Best practices are the focus of countless whitepapers and webcasts each year. Implement these set of practices and you’ll save time and money, gain market share, create a competitive advantage, and so on. But as many people have discovered, a practice that works well for one company (or in a particular industry) may not work so well for another. Why not?
This was the focus of an interesting Harvard Business Review blog posting last month by Ron Ashkenas (“Why Best Practices are Hard to Practice”). “It would be easy to say that processes and tools cannot be picked up and moved from one organization to another,” says Ashkenas. “After all, each organization is unique — with different markets, commercial forces, structures, histories, leadership, and cultures. But if there weren’t any universals, the sharing and transferring of best practices would be a waste of time, and there would be little learning across companies (or even within companies). But in truth some firms are exceptionally good at ‘stealing shamelessly’. For example, think of all the companies that have benefited from Toyota’s production model.”
The two common pitfalls of applying best practices according to Ashkenas are lack of adaptation and lack of adoption. Regarding the first point, Ashkenas writes, “Because companies are so different, it is rare that a practice developed in one place can be applied elsewhere without significant customization. This not only requires learning the tool or process, but truly understanding the principles behind it [emphasis mine].”
This reminded me of a college experience I had in my junior year. I took a graduate level materials science course that year (I don’t know what possessed me) and our first exam was open book and open notes–i.e., we could reference our textbook and notes for assistance. The first question on the test looked exactly like a homework problem we were assigned a week earlier. So, to answer the first question, I simply started to apply the same steps I took to solve the homework problem. Five minutes into the test, however, the professor warned us that the first question was not like the homework problem at all. There was a detail in the question that effectively required us to take a different approach. In short, plugging numbers into a known equation wasn’t going to get me the answer. I had to truly understand how this detail affected the underlying chemical reactions, which in turn would require me to change the equation.
I scored a 7 out of 100 on the test. To this day, I still don’t know how I earned those seven points.
The second pitfall is simply a case of companies not walking the talk, or in the words of Ashkenas, “to utilize a borrowed process or tool without full leadership support and commitment, as though just having the tool itself will generate the desired results.”
For almost two years, I’ve been writing and preaching about the benefits of performance-based outsourcing (aka Vested Outsourcing). I call it a best practice in how to structure and manage strategic outsourcing relationships, especially in logistics. But some folks have said to me, “Oh, that’s gain sharing; we tried that in the past and it didn’t work.” Here is my response now:
If you equate vested outsourcing with gain sharing, then you truly don’t understand the underlying principles behind it. And if you try to implement it again, you’ll likely fail again. Take the time to thoroughly understand the underlying principles of vested outsourcing, then develop your own set of practices based on those principles, also taking into account the unique characteristics of your company, industry, and business environment. Also, buying books on vested outsourcing and attending seminars is not enough. At the end of the day, everyone from senior leadership on down has to walk the talk. No pain, no gain.
Do you understand why X2 + Y2 = Z2 or do you just plug in the numbers? The same applies to best practices.
good reminder that one size doesn’t fit all.
I had read the HBR Blog Post by Ron Ashkenas last month, and I continue to be opposed to his characterization of “significant customization” being needed to apply a best practice concept. My basis is that the word “customization” tends to cause folks to get uncomfortable and look elsewhere.
Yes, all businesses are differenct. Even Coke and Pepsi are very different companies. What is best for one, may not be best for another.
But by studying how other perform and the practices they use we can draft similar approaches that work.
Such is the power and benefit of best practices research and application