exchange for absorption and order pace.
No matter their size, their capital structure, nor their operations model, January of 2019 came as a crossroads no home building principal or executive strategist could avoid. The crossroads would divide builders, some of whom would learn new ways to become sustainably vital makers of homes and communities of the future, and some of whom, to put it simply, would not.
“There are a number of elements and areas in the value chain of investment, development, and building new homes that are ripe for disruption,” says Carl Reichardt, managing director of equity research at financial services advisory firm BTIG. “One or two U.S. companies may be capable of it, but Japanese firm Sekisui House is certainly also one to watch as they expand their strategic footprint in the United States.”
The Platform House briefing was a but a fleeting, real-time flashpoint in the grand scheme of things.
It took place in just an instant, among thousands of high-energy, elevator-pitch showcases and Shark Tank-style come-ons, streaming pell-mell in a throng of more than 4,500 exhibitors in 33 categories of consumer technology applications, products, software, and experience that extended to the dizzying heights and farthest reaches of Las Vegas’ party-central atmosphere. Sellers, inventors, manufacturers, platform-marketers, etc. courted the attention of executive strategists of 307 of the Fortune 500 global companies and angel investors, themselves a VIP subset in a practically endless sea of 175,000 attendees, not to mention over 6,300 new and traditional media correspondents from 79 countries.
Still, Sekisui House’s CES 2019 moment stood out. If for no other reason than the magnitude and ambition of its intention offset by the rigor of practiced understatement, it differed from the rest. Like the meteor shower of latest releases, upgrades, 5G versions, etc., from Silicon Valley mega powers, global appliance players, and countless bootstrapped startups—who use CES to generate more than $1 billion in capital fund raising—Sekisui House’s concept house is all about what’s next, pushing advances in technology to their vanishing point frontiers.
However, there’s one huge differentiator. The reason the Platform House introduction to the world distinguishes itself from all the high-profile roll-outs, the million-dollar booth installations, the mesmerizing pulse of Vegas’ electronic multimedia marquees, and the Silicon Valley pyrotechnics of promotion, goes beyond what it will be when Sekisui House unveils the first ones in 2020, or how they will work, or what they will do.
Rather, it’s why.
Sekisui House’s Core Value
Why—the answer being, “because we love humanity” enough to commit to and invest in that singular baseline truth–runs at the core of the Sekisui House story. It has been so for the almost 60 years the company has been in existence. It has coursed through each of what it calls its “three phases” as a house building, sales, planning, finance, research, design, engineering, distribution, and marketing organization, starting with the introduction of its Model A home in April of 1960.
“For many years, Sekisui House has had a philosophy of a ‘love of humanity,’” says Norio Adachi, marketing General Manager at Sekisui House’s Osaka, Japan headquarters. “This is all about how we can create a comfortable lifestyle for people by using our technologies. This is something that we’ve been implementing and carrying on continually, for many years. In Japan, we have a culture of kaizen, continuous improvement, including organically occurring innovations. When you think about where you should be making those improvements, where you should be undertaking that kaizen–one of the real strengths of Sekisui House is that we really listen to the customer’s voice–that’s where you can get really unique innovations. That’s one of the secrets of innovation in our Sekisui houses.”
From that unveiling of the first Model A and the initial groundbreaking home offerings in August of 1960, the next three decades of Sekisui House focus would center on repairing a fabric of society in Japan that had been torn and traumatized since World War II. New homes—many of them—needed to be built. Skilled labor those post-war days was a crisis-level constraint. People in cities, towns, and villages needed homes that would be safe, seismically resilient, and lasting so that their value could grow with patience and get passed to a next generation. These needs shaped Sekisui House’s first phase whose essential center of gravity–its “why”—drew from primal human needs for safety and security.
In the second 30 years—now just wrapping up in Sekisui House’s 59th year as a going concern—new human needs surfaced in the mid-1980s into the early part of the new millennium, each with an arc from the present into the future. These needs revolve around a very basic multi-factorial sense of comfort, and Sekisui House leaned into new materials, processes, and functionality in its home offerings that promised its customers a level of comfort in their homes they could not expect from other builders. Thermal insulation, net zero energy consumption, air quality management, and universal design that would adapt as a habitat needs to with its residents’ life-stages and ages became the principle points of distinction in Sekisui House’s fanatic commitment to make customers’ comfort the guiding star among its promises to stakeholders. With this promise, the company could assure customers of their resilient access to vital resources, for energy efficiency in light of risks of depleting fossil fuel supplies.
Why is literally an operating principle central to Sekisui House’s path of evolution into the approximately $20 billion global enterprise it is today. It’s an intrinsic part of the 2.43 million homes it has delivered to the market in almost six decades. It’s a real-life, unifying point of purpose for 25,000 employee associates in Japan, China and Singapore, Australia and the U.S.—in 25 different subsidiaries and affiliates, including wholly-owned operating units Salt Lake City-based, Woodside Homes and North America Sekisui House residential development. It’s the impetus that energizes the company to transform itself beyond what it is—a leader in custom detached homes, rental housing, remodeling, property management, existing home sales, attached town homes, urban redevelopment, and new development, to what it strives to become. Why is who Sekisui House tries to be as a company in its deepest nature, comprised of more than 7,000 architects, as many engineers, materials, and water, and air, and geological scientists, logistics specialists, business planners, marketing and sales associates, and building trades workers.
“We look at why so many people love the company, and want to stay with the company until they retire, and I think one of the big reasons is that the company has a strong focus on what kind of contribution can the company make for society,” Adachi says. “Obviously, there are annual sales targets and all the things you need to do to run the company, but looking further than sales for next year, looking further than that, the company has a strong focus on what it can do to give to society. That’s a big reason why so many employees love working at the company and love contributing with the company.”
When it comes down to it, Sekisui House and the basic reason why—love of humanity–cannot be pried apart. They’re one, like genetic strands of DNA that entwine in a helical whole. Why is the particular, compelling way the future—of people, society, the planet—matters as essential motivators in what the enterprise commits to and invests in whole-heartedly today.
What Is Platform House?
Sekisui House president Nakai, with assistance from a translation expert, took a small audience of Japanese- and English-speaking journalists through about a dozen slides. The first several of them were visuals showing the company’s journey through its first two 30-year phases—focused first on customers’ safety and security, and then on their comfort, and their ability to get to an entirely new level of customer-centricity.
“The third phase, from 2020, will enter us into a period in our society where people will have a 100-year-lifespan” explains Adachi. “What we’re focusing on in the third stage of our journey is happiness, and making home the happiest place in the world. So, for that, we must consider ‘what is happiness?’ and ‘what is the role of happiness?’ and ‘what is the role that the house plays in providing the happiness?’ and so we’re really just embarking on that part of our journey right now. We’re starting to think of how the house can provide that happiness.”
The Platform House—now progressing through Sekisui House research and development, and expected to come to market in Japan in the first half of 2020–would be equipped with an array of sensors, constantly monitoring the dimensional space in the interior living areas of the home with radio frequencies that detect motion and biological benchmarks. The sensors, creating an environmental data grid, would be set up to detect—in much the same manner an autonomous vehicle navigates its way through traffic to a destination—the position, comfort, and health status of an individual occupant. Similarly, the weaving of environmental and bio data allows an inhabitant to easily manage room temperature comfort, connections with family members and friends, etc.
Abnormal data the Platform House’s sensors could capture, such as a fall or a non-routine duration of inactivity by the occupant, would mesh with that resident’s medical history and electronic records and immediately begin signaling first responders in the home’s locality. Like a fire or burglar alarm system, a Sekisui House Platform House’s fusing of environmental data with the bio data of the resident could trigger a timely medical rescue, especially in cases—like strokes or cardiac events—where every second counts.
Key to Platform House’s promise of one-day-soon helping people to extend their ability to live autonomously in their homes as they reach old age and beyond will be societal, science, and medical community buy-in.
The boldness of the Platform House initiative is two-fold. One is that it changes the fundamental meaning of home. No longer is a home—owned or rented, new or existing—merely a structure that provides shelter, safety security, and the opportunity to increase property value. Now, the home becomes a vehicle for making life’s experiences more enjoyable–a cluster of services, a way to simplify life’s hard, complex journey.
The other bold aspect of the Platform House project is that it acknowledges that to pull it off, Sekisui House must persuade partners in the science and medicine community, in policy making, and in finance and lending, in manufacturing and distribution, and among home buying consumers themselves to share in both the risks, the investment, and the rewards of making homes live healthier and more harmoniously with nature.
People live longer these days. Companies, by and large, come and go into oblivion much faster than they used to. What does it mean, among home builders, developers, and investors in residential construction and real estate, that human life expectancy should continue to lengthen and that companies’ lives are getting shorter? Why does it matter?
Lifespans of both people and firms are an issue. In the U.S., the National Institutes of Health projects that in three short decades, the nation’s 65-and-over population will nearly double in size to 88 million people. Meanwhile, a Harvard Business Review analysis notes that, since 1990 or so, the average life-expectancy of a U.S. S&P 500 firm has plummeted 80%, from 80 years to 15 years.
These two opposite-trending phenomena intertwine. Moreover, in the case of Japan-based Sekisui House Ltd., they converge. For Sekisui House, 100-year lives of people is not a tomorrow matter; it’s a today challenge, and one that gives the world’s No. 1 home building enterprise a heightened degree of accountability, for present-day investment and longer-term future impact. What this means is, the future is here, and for this organization, the “100-year life” of people is a foundation of its own plan to be around for another 60 years or more, as in 2020, it celebrates 60 years since its founding.
Why Chōwa, Why Now?
Sekisui House and Woodside Homes’ partnership with BUILDER for the Chōwa concept home in the west-Las Vegas master planned community Summerlin’s Ridges-Talon Ridge neighborhood reflects Sekisui House’s plan to extend “why”—its higher purpose—globally. By bringing its methods, principles, and values into the North American marketplace through the showcase of a Japanese-designed and built home for the American Generation X-cohort professional household, the firm embraces its central philosophy of action and investment in helping its homeowners live happily in their communities.
“It will be interesting to see whether we can influence U.S. consumers to understand the impact not just of technology, but also the humanity that we put into our houses, the intangibles, that really can make the house special,” says Adachi. “For houses, each country, each region has its own lifestyle, its own national personality, its own customers. Understanding that is the key. We’ve got a fairly good understanding of that in Japan, but are we going to be able to understand the U.S. consumer, what they want from a house? What do they expect and need from a house? That’s going to be one of the greatest things that we need to learn if we’re going to be able to make an impact on the market in the United States.”
Chōwa is intended as a learning laboratory for Sekisui House, not just to propel growth opportunity in the North American market, but to improve itself as an enterprise with “love of humanity” as its driving purpose.
In an analysis entitled, “How Winning Organizations Last 100 Years,” Harvard Business Review contributors Alex Hill, Liz Mellon, and Jules Goddard, looked into the secret of healthy longevity for some enterprises, and made a big discovery about ones that endure and thrive the longest. Simply, these firms set themselves apart.
“Most businesses focus on serving customers, owning resources, being efficient and growing — but the Centennials don’t,” write Hill, Mellon, and Goddard. “Instead, they try to shape society, share experts, create accidents, and focus on getting better not bigger.”
This is the reason Sekisui House’s 2019 CES moment, introducing its high-bar-of-ambition plan for Platform House is so meaningful, and how Chōwa might one day be looked at as a moment of disruptive innovation in U.S. home building.
It’s about what it is, and how it gets done, but most importantly, it’s about why Sekisui House is doing it. For “the love of humanity.”