The Value of Choice Effectively Reduce Cycle Time Bruce Karatz

SPR I NG 2006
C O N N E CTI N G TE AM S. B U I LD I N G C O M M U N IT Y. AC C E LE R ATI N G G R OW TH.
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F R O M TH E C E O: B R U C E K AR ATZ
K Bnxt F O C U S: J E F F M E ZG E R
The Value of Choice
Effectively Reduce Cycle Time
KB Home has achieved great success in
recent years thanks to our KBnxt business
model, and our focus on providing homebuyers with unparalleled value and
choice. Recently,
more homebuilders
have been offering
incentives to drive
buyers to their
communities, a
practice that traditionally increases when the
market normalizes. In my experience, incentives are rarely as good as they sound — in
fact, I believe that incentives are nothing
more than an apology for not pricing the
home at market value.
I believe homebuyers deserve much
more than a discount on a home they don’t
really want. They deserve to purchase the
home of their dreams, with the homesite,
floorplan, and options they select. This is
why KB Home has chosen to resist the use
of short-term sales incentives and maintain
our focus on selling value and choice.
At KB Home, we develop every new
community and product series based on
extensive market research. We identify features that are important to buyers and
include them in each home. Then, we
allow our buyers to personalize their homes
at our KB Home Studio, selecting only the
features they want, and making every KB
home truly unique. These factors will
continue to provide us with a competitive
advantage and allow us to offer homebuyers
true value in a cluttered market.
Of course, we also continue to find
innovative ways to promote our products
and bring new buyers into the KB Home
family. Our recent Martha Stewart community is a perfect example. We did something no other homebuilder in the country
has done, and the results have been outstanding. In building some of the most
anticipated new home communities of
the decade, the partnership with Martha
Stewart has set our company and our
homes apart in an increasingly competitive
housing landscape.
Clearly, as we enter the second half of
2006, it’s an exciting time to be a member
of the KB Home team. We can all be proud
to work for a company that provides innovative product offerings and unmatched
choice and value for all types of buyers.
And, with our proven business model and
commitment to customer satisfaction, we
will continue to outperform the competition for years to come.
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Bruce Karatz Recognized by
City of Hope
For his business and philanthropic leadership, Bruce Karatz will receive the prestigious “Spirit of Life” Award by the
Southern California Construction Industries
Alliance for City of Hope at a dinner gala
in his honor on October 7.
Bruce Karatz and Michael A. Friedman, MD,
President and CEO, City of Hope
Based in Los Angeles, City of Hope (COH)
is one of the world’s leading research and
treatment centers for life-threatening diseases such as cancer and HIV/AIDS. The
Construction Industries Alliance for City
of Hope began in 1974 and has grown to
include leaders from all areas of the homebuilding, construction and service industries,
including KB Home. To date, the group
has raised nearly $12 million for COH.
In the tradition for its honorees, COH
hosted a special tour and lunch in Karatz’
honor at its campus on April 13. The tour
also marked the kick-off of its new Spirit of
Life fundraising campaign. Accompanying
Karatz on the tour were Southern California
Regional General Manager Jay Moss and
Orange County Executive Vice President
David Hendryx. During the tour, the group
participated in demonstrations of the da
Vinci Surgical System, the first completely
“intuitive” laparoscopic surgical robot in
existence. The system promises to give
COH surgeons a superhuman degree of
control during prostate surgery, and offers
patients the chance of a cure without many
of the side effects.
Over 700 members of the construction
industry are expected to attend the October
gala at the St. Regis Resort in Dana Point,
California, and KB Home Southern California
Every manufacturing company is focused
on inventory turn and how it affects their
profitability. At KB Home, our inventory
turn is controlled by
our cycle time — the
time between when we
close a sale to when we
deliver a finished home
to the customer. Of
course, we’re always
looking for ways to
improve cycle time. If we can reduce it by
20 days across the company, we can increase
our unit deliveries by several thousand
units annually — and those deliveries will
be more profitable because we’ll pay less
interest to carry the lots.
Many factors affect cycle time, and
while we can’t control all of them, we need
every team member to adhere to our
KBnxt fundamentals and stay focused on
the processes within our control. First and
foremost, it’s important to establish a
timeline that begins the day you record the
sale, and stick to it. Review your schedule
for every home on a daily basis to determine which homes are ready to be started,
which are waiting on approvals, and what
other holdups exist that might delay construction. Plan effectively so that you can
overcome any obstacles that arise without
affecting your production timelines. And, no
matter what impact you have on cycle time,
focus on daily execution and make sure your
piece of the puzzle is not a cause for delay.
I challenge every division to analyze its
current cycle time and identify areas where
you can increase efficiency and compress
your production schedule. Use the Cycle
Time Scorecard on KBU to help you identify areas for improvement and set specific,
measurable performance standards for each
phase of the construction process.
In addition, I encourage you to work with
your Regional Execution Team to leverage
best practices from other divisions. For
example, the Houston Division has provided
a list of practices for every stage in the homebuilding process. Find ways to compress
your production schedule in each phase to
dramatically reduce your overall cycle
time. In doing so, you can increase your
revenue and improve the Company’s overall
profitability.
Additionally, reducing cycle time will
enable us to continue to increase satisfaction
among KB Home customers. According to
J.D. Power, one of the greatest drivers of
customer satisfaction is Home Readiness,
defined by the following two measurements:
■
■
Deliver every home 100% complete
Deliver every home on-time
It is our companywide goal to deliver every
home on-time and 100 percent complete,
with zero exceptions! By adhering to daily
disciplines, tracking starts and closings each
day, and acting on every opportunity to
reduce our cycle time, we can deliver every
home on time and improve our customer
satisfaction.
We have the tools and practices we need
to help us achieve these goals, so let’s work
together to execute on them with every
KB home and achieve a measurable reduction
in cycle time this year.
VIS IT K B U F O R M O R E I N F O R MATIO N
KBU Google search term: “Cycle Time Scorecard”
KBU Google search term: “Houston Cycle Time”
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KB Home Joins Habitat Blitz
During the nationwide Home Builder’s Blitz June 5–9, KB Home
will join with Habitat for Humanity and homebuilders from across
the country to build 400 much needed homes in more than 130
communities nationwide. KB Home is a national sponsor of the build,
and our New Mexico, Houston, Jacksonville, San Diego, Charlotte,
Dallas and South Bay Divisions will participate to build 11 homes for
families who otherwise could not afford to buy a home of their own.
To learn more, visit www.habitat.org/buildersblitz.
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Connect to The Pulse
Bruce Karatz, Jay Moss, David Hendryx and group
on City of Hope tour
KB Home recently launched an internal website called “The Pulse” to recognize top
performing Sales Counselors, share best practices and provide tips and takeaways to help
our teams increase sales. The site includes monthly audio broadcasts, as well as feedback
“From the Field.” Login to now to learn more: www.kbyou.com/thepulse
divisions have been asked to participate in
the fundraising efforts. Proceeds from the
event will benefit the 2006 Spirit of Life
campaign in support of research, treatment
and education efforts at COH’s Cancer Center.
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B E ST P R ACTIC E S
Beating the Clock to Open New Communities On Time
All great sales oriented companies are
focused on their store count, and KB
Home is no different — to ensure that we
get the sales we need to drive our business,
we need to open more communities. And
of course, we need to do so as quickly and
efficiently as possible, with the greatest
possible impact.
Many factors go in to opening a new
community. We perform detailed market
research, acquire and develop the land,
design the community and model park,
and design the homes we’re going to offer.
We establish contracts for the materials
we’ll use and the trade partner services
we’ll rely on to build the homes. We define
the structural and Studio options that
homebuyers will be able to select, ensure
that they’re contracted for the best price,
and enter them into our IT systems.
Then, we build model homes and
merchandise them to fit homebuyer demographics and demonstrate our array of
Studio options. We set pricing for the
homes and all of the options, and prepare
our sales teams to sell in the new community. Finally, we begin advertising, and we
plan and execute a Grand Opening to
bring in the greatest possible amount of
traffic and, ultimately, sales.
Throughout this process, we count on
every team member to ensure that we
deliver on each of these commitments on
time and within our budget. So how do
our divisions ensure a smooth, effective
community opening? We interviewed KB
employees from various divisions for their
advice on how to “beat the clock.”
Plan Effectively
One important part of the new community opening process is planning effectively. From entitlement issues to bad
weather, to a shortage in trades or materials, many variables can lead to delays, and
it’s important to ensure that you’re prepared for any challenges that may arise.
Jaci Chapman, Jacksonville Director of
Sales and Marketing recommends ensuring
you are up-to-date on city and county codes
and regulations. “If you want two-story
homes, look at the updated county jurisdictions and laws to make sure they don’t
specify one-story homes only,” said Chapman.
Chapman also stresses the importance of
having a back-up plan. “We had development delays at one division making sure
cable and phone lines were in. They’re not
always 100 percent connected, so your
Plan B in this case would be making sure
wireless access was provided.”
With so many departments involved in
getting new communities open, it’s important to remember when assigning duties
that departments have different deadlines
and priorities. For example, Ken Langston,
Austin Division President, allows the
Purchasing department plenty of time to
get estimates and bids out for model openings. He gives a priority list of his needs
and deadlines so that Purchasing knows
ahead of time what they need to do.
“Do your homework so you can give
your team members proper strategies and
lead times in advance. If you’re in front
on scheduling and let the departments
involved know, they can meet the lead
times you give them,” said Langston.
“If you make a change late in the game,
that’s hard on everyone.”
To prevent the busy Architecture department from doing extra work, the Greater
L.A. Division does framework changes on
paper as much as possible. They also do a
“paper walk,” where everyone reviews
plans and issues before further work is
done. “If we are building a product that’s
been done before, we reblock it for the new
division.” says Michelle Johnson, Executive
Vice President of Sales. “We do that early
so Architecture can make changes on plans
before they are submitted.”
Communicate Frequently
For Langston, it’s critical to ensure constant communication with all departments.
“We have input from all functions and
different departments to make sure everything gets done and gets done on time.”
Throughout the community opening
process, Langston’s group holds weekly
meetings with key members of each
function and department to track their
progress. “There’s a lot of interaction and
communication at those meetings to make
sure we’re achieving the expected results
and holding each other accountable,” said
Langston. “If we lose a day, we find out
how we can make it up, because losing a
day on a new community being built is
just as bad as losing one on a home that
is close to delivery.”
The Greater L.A. Division holds conference calls so that all team members can meet
to make decisions quickly. For example,
the Land Development team might discuss
framework issues that could trigger construction changes, and because the Architecture
and Purchasing departments are on the
call, no time is lost relaying the information to the right people and ensuring the
changes are made quickly and efficiently.
“That frees people in the field from
waiting on discussions made in the office or
having to making several phone calls to get
results,” said Glen Crosby, Vice President
of Land Development. “Everything is handled in one brief conference call that lasts
no more than 45 minutes.”
Leverage Third-Party Relationships
Successful community openings require
partnership with many people at KB Home
and in the community. It’s important to
leverage relationships you have with vendors,
trade partners, government officials, and
other community members.
The Austin Division relies on longstanding relationships with its vendors
and contractors, and often provides them
with incentives to get jobs done quickly.
“If they want to get paid by a certain date,
we give them incentives to hit that date
or finish beforehand,” said Langston. “The
incentive could be money or a first shot
on bidding on our next development.”
Focus on results
Perhaps the most important aspect of
opening a new community is finding
creative ways to get the results you need.
For example, when local government
permits and other issues tie a community
up in red tape, finding a solution may mean
pitching in to get the job done yourself.
When the Austin Division faced a substantial delay in opening a new community
due to city timelines for paving a new
boulevard, the team worked out an agreement for KB Home to build and pave the
boulevard rather than waiting for the city
do so. By taking care of that construction,
Austin moved its first delivery of model
homes six months ahead of schedule.
Leverage these tips from some of our
leading divisions to help you execute your
next community opening.
VIS IT K B U TO LE AR N M O R E
KBU Google search term:
“New Community Openings”
B E ST P R ACTIC E S
Customer Touch Points Drive Satisfaction
The KB Home Say Yes! culture aims to
exceed customer expectations throughout
the homebuying process by doing the right
thing for the customer every time.
Delivering on this promise requires a commitment to KB Home’s internal Say Yes!
initiatives, as well as careful execution of
every Say Yes! Standard related to interacting with our customers. The 2006 Say Yes!
Standards Guide outlines these “customer
touch points,” which are divided into
various phases of the homebuilding process and designed to
help us build and maintain
strong relationships that drive
customer satisfaction.
Kyle Davison, Texas RGM
and KB Home Customer
Satisfaction Task Force Leader,
says the touch points provide a
roadmap to customer satisfaction.
“Customer touch points provide the
vehicle for us to set proper expectations
with our homeowners, as well as develop
long-lasting, trusting relationships. If
every touch point is a positive experience
for the homebuyer, they will be completely
satisfied and more likely to refer KB Home
to a friend or relative.”
Point of Sale
Customer touch points at the point of
sale provide a great opportunity to get the
homebuyer excited about working with
KB Home, while setting their expectations
for the entire homebuilding process. The
customer will attend a KB Care workshop,
where they can learn about their home and
the homebuying process. They will also
receive a congratulatory letter from the
Division President and begin receiving
weekly calls from their Sales Counselor.
“The weekly phone calls from the Sales
Counselor are vitally important throughout
the entire process,” says Davison.
“The customer needs to know
that we are thinking about
them and making progress on
their home, and the calls also
give them an opportunity to
tell the Sales Counselor their
questions or concerns.”
During each weekly call to
their customers, Sales Counselors
should communicate their desire to
“Earn the 10,” while setting expectations
and updating customers on the progress of
their home. They should share pertinent
information gathered during the weekly
calls with the Community Team so any
problems can be resolved immediately.
The Houston Division supplements the
required touch points with another communication: their homebuyers receive a
letter at the point of sale introducing them
to the division’s Customer Relations
group. Steve Gibson, Houston SVP of
Operations, says the homebuilding process
is even smoother when the customer has a
contact in customer service from the point
of sale, as a backup to the Sales Counselor.
Homebuyer Walks
The pre-construction, pre-drywall,
and Homeowner Orientation walks introduce the homebuyer to their new KB
home. The homebuyer walks are crucial
to customer satisfaction, since they give
KB Home a chance to demonstrate quality
construction and a show customers that
their home has been built according to
their specifications. At the pre-construction
and pre-drywall stages, for example,
customers can confirm their option selections and see how the home functions
behind the walls. At the Homeowner
Orientation, customers are formally
introduced to their new KB home and
all of its features.
According to J.D. Power, home readiness is the second highest key driver of
customer satisfaction. Davison says the
Homeowner Orientation can have more
impact on customer satisfaction that any
other customer touch point if the home
is 100 percent complete and on time.
Troy Eckhardt, San Antonio Director
of Customer Service, says hitting every
Say Yes! standard will prepare you to
deliver a 100 percent complete home at
the Homeowner Orientation. Prior to the
Orientation, the San Antonio Division
G E T C O N N E CTE D AT W W W.K BYO U.C O M
SAY YE S! C U STO M E R TO U C H
P O I NTS
Point of Sale
■ KB Care Homebuyer Workshop
■ Sales Counselor Thank You Letter
■ Sales Counselor Weekly Follow-up Call
■ Congratulations Letter from Division
President
Slab Start
■ Sales/Mortgage/Studio Survey
■ Pre-construction Orientation
Drywall
■ Pre-drywall Orientation
Delivery
■ Homeowner Orientation
Close of Escrow Survey
■ Close of Escrow Survey
■ Thank-you Gift
After Close
■ 10-day Follow-up by CS Representative
■ 60-day Follow-up by CS Representative
■ 6 Month Follow-up by CS Representative
■ 11 Month Walk Through
■ 18 Month Walk Through
focuses on the Community Team Walk,
and their Quality Management Systems
department performs an extra walkthrough
to ensure the home is ready to be presented
to the homebuyer.
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B E ST P R ACTIC E S
RETs Drive KBnxt
Three years ago, KB Home’s Texas divisions
launched a Regional Execution Team (RET),
a group of KBnxt “drivers” from different
functions, who would meet on a regular
basis to discuss and act on trends and issues
in their region. Since that time, these team
members have demonstrated that RETs
can be a strong force of accountability and
performance improvement at KB Home,
and set the stage for a companywide launch
of RETs in 2006.
4. Participate on their respective function’s
National Driver Call. Based on the
format of the National Sales Driver Call,
one representative from each region
meets monthly with the functional
representatives from other regions to
discuss trends and create action plans
that drive performance nationally.
Participation
The Texas RET includes one functional
driver from Construction, Customer Service,
Sales, Land Development, and Purchasing.
The RET meets bi-annually in person and
every other month on the phone to discuss
trends in their business across the region.
Additionally, each RET member meets
monthly with functional department heads
from every division in Texas to drive
messages down.
In Q4, the RET conducts their primary
planning meeting. From this meeting,
each person is assigned up to five projects
to implement in each quarter of the
following year. Once the calendars are set,
the functional drivers meet individually
with the RGM regularly to discuss their
progress. Team members spend approximately 15% of their time on RET activities which includes visits to every division
within their region once each quarter.
In addition to helping KB Home build
a better business, RETs provide a number
of additional benefits to the company.
RET Responsibilities
The primary responsibilities of the functional RETs are to:
1. Conduct ongoing gap analyses against
the KBnxt White Papers, Absolutes and
Scorecards
2. Respond to business issues or performance gaps with specific action plans
when needed
3. Promote best practice sharing across the
region that supports continuous
improvement
Cost Reduction
RET members partner to identify cost
saving opportunities and work together to
establish regional contracts wherever possible. According to Dale Ahrendt, Houston
SVP of Purchasing and Studio, the Austin,
San Antonio, Dallas, and Houston Divisions
compared costs across the region, and
found that they had a lot of volume that
they weren’t leveraging.
The RET invited purchasing managers to
join their calls to help gather more specific
pricing information from the front lines
and drill down into cost comparisons with
larger trade partners. Armed with their
results, the RET was able to achieve measurable cost reductions simply by leveraging
their volume with vendors and suppliers.
For example, the Austin Division got a 4%
price reduction from their windows supplier,
or $40 per home, and a $10 reduction per
thousand bricks from the brick supplier,
equaling $50 per home.
Leadership Development
John Zinsmeyer, Austin Vice President
of Operations, says that the RETs also help
facilitate bench development. For example,
many RETs have other employees listen in
on their calls. “We want to grow leaders,
so we have some people attend these calls
so they can hear higher-level things they
would normally not hear or participate in,”
said Zinsmeyer. “It helps to build our
bench and get them up to speed when they
get promoted or move to a new business.”
peers in other divisions to help them work
through business issues and challenge each
other to create better results. “For example,
the Charlotte Division has 3,500 traffic
units because of the Martha Stewart partnership,” said Jeanne Conger, San Antonio
Vice President of Sales. “We challenged
them to specify how they will manage,
inspect, and follow up on each one, because
that new traffic has the ability to either
make or break you. And we can all learn
from that experience.”
Uniform Language and Processes
Regular participation in the RET helps
all the divisions speak the same language
and conduct their business through standard processes aligned with KBnxt. This
makes it easy for the employees to transfer
from one division to another based on the
needs of the business.
Companywide Roll-Out
In January 2006, each KB Home region
was tasked with launching its own RET
based on the results achieved by our team
members in Texas. Business leaders conducted a training session for all new RET
members to introduce them to the process
and their role in the coming year. These
team members will continue take a greater
role in driving performance across their
region and within their own divisions to
achieve better results for KB Home.
Peer Network
The RET fosters a peer-to-peer network,
encouraging managers to contact their
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Team Members and Partners Focus on Pathfinder Charlotte Helps
Homeowners
After Fire
KB Home’s National Contracts Partners
joined business leaders from our Land
Development, Marketing, Purchasing, and
Studio teams on May 16th for the New
Community Openings meeting. During
the two-day meeting, partners and
employees participated in sessions focused
on opening communities on time, delivering quality products, and reducing costs.
Many of the meeting sessions and discussions focused on KB Home’s Project
Pathfinder, an internal initiative to help
reduce costs and improve profitability
across the company. While the Purchasing
LOGIN TO KBU FOR MORE
INFORMATION
KBU Google search terms:
“Pathfinder” “New Community”
for immediate impact. Next, Pathfinder
teams will meet with their major trade
partners to discuss ways to reduce costs in
their contracts going forward.
On Tuesday evening, our National
Contracts Partners also demonstrated their
products and had a chance to network with
KB Home business leaders during a State
Fair-themed tradeshow.
Bruce Karatz addresses team members and partners
department controls many of the costs that
impact Pathfinder at the community level,
every function and division is accountable
for reducing costs, improving processes,
eliminating waste, promoting quality, and
maximizing revenue opportunities.
Each KB Home division is working on
Pathfinder action plans for all departments
and establishing a list of items to execute
Attendees discuss products at a partner booth
C U STO M E R TO U C H P O I NTS: Continued from page 2
“If the home is complete at the orientation, you will be able to celebrate the new
home with the buyer, showing them all of
the features instead of writing down items
that need to be completed,” says Eckhardt.
“Since this is your last chance to touch the
homebuyer before they close on their home,
you have to be prepared and put your best
foot forward.”
“Nothing will make the customer happier than a complete home in the timeframe
they were promised,” says Davison. “If we
had to choose one customer touch point as
most important, it would be a complete
home at the Homeowner Orientation.”
Post Close Follow-Up
Once the homeowner closes escrow on
their home, the Customer Service team
performs the bulk of the customer touch
points, ensuring that we maintain customer
satisfaction long after the home is delivered.
At this point, KB Home surveys the
homeowner and contacts them for customer
service follow-up and walkthroughs.
Chris Tampas, Central Valley VP of
Customer Service, says the best way to
satisfy the customer during the follow-up
touch points is to be proactive and react
immediately to any concerns they have
about their new home.
“It is actually pretty simple to increase
customer satisfaction during the follow-up
touch points. Set up an appointment, be
there on time and do what you say you are
going to do,” said Tampas. “It’s not the
actual touch point, the 11-month walkthrough, or the 60-day follow-up call that
make the difference. It’s the way you handle and resolve any problems that come to
your attention during those touch points.”
The San Antonio Division has increased
customer satisfaction by bringing the appropriate trade partner with them when they
make an appointment with a homeowner.
For instance, if a problem with a loud door
is uncovered during the 60-day follow-up
call, they get the details of the problem and
schedule a visit with the homeowner. The
framing trade partner responsible for the
loud door will go to the appointment with a
KB Home Customer Service Representative
so the work can be done immediately.
“Our motto is one call one trip,” says
Eckhardt. “By resolving customer issues in
one trip, our warranty claims are down to
an average of four days, and our customers
are often happier with us after we fix the
problem quickly than they were before
they even had a problem.”
Using the Say Yes! customer touch
points as a minimum, every KB Home
division can continue to build strong relationships with our customers and deliver
even greater customer satisfaction.
VIS IT K B U TO LE AR N M O R E
KBU Google search term: “Say Yes”
G E T C O N N E CTE D AT W W W.K BYO U.C O M
When a Charlotte homeowner left dinner
on the stove one night in the St. John’s
Forest community, the results were much
more than just a burnt pot. Three occupied
houses caught fire, and the flames were
so hot that they melted the siding of five
houses across the street.
Steve Liebentritt, Charlotte’s Vice
President of Operations, immediately
rushed down to see what he could do.
By the time he arrived, the fire department had finished putting out the flames,
but the house where the fire had started
in was completely destroyed, and the
house next door was 60 percent destroyed.
Both owners had lived there for less than
two months.
Liebentritt spent the rest of the day
making sure KB Home could offer assistance. When a neighbor came to him
asking if a spaghetti dinner could be
held in the clubhouse for residents,
Liebentritt immediately agreed, paying
for the dinner and renting the tables,
chairs and utensils. Agents baked cookies
and provided the drinks.
One of his superintendents, Melissa
Moncrieff, helped comfort one of the
homeowners by driving her to the store
to get toiletries and temporary supplies.
By the end of the day, the community
had come up with $500 and a new
wardrobe for their grateful neighbors.
Liebentritt also made sure hotel rooms
were provided for them.
“We’ll stick by them until they are
back in their homes,” he said.
Thanks to Steve and the rest of the
Charlotte team for demonstrating KB
Home’s commitment to our customers.
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Raleigh Sales Team’s Easter Surprise
In April, the Raleigh Division held an Easter egg hunt for employees’ children, but the
biggest treat was saved for one of the division employees. The Sales team presented Maria
Hendricks, a Daily Units Processing coordinator who recently returned to work after recovering from breast cancer, with a check for $7,500. The team had earned the money from two
different sales contests and instead of holding a grand party for Hendricks’s return, they
decided to give it to her to help with any extra medical costs.
“It will definitely come in handy!” said a thankful Hendricks, who was surprised by but
appreciative of the sales team’s gesture. Hendricks, diagnosed with breast cancer in January
at only 24 years old, recently underwent a double mastectomy to ensure the cancer would not
return. She said her fellow employees helped greatly in getting her through her six weeks
of recovery. “They brought gifts like books for me to read in bed and came by to keep me
company when I needed someone to talk to.”
While Hendricks was recuperating, the sales team also sold T-shirts with a pink ribbon
that read “Support One of Our Own.” When the they told Hendricks they had a gift for her,
she thought it was a nice portrait of the team, totally unaware she would receive a hefty
check instead. A fully-recovered Hendricks said she’s glad to be back at work. “It was such
Maria Hendricks (center row, sixth from right) poses with the Raleigh sales team.
a warm feeling to be welcomed back like that, it felt like a family reunion.”
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E M P LOY E E A N N I V E R SA R I E S
KB Home San Antonio Recognized
Congratulations to the following KB Home team members who celebrated anniversaries
in Q4 (Note: QI anniversaries were printed in the Winter issue of KBConnect):
KB Home San Antonio was recently recognized by Scenic San Antonio as the city’s “Most
Improved” developer for its efforts to preserve heritage trees and provide park space in the
Fox Grove community.
5 Years
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Hampton Oaks
Riverline Hill
Austin
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Tuscany Village
Serenity Bay
LA-Ventura
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McKinney Heights
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Charlotte
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Prosperity Ridge
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Calico Terrace
Cascades – Brighton
Collection
Cascades – Summerlin
Grandiflora
Chicago
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Park Place – Phase II
Lincoln Prairie 6-Plex Units
Lincoln Prairie Duplex Units
Prairie Ridge
Las Vegas
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Colorado
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River Oaks
Walnut Grove
Bluffs at Spring Creek
Sorrel Ranch
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Cascades – Garden Homes
Cascades – Townhomes
Mid-Atlantic
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Tuscany Isles
Houston
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WoodCreek Reserve
Martin’s Chase
Broad Creek Hollow
Cherry Tree Estates
Whetstone
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Montecito Estates
The Villas @ Menaul School
North Bay
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Bella Terra
Woodshire Affordable
Duplexes
Indianapolis
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Cimmaron Place
Inland Valley
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Huntington at Willow
Ranch
Ashton at Willow Ranch
Bonita Canyon
Silver Springs
Meadowood
Lawrence Oglesby
Classics at Sin Lomas
Villas at Spectrum
Raleigh
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Twin Lakes Townhomes
Rio Grande Valley
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Chapin Crossing
San Antonio
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Herff Ranch
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Magnolia Lane – Southaven
Townhomes
Madison
Bougainvillea
Santa Fe Courtyards
Tesora
South Bay
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Del Vina
Maple Glen
Montclair
Olympia
Renaissance at Bluerock
South Carolina
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Fox Bank C & D
Settlers Pointe
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Bridgewater 50
Bridgewater 60
Palmetto Cove
Treasure Coast
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Orlando
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Hammock Trails
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VOLU M E 3: ISSU E 1
From the CEO
K Bnxt I N ITIATIVE S
1
Reduce Cycle Time
B E ST P R ACTIC E S
2
2
3
Open Communities On Time
Say Yes! Customer Touch Points
RETs Drive KBnxt Execution
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1
4
Bruce Karatz Recognized
KB Home Joins Habitat Blitz
San Antonio Recognized
S P E C IAL F E ATU R E
New KB Home Products/
Martha Fever
Pine Trace (111)
Tucson
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I N S I D E TH IS IS S U E
C O M PANY N E WS
Tampa
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Orange County
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New Mexico
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Fort Myers
William Huddleston
Vincent Maisano
Lynn Misurelli
Christian Tampas
20 Years
San Diego
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Dallas/Fort Worth
Cambridge Crossing
Cambridge Villas
Oxford Commons
Manchester Park
Hillcrest Estates
Rebecca Goddard
Terrence Herlihy
Michelle Johnson
Joan Keith
Anna Mancillas
Wendy Marlett
15 Years
Phoenix
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Blackstone
Lancaster @ Loch Leven
Avellino
PAID
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James Webb
Wade Wilson
Christine Woods
Sherry Wysong
10 Years
10990 Wilshire Boulevard
Los Angeles, CA 90024-3911
Jacksonville
KBCONNECT
Atlanta
Robert McGibney
Lynda McInnerney
Danelle Morgan
Terence Mosley
Frankie Park
William Payne
Bobby Ransom
Barbara Riss
Robert Roberts
Heather Rodriguez
Darci Rydeen
Sandeep Sakhon
Orlando Sanchez
Deborah Snow
Jennifer Spear
Patricia Swope
Jena Tallon
Bertha Trammell
Cynthia Truong
Daniel Waibel
THOUSAND OAKS CA
PERMIT No– 1
Q3 COMMUNITY OPENINGS FORECAST
PRESORTED FIRST-CLASS
U.S. POSTAGE
Pictured from left to right are: Joe Hernandez, Manager of Land Development; Scott Finfer, Vice President
of Land; Joey Doctor, Manager of Permitting; and Craig Westmoreland, Division President.
Nicol Andrews
Michael Anthony
Amanda Bachmeier
Carey Bender
Monica Benyo
Julie Bergo
Sheree Chilton
Veronica Contreras
Dale Crandall
Denise Crawford
John Daurio
Brad Deal
Jessica Deal
Nancy Dilley
John Durham
John Eiseman
Christopher Fisher
Jonathan Gardikis
David Garza
Cindy Greene
Kevin Hale
Gwendolyn Haley
Kenneth Hanks
Gary Heer
George Hernandez
Cecil Hernandez
Miquel Hutton
Sharon Ingram
Joseph Iturzaeta
Jeremy Jenkins
Christopher Jensen
Angela Lewis
Michael Lindemuth
Elizabeth Lopez
LaVerne Lowe
Robin Marshall
Ray Martinez
Shauna McCaffrey
Sonoran Ranch
Saguaro Springs
KBConnect is produced by KB University, 10990 Wilshire Blvd., Los Angeles, CA 90024.
We want to hear from you! Email your comments, questions and suggested topics to
[email protected] or call Sara Mariani, Employee Communications Manager, at
(310) 231-4192. ©2006 KB Home. All Rights Reserved.
S P E C IAL F EATU R E
C O N N E CTI N G TE AM S. B U I LD I N G C O M M U N IT Y. AC C E LE R ATI N G G R OW TH.
EXTRA: PAG E 1
S P E C IAL I NTE R E ST
“Martha Fever” Strikes Raleigh Homebuyers
One of the biggest events in KB Home’s
recent history took place last March when
the first new home community built in
partnership with Martha Stewart, founder
of the lifestyle empire Martha Stewart
Living Omnimedia, made its debut in
Cary, North Carolina.
The Twin Lakes community, located
just outside the urban “Research Triangle”
cities of Raleigh, Durham, and Chapel
Hill, features 650 homes and received
nearly 3,500 visitors during its opening
weekend. Interest in the community had
been high since it was announced. Within
a few weeks of offering the homes in Cary,
all the homes were sold. In fact, the opening of Twin Lakes was the most successful
Grand Opening in terms of sales in the
company’s nearly 50-year history.
The Raleigh-Durham area was selected
as the site of the first Martha Stewart community because of its national reputation
as a great place to live, and because KB
Home had 8,000 homesites there ready for
development. “Cary is a beautiful town
that goes with Martha’s personality,” said
Trish Hanchette, President of the RaleighDurham Division. “Timing-wise, we could
also implement the homebuilding quickly,
and Bruce Karatz had a lot of faith in our
team’s ability to pull it off.”
The Twin Lakes community was inspired
by Martha Stewart’s own homes in New
York and Maine. Stewart worked closely
with KB Home on all aspects of the homes’
design, including their architecture and
interior design. “This is a person who is
truly passionate about what she does,” said
Hanchette. “When we were down there
together for the launch, she was the first
one to roll up her sleeves and make sure
every detail was perfect . . . and it was.
As a result, these homes have a style and
presence that is uniquely Martha, and our
customers are responding strongly to her.”
The new community was first unveiled
on March 9, or “Media Day.” Media outlets
from across the country came to see Twin
Lakes, providing extensive local and national
TV coverage on shows such as NBC’s “The
Today Show,” the CBS Evening News and,
of course, Stewart’s own daytime TV show,
Martha, where she gave viewers a video
tour of a Twin Lakes home. KB Home CEO
Bruce Karatz and COO Jeff Mezger were
also there to greet the media. The media
event was followed by a VIP event for 150
people, including preferred land developers,
top-selling Realtors, and mayors from
various towns in the region, where they
were greeted by Martha Stewart in person.
Media Day was followed by a weekend
full of events for Realtors, customers and
the general public, all interested in seeing
“Martha’s homes” up close. On Friday,
KB Home held a luncheon for its preferred
Realtors, and then conducted a tour for 200
pre-qualified customers and their families
to introduce them to the community.
Sunday, March 11 was scheduled for the
public Grand Opening, where 3,500 people
lined up — literally around the block — to
get a look at the homes.
The success and the crowds even surprised
KB Home executives. “We’ve never seen this
type of traffic before,” said Timothy Pittman,
KB Home’s PR Director. “It was like a theme
park. Even local real estate agents, many
of them veterans with years in the business,
were taken aback by the large crowds and
their incredible interest in the community.
Bruce Karatz later told shareholders this
was the biggest event KB ever had.”
The Twin Lakes’ debut increased KB
Home’s brand awareness on both local and
national levels. Soon after the opening, top
trade partners and prospective employees
began to approach the Raleigh-Durham
Division, perceiving KB Home as the premier builder in the Triangle region. The
Company is also benefiting from superior
land opportunities as more interested
developers contact KB Home.
The Raleigh-Durham Division recently
issued a second phase of Twin Lakes, where
650 homes will be built on 286 acres. And
because the response to the community
was so extraordinary, with requests from
potential customers nationwide, KB Home
quickly announced plans to build more cobranded communities with Martha Stewart
across the country.
The next community will be Hampton
Oaks near Atlanta, due to open this summer.
G E T C O N N E CTE D AT W W W.K BYO U.C O M
Located along the banks of the Chattahoochee
River and minutes from downtown Atlanta,
the community will feature approximately
800 homes spanning 480 acres, more than
one third of which are rolling hills. Hampton
Oaks will offer homes ranging in size from
1,800 to 4,600 square feet.
Like Twin Lakes, the exterior of the
Hampton Oaks homes will have characteristics from Martha Stewart’s homes in New
York State and Maine, and her influence will
be present in all aspects of the home interiors.
Hampton Oaks will also be the first to offer
homebuyers landscaping packages designed
by Stewart’s personal gardener.
Like her personal involvement with the
creation of Twin Lakes, Stewart had a key
role in selecting the next site for her homes.
“Atlanta is a dynamic and fast-growing
city with a very diverse population,” she
said. “This development of tasteful homes,
set in a gorgeous area famous for its rolling
hills, will be extremely appealing.”
Additional communities are also expected
to open later this year in Houston, Charlotte,
Las Vegas, Orlando, Daytona Beach, and
Southern California. Along with the homes,
KB Home will also introduce a line of
interior and exterior home products and
design options called “Martha’s Choices.”
These items will be designed by Stewart
and her team and offered to homebuyers
exclusively through KB Home Studios.
The successful partnership is not simply
another high-profile joint venture for KB
Home, said Hanchette. “It has also served
to set our company and our homes apart in
an increasingly competitive market.”
EXTRA: PAG E 2
S P E C IAL I NTE R E ST
Divisions Launch New Product Series
As part of the KBnxt Business Model, KB
Home conducts ongoing market research
to identify the best land purchases and the
best combination of products and choices
people want in their home. Using the
Market Survey to develop new product
series removes uncertainty, and enables us
to make fact-based decisions about how to
provide what homebuyers want.
Detailed Market Surveys are performed
in every division at least every 18 months,
or as market conditions shift. They are
designed to determine buyers’ location and
product preferences, price/value percep-
tions, and “tradeoffs” they are willing to
make for specific features. Glen Barnard,
RGM for KB Home’s Central and
Southeast Regions, says the first step to
developing a successful new product series
is to analyze the Market Survey data to
extract as much knowledge as possible.
“The Market Survey is designed to
reveal what homebuyers have purchased,
what they would like to purchase, and
what tradeoffs they are willing to accept,”
says Barnard. “Every division is expected
to use the Market Survey to identify the
best opportunities for their specific market
including price, product, and location.”
Using this information, the division
works with team members from Architecture
to develop products that meet the needs of
homebuyers in that market. This often
leads KB Home to develop new products
that differentiate us from the competition,
while providing new growth opportunities.
Barnard says new products can allow a
division to expand in the market they are
already serving, or expand by serving a new
niche in the marketplace.
Many KB Home divisions have recently
developed new product series to target
specific buyer types and market segments
in their areas. For example, the Riverside
and Coastal Divisions have developed
luxury homes with spacious floorplans and
unique architectural features. Targeting a
completely different market in one of its
communities, the Raleigh Division has developed distinctive townhomes with custom
room conversions and exterior options.
“Luxury homes appeal to a narrow
market niche, so the Riverside and Coastal
Divisions have created a product that
incorporates exactly what the higher-end
customer wants,” says Barnard. “The townhomes in the Raleigh Division are unique
because they allowed KB Home to enter a
location that couldn’t accommodate
detached housing. Both of these products
serve a new type of homebuyer at a different price point, allowing these Divisions
the opportunity to grow in a new area
without diminishing their core business.”
take advantage of low interest rates and the
equity in their home to “move up” in the
market and buy a bigger home with more
custom features. To meet that market
need, the Riverside and Coastal Divisions
developed a series of luxury homes that
feature beautiful views, spacious bedrooms,
and sophisticated interiors.
“We have seen demand building for
higher-end homes, so developing a luxury
product series made sense,” says Moss.
“The void in the marketplace was clear,
and the Market Survey revealed exactly
which features would appeal to the higherend market segment.”
Architecture concentrated on fine-tuning
the specifications and architectural details
so the homes would impress all types of
homebuyers. The luxury communities are
built in ideal locations, with a unique
identity that appeals to a higher-end buyer,
as well as those seeking a prestigious lifestyle.
“KB Home offers choice in all areas,
including offering a vast product array,”
says Moss. “As the market changes the
only way to keep up with the competition
is to diversify with a product that sets you
apart in every way. The response to our
luxury homes has been tremendous so far,
with sales exceeding our expectations.”
clear we needed to design a new product,
and the result is a very unique townhome
that offers homebuyers great floorplans
and more choice.”
The Washington Square Townhomes at
Amberly feature structural options like
covered patios, or enclosed second story
decks. They offer room conversions such as
the choice of a loft, a traditional bedroom,
or a sitting room off the bedroom.
“These townhomes are unique because
— although the floorplans are similar —
the options mean that owners can go into
their neighbor’s home and see something
different than their own. It was worth the
Raleigh Townhomes
When the Raleigh Division completed
its Amberly land purchase, they considered
both detached housing and townhomes.
From the Market Survey data about their
buyers, they knew that if they were going
to build townhomes they would need to
be different from anything their competitors had on the market. They wanted to
provide homebuyers with more choice than
they would have if they were to purchase
Riverside and Coastal Luxury Homes
With record-breaking growth in the
Southern California housing market over
the past few years, many homebuyers have
quickly built up a large amount of equity in
their homes. Jay Moss, Southern California
RGM, says those buyers are looking to
time and effort to do the research and launch
a product specifically for this market, and
the response has been great,” said Hanchette.
“Word is getting out that KB Home has a
great multifamily product that is different
from anything else in Raleigh.”
With their new product series, KB
Home’s Raleigh and Southern California
divisions are targeting broader markets for
the Company, and reinforcing the message
that KB Home offers value and choice to
our buyers.
traditional attached housing units, including more floorplan and KB Home Studio
options.
“We didn’t want every unit to look
exactly the same, and we wanted to create
the “wow” factor in these townhomes,”
says Trish Hanchette, Raleigh Division
President. “This was our first entry into
the multifamily market here in Raleigh,
so we listened to the issues other KB Home
divisions had faced, and went into the
market to look at the strengths and weaknesses of our competitors’ designs. It was
G E T C O N N E CTE D AT W W W.K BYO U.C O M