Why industry ‘best practice’ is not ‘best strategy’ for you
While I have a world class research team available to me and am able to provide ‘best practice’ insights, my team and I are always concerned when a client asks for them. The reason is that they are often set up as targets, rather than starting points (regardless of what the executive requesting them says). Two recent McKinsey Quarterly articles highlight perfectly the concerns we have, especially for clients working in fast-moving, turbulent or dynamic markets (that would be all of us at the moment, then!).
McKinsey correctly argues that spurious frameworks and torrents of data often obscure the basic principles of good strategy. “To beat the market, companies must exploit imperfections that stop (or at least slow) its workings. Such competitive advantages are scarce and fleeting because markets drive a reversion to mean performance as middling companies emulate the best and the worst exit or undergo significant reform. Good strategies therefore emphasize difference — versus direct competitors, potential substitutes, and potential entrants — not industry-wide best practices.” This is especially true in turbulent times such as these. Best practice is an anaesthetic at best, and a diversion at worst. What is needed now is true innovation and ‘standing out from the crowd’.
The first article from McKinsey is about ‘Remapping your strategic mind-set’ (read it here). The author suggests looking at the world in different ways to help you create a differentiated strategic view of your market. The “rooted maps” the author uses are very similar to those that can be found at WorldMapper.org, a resource I have always found intriguing and useful. Check them out for your region and industry – they will shift your perceptions of what is ‘normal’, ‘right’ and ‘best practice’ for you.
The second article adds some practical actions to these thoughts, providing ‘Ten timeless tests can help you kick the tires on your strategy, and kick up the level of strategic dialogue throughout your company‘. Use their ten question checklist to check your strategy. Be warned: this article will take you some time to work through, especially if you follow the reading lists they suggest for each of the ten questions you sense weakness in your company’s strategy. It is worth the effort. You might also be interested in supplementing McKinsey’s insights with my business partner, Dean van Leeuwen’s business SCRIPT concept.
But ultimately on this topic, I agree with CEO coach, Mike Myatt (author of “Leadership Matters… The CEO Survival Manual”) who says: “There is no such thing as best practices”. Read his thoughts here at a Google knol, or an extract below.
The Problem with Best Practices
Why Implementing Best Practices Leads to Mediocrity
by Mike Myatt
Even though I will from time-to-time slip and refer to something as Best Practices, I am attempting to extricate that phrase from my vocabulary. I have actually come to cringe every time I hear a so called ‘expert’ use the phrase in an authoritarian manner as a justification for the position they happen to be evangelizing… [There are] hidden dangers often associated with so called “Best Practices” implementations.
… Best Practices are really nothing more than disparate groups of methodologies, processes, rules, concepts, and theories that have previously garnered success in certain areas. However, prior individual or contextual successes rarely warrant being deemed as universal truths. It is nothing short of over exuberant thinking to assume that any single solution can be applied anywhere and everywhere, while boldly promising dramatic improvements in blanket fashion… Just because company A had success with a certain initiative doesn’t mean that company B can seamlessly plug-and-play the same process and expect the same outcome.
… It has been my experience that whenever methodologies become productized, that is precisely the point in time when objectivity is removed from the equation. Whenever you are being pitched a product as a solution I suggest you exercise extreme caution. Business is fluid, dynamic, and ever evolving. This means that static advice is at best short lived, but most times is simply incongruous with the very nature of business itself. I’m not looking for someone to cram my enterprise into their set of canned rules and processes. Rather I’m looking for someone to tailor a solution based upon the unique contextual circumstances of my environment.
… It is precisely the dispensing of one-size fits all advice that has allowed the ranks of consultants, coaches, mentors and other professional advisors to swell to historical proportions. After all, if you can apply someone else’s theory in a vacuum it lowers the barrier to entry doesn’t it? Labeling something as ‘Best Practices’ is not a de facto substitute for wisdom, experience, discernment, discretion, subject matter expertise, intellect, creativity or any of the other qualities I value in an advisor.
Popular business axioms and management theories are thrown around in such cavalier fashion these days that they can actually result in flawed decisioning. It is for precisely this reason that I believe too much common management wisdom is not wise at all, but instead represents flawed knowledge based on a misunderstanding or misapplication of ‘best practices’ that often constitutes poor, incomplete, or outright obsolete thinking.
Let’s examine this from another angle: Why would you want to do business in the same fashion as your competitors? Don’t utilize your competitions business practices, but rather innovate around them, and improve upon them to create an advantage that can be leveraged in the market. Be disruptive in your approach, and don’t fall into the trap of doing something in a particular fashion just because others do it that way.
Bottom line: Just because a professor says it’s so, a consultant recommends it, a book has been written on it, or a product has been developed for it, doesn’t mean that whatever “it” is constitutes the right option for you. I have personally witnessed companies that embarked upon an enterprise-wide initiative because they were sold on “Best Practices” and after two years into a seven-figure implementation, and without any meaningful benefit, they woke-up to the fact that purchasing a product as a solution does not constitute best practices. When all is said and done, there is no substitute for solid due diligence and sound business logic that has been vetted against the context of the situation at hand.
About the Author: Mike Myatt is a Top CEO Coach, author of “Leadership Matters… The CEO Survival Manual” and a frequently requested speaker on the topics of leadership, strategy and innovation. More information on Mike Myatt can be found at www.N2growth.com.
Source: Mike Myatt