This week's episode of the “My Favorite Mistake” podcast features Mike Kaeding, the CEO of a company, Norhart, that designs, builds, and rents apartments.
They are transforming the way this is done by incorporating technologies and techniques that have revolutionized other industries. This has resulted in improved quality and reduced cost of housing. Ultimately, they are committed to solving America's housing shortage and affordability crisis. And in doing so they hope to improve the way we all live.
Their mission and vision sound sort of Toyota-like?
That might be one reason Toyota's TSSC organization is helping Mike and Norhart, and that's one of the secondary topics in this episode. We also recently recorded an episode of my Lean podcast where we dive deeper into Lean and TPS. Subscribe to make sure you don't miss it.
Here is a recent article about the way TSSC helps manufacturers. Says TSSC's Jamie Bonini:
“‘Lean' has come to mean different things to different people,” he continued. “But this is what we mean by a Toyota production system: an organization-wide culture of highly engaged people who are solving problems and innovating to drive performance.”
“When we work with a company, [our solution is] customized; it's highly situational. What we're trying to build in an organization is a culture. And to build it, it has to be nurtured, fortified. That's why we like these longer-term engagements.”
Below the video, I'll share some of the episode transcript that's related to Toyota and TSSC.
CEO Mike Kaeding Learned That Paying to Hire the Best Was Worth the Investment
Transcript Excerpt About Toyota / TSSC
Mike Kaeding (19m 37s):
And so if you look at manufacturing over the past 60 years, they've improved labor productivity by 760%. Agriculture is improved by 1500% during that same time period. Construction has done nothing or 10%, but basically nothing. Right. Yeah. And so if we can just take the lessons learned from these other industries, we can have some radical improvements. For example, the assembly line, right, it radically improved manufacturing. But how in the world could you take that concept into construction? I mean, you can't take a building and drive it down a line, can you? Well, no, but what you can do is you can move the person through the building.
Mike Kaeding (20m 24s):
And so right now, every five hours, our teams shift through the building. And if you look at the very end of our line, you see a brand new apartment unit being produced every five hours, and just that one technique takes a 15-month project down to nine months. Wow. But that wouldn't even have been possible unless we've brought things in house. Yeah.
Mark Graban (20m 49s):
So you, you mentioned manufacturing and you know, tho, tho those are my roots. Originally I started in the audio industry working with assembly lines. You know, your website talks about bringing techniques from manufacturing. So it's a company near and dear to me. Tell, tell us about at least one of those companies that's been helping you and and how they do that.
Mike Kaeding (21m 10s):
Yeah, so the inventors of sort of these efficiencies and something called Lean is, is Toyota. Right? They did, they radically improved the space. So why not for looking to find the world's best? Why not tap into the best people in the world what they do? So we connected with Toyota and they were excited about this because they wanna see improvements to the overall economy go beyond just manufacturing. And so it's just a great partnership. They're out here for a week every month right now. And it has just been phenomenal. The lessons learned from them are just fantastic.
Mike Kaeding (21m 50s):
We actually met up with some of their executives just last week. And the lesson I learned from them this last week is you really want to think about culture as we're talking about here. You can bring people in and improve something about your business, and then they leave, and that thing goes back to the way it's been. And so how, how do you change the way that everyone thinks about this so that it becomes embedded in everything that you do? And that's, that's what we're working on currently with Toyota.
Mark Graban (22m 20s):
Yeah. Yeah. And Toyota and their TSSC group, yes, as they call it, they work with suppliers of theirs, manufacturers. They've done a lot of pro bono work for nonprofits, like with food banks and soup kitchens, and helping them improve. Not coming in to be the idea people, but to come in and, and coach and teach methodology. They've done a lot of work in, in healthcare and, you know, I could see, I mean I can't speak on their behalf, but I could see the appeal where, you know, Nortart talks about, and there's this phrase that's on your website, obsession to improve our customer's lives. Like that, that's kind of a high-minded purpose or, or, or, or mission where I, I, I could see, you know, Toyota talks about doing the same things around mobility and improving people's lives.
Mark Graban (23m 8s):
Yeah. I wonder if that was part of the connection of like how they decide to work with a company like Nortart.
Mike Kaeding (23m 14s):
Oh, absolutely. There's a several-month process that we go through and kind of evaluating each other to see if we're a good fit and a key piece of that's the culture, right? If you don't have the right culture in place, Toyota might be open to working with you, but, but they're not gonna have any bit of effectiveness unless you've got the right people and the right willingness to change and improve. And so, yeah, it's been a great partnership. In fact, we're in talks about becoming one of their like prime sites that they kinda show off for the rest of the world and maybe we can share this knowledge and experience we've gained the construction world with other companies.
Mark Graban (23m 54s):
So I'll put links on the show notes for the audience about some of the videos and some of the work that TSSC and Toyota have shared. Maybe I'll look forward to there being a video about Norhart someday that we can love it, watch and learn from and share. So, you know, you, you, you talk in videos and on the website about the importance of culture creating an attractive culture. And I know how important that can be, you know, to people in manufacturing. So I wouldn't be surprised that that matters to people doing construction. But can, can you kind of talk about like that connection of, of somebody who's, you know, a drywaller or a painter or whatever their, their field is like, they may have always thought of like the tasks and the job.
Mark Graban (24m 38s):
I'm curious like if you have stories about how like that connection to purpose and, and mission connects with people in jobs like that.
Mike Kaeding (24m 48s):
Yeah. You know, the, the heart of is understanding what your purpose and mission are. And if you get that right, it takes some time. But if you get that right, that connection starts happening. You know, for us, our purpose is to create a better way to live. But I think the impact that we can have is solving America's housing affordability. And once people start to get that, they realize that we're more than just here to make some money or just to get some work done or build a nice new building. We're all about solving that problem for humanity. And that gives people an extra energy and oomph to get what they're getting done.
Mike Kaeding (25m 28s):
You know, another, another piece of our culture is our mission, which is to build and manage awesome apartments. And we stay laser focused on that because we want to be literally be best in the world at doing that. That's the goal. That's not just some statement. That is actually the goal that's really a lot of fun because you go on-site and talk with people and you hear people responding that back regularly. Like, we want to be best in the world at what we want to do because that's what it takes to solve this kind of problem. You know, another thing I often hear the world of construction, typically it's kind of rough and tumble. People can be yelling and screaming and kind of mean and nasty.
Mike Kaeding (26m 8s):
It's doesn't bring out the best in people always. And so oftentimes at orientation, people hear our orientation. I, I'm at every orientation and at the end I just get their feedback. And a lot of times someone in the room will say, Mike, this sounds great, but this is too good to be true. I have lived in construction for decades and people say this sort of thing, but it never actually happens. Then what I say is, in two months, you and me will be connected back up again for follow up orientation. This is your chance to tell me everything that's going wrong and right in the organization. And two months later, without fail, every single time I come back and say, Mike, I thought you were full of it, and then I walked on site.
Mike Kaeding (26m 57s):
Right. That, that's the powerful moments when, you know, finally if something is working the way you hope it will.
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