On the road-building side of the business, Woolpert says that one example of the philosophy is how it led to the development of rapid-set concrete. A customer told the company that, for one of its projects, it needed to be able to allow traffic in a work zone after only a few hours. A special mix design that sets up in three hours was developed to meet that need. While no longer new, this requirement is an example of how responding to a customer request led to a new product.
In the construction materials area, the range of product offerings has been expanded to meet the needs of numerous new market niches. “Ten years ago, we had maybe 10 products in our quarry,” Woolpert says. “Now, we have 200 because of different mix formulations, different sizes, and aggregate products support a broader range of needs.”
Throughout the private sector, the company has seen a big shift as more building owners ask for green buildings. “We have customers who call us and ask to meet for the purpose of brainstorming ideas,” Woolpert says. “They want a smart looking and smart acting building, and they don’t want to pay that much more for it. They don’t want to build a standard building; they want to do something good for the environment.” Graniterock’s ability to meet that goal has paid dividends. While all state buildings have to be built green, Woolpert says that the private sector green building market has grown from about 5 percent of northern California construction two years ago to 20 percent today.
To succeed in the growing green build market, adhering to industry standards would not work. “That basically denies the fact that we have any creative ways of being more green in 2010 than we did two years ago,” Woolpert says. “That’s just not real. We could see the world was changing, and to be more open to customers, we developed ‘Yes, we will” so that we could respond with a yes and then figure out how to do it… We’ve done some unbelievable stuff.”
Keeping customers satisfied
Customer care doesn’t end when a truck leaves the gates at Graniterock. It continues throughout the company’s relationship with each customer. To make sure its customers are satisfied after their purchase, the company instituted a short-pay guarantee. The back of each invoice includes a statement that says that if the customer is not happy with the product or service it received, it should draw a line through the unsatisfactory item on the invoice, subtract it from the total, and pay the difference.
“Pay us what we earned. Don’t pay us for what we didn’t earn,” Woolpert says. In fact, when the program was introduced, he wrote letters to customers explaining the program and encouraging them to use it. “We only ask that we have an opportunity to come out and talk to them so we can find out how we disappointed them. Our goal is to learn from a customer how we disappointed them so we’ll never do that again.”
In an industry where margins are notoriously thin, offering customers an ‘out’ on their invoice might seem counterintuitive. The long-term rewards, however, outweigh the short-term risks — as long as a company follows through on resolving its problems. During the first year of the program’s existence, 2 percent of Graniterock sales were held up by the short-pay guarantee. “Today, it is less than 1/10 of a percent because we’ve learned where our problems are,” Woolpert says. “Our whole design was to take the problems and eliminate them.”
The concept, he says, was based on Phil Crosby’s book, Quality is Free. In the book, Crosby asserts that 25 percent of all Americans are employed to fix other people’s mistakes. The book was required reading when Woolpert worked at HP, which employed 80,000. “I thought, if that’s true, 20,000 people at HP don’t contribute anything to revenue, don’t contribute anything to customer satisfaction in terms of new transactions,” he says. “All they’re doing is running around cleaning up behind the elephant, so to speak.”
After reading the book, Woolpert says he couldn’t immediately identify that 25 percent of the workforce at HP, or later, at Graniterock. But, he did begin to observe it in other businesses. For example, he attended a building construction seminar with a friend. A structural engineer talking at the conference said that he had a set of drawings he was ready to hand to a building owner in the audience. He said he could guarantee the drawings contained no structural or design defects and no errors that would cause a delay in construction. Woolpert says his friend called the engineer’s claim impossible, so Woolpert encouraged him to ask how the engineering firm accomplished such a feat. The engineer said the firm put its best and brightest to work in a design defect department to review drawings. “Aha,” says Woolpert. “I had just found their 25 percent.”
He encountered another example after asking a former classmate, who worked at Delta Airlines, why one of its red coat agents meets every flight. He learned that the airline’s connection system did not always work and the airline employees met each flight to assist customers who deplaned angry and worried about having missed a connection.
Finally, he talked to the president of Ritz Carlton when both companies won the prestigious Malcolm Baldrige National Quality Award (which recognizes U.S. organizations in the business for performance excellence) in 1992. Woolpert asked his peer about the company’s cost structure, noting that its charge per night was more than its competitors. Rather than having a higher cost than other high-end hotel chains, the company president told Woolpert that its cost was actually lower because of efficiencies in areas such as housekeeping. He explained that many chains have a staff of housekeeping supervisors who report to a housekeeping manager and asked if Woolpert had ever been in his room when such a manager knocked on the door to see if the room was clean. “He said, ‘That’s the housekeeping police. They’re coming by to see if the housekeepers are doing their work,’” Woolpert recalls. “I said, ‘Oh my gosh, that’s part of their 25 percent.’”