By Mike Loughrin, CEO of Transformance Advisors
Jolted To My Core
During recent conversations, two colleagues demolished my comfort zone by saying that a focus on best practices is not the path to success.
Hearing them bash best practices was like an earthquake tossing me off the couch while taking a well deserved nap on Sunday afternoon!
Now, these two colleagues are people that I admire and respect; why would they say things that do not align with my view of the universe?
The first bashing was how best practices only get you as good as your competition. The logic is how everyone knows the best practices and you really need to beat your competition. It’s not good enough to just match the things that your competition does.
The second bashing was a proclamation that there are not any best practices; there are only better practices. The logic reflects the spirit of continuous improvement and how anything that is best today will no longer be best tomorrow. Those things we call best practices are just better than most.
Having been jolted to my core, I began pondering my deeply held beliefs concerning best practices.
Have I been a fool wondering in the dark?
Time To Ponder
Taking a long hike on the Little Switzerland Trail, I thought about the challenges of some common best practices. As I examined different practices, I kept finding examples where organizations had created a competitive advantage by following the success of others.
And then the fog began to lift. While the concept that best practices will only get you equal to your competition sounds rational, it has a big assumption. It “assumes” your competition has successfully implemented the best practices in question!
This assumption is painfully incorrect in many cases.
Let’s take a closer look at a few examples.
What Really Happens?
While leveraging best practices does seem to provide an advantage, what is typical when you look at the actual “practices” for many organizations?
Strategy Execution is critical for achieving your mission and vision. One optimistic report says that 70% of those with a strategy will fail at execution. So, let’s say 30% do it right. But many have not articulated a strategy. So, let’s go with 20% have a strategy and are able to implement it.
For many, the key aspect of strategy execution is saying No to the great ideas you will not work on. The key is crafting those 3 to 5 strategic initiatives that will receive the support and resources they need.
Show me an organization with 50 top priority projects and you will have shown me an organization that has no priorities and is heading in the wrong direction!
Lean Transformation is the number 1 improvement program in the world. I ask a few questions during my lean presentations and routinely find that only 20% of people doing lean are doing it correctly.
Most organizations that claim to be working on a lean transformation are just hacking at costs and missing the big benefits. Lean is a cultural transformation that must leverage key concepts as the 5 Principles of Lean, the 7 Types of Waste, and the goal of creating a sustainable organization.
Everyone seems to have lean on their resume and many organizations desperately hope they can buy their way to lean by hiring someone with big claims of past achievement. Unfortunately, many of these new hires are charlatans whose chaotic costing skills have left a wake of destruction for others to deal with.
Sales and Operations Planning (S&OP) has been called “the ultimate best practice.” Based upon my travels and observations, I can optimistically estimate that only 20% of people are doing an effective job with S&OP.
In many organizations, you see wasted efforts on feeding a software monster that is attempting to create thousands of item level forecasts. The accuracy is predictably poor and there is only a casual glance at the aggregate volume levels of demand. The “operations” part of S&OP is often missing completely. The supply planners are too busy fighting fires started by reliance on those item level forecasts. Who has time for a thoughtful assessment of volume level capacity requirements?
The Balanced Scorecard is an exceptional approach for driving the right behavior. For most, awful counter-productive performance measurements are still the norm. Let’s be optimistic and say 20% of organizations have a balance of measurements that drive the right behavior.
The number of purchasing people rewarded for low price vs. least total cost is astonishing. Other examples hit us everyday by just reading the news. Let’s reward people for developing software to cheat on vehicle emission testing. Let’s pay bonuses to brokers who give mortgages to those that cannot afford to pay for them. Let’s reward healthcare providers for curing illness, but not for keeping us healthy.
The concept of getting everyone aligned and working toward the same adjectives is astonishing.
The above are just a sampling of best practices.
Others involving new product development, sales, marketing, customer service, information technology, manufacturing technology, carbon footprint, risk management, or whatever may be more important for your organization.
Regardless of the best practice, just consider what it means when only 20% of those attempting to achieve the best are actually able to do so.
Some Easy Math
Pick 4 best practices that would drive competitive advantage for your organization.
My list from above is Strategy Execution, Lean Transformation, Sales & Operations Planning, and Balanced Scorecard. I have been very generous and estimated that only 20% of organizations that attempt each practice are successful at executing the practice.
Running the math, we find that 20% times 20% times 20% times 20% equals 0.16% of organizations are successful at all 4 of the selected best practices.
Think about it, if you implement 4 best practices that can drive competitive advantage in your industry, then you will be better than 100 – 0.16 = 99.84% of your competition.
Call to Action
The prize awaits. It’s time for you to:
- Discuss the current and future best practices that could provide your organization a competitive advantage.
- Select a small number that you will commit to do correctly.
- Integrate these best practices with your 3 to 5 strategic initiatives. If you don’t have 3 to 5, then you had better picked Strategy Execution as a best practice you need now!
- Stay the course and focus on becoming the best
And now, back to my colleague that claims there are only better practices.
He is right that the best practices of today will not be the best tomorrow.
You will need to practice continuous improvement and become a leader in making your chosen best practices even better tomorrow. That will be our way of saying that continuous improvement is a common feature of all best practices.
Thus, the best practices of today will evolve through continuous improvement and brand new best practices of tomorrow will emerge from experiments that thought leaders are exploring today.
Read Effective Strategy Execution
Read Designing a Lean Transformation program
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