I am often asked by managers and executives to recommend “best practices” that they might emulate. What they are actually looking for are ideas and behaviors that have proven successful for other companies that they can then plunk down in their firms. In some cases, seeking after best practices represents a genuine interest in learning from companies who have been successful in other markets and even in other industries. In other cases, I am afraid it is little more than a search for an easy way out; “let’s borrow what someone else has developed rather than make the effort to create our own way of doing things.”
I must confess that I have a real problem with the concept of best practices. My concern is that some firms will adopt what others are doing in other settings and assume that these practices will work in their own situation.
The “best practices” that might be identified at successful companies like FedEx or Ritz Carlton did not happen overnight. They became “best” because they were honed over time by particular companies in particular settings. And, unless you happen to be in the overnight courier or luxury hotel business, looking to these firms for best practices may not be such a good idea. Even if you are in those industries, what works for them won’t necessarily work well for you. Chances are, the company that you are seeking to copy serves different kinds of customers and has a different set of capabilities and strengths. Their best practices may not be best for you.
Are their good ideas that you might pick up by observing well-run, customer-centric firms that you might modify and implement in your company? Of course there are. These ideas are just as likely to come from the deli on the corner or the cracker-jack mechanic who tunes your car as they are from large successful corporations.
But, don’t go betting you future success on ideas that you can borrow from others. There is no easy way out. There can be no substitute for a comprehensive understanding of your own customers and what they are looking to you to provide. What will work best in serving your customers can’t be copied from others. The best advice is to go out and invent your own best practices.
Jim
You touch on a complex subject, but as an business academic and book author, I fear that you are in real danger of tarring yourself black.
The vast majority of business research and business books are not based upon radically original thinking, but rather, are based upon incremental developments of the collected business wisdom of others. They are in effect based heavily upon business best-practices. If you don’t believe me, just pick up any business tome and leaf through it. Recognise many of the ideas? Recognise many of the same company case studies? Recognise many of the same information sources in the bibliography? Business best practices through and through.
Just as the best practices of others fuel incremental developments in business research, so they can in business practice too. Even thought markets served and company capabilities may be different, customers and business practices are often somewhat similar. (Indeed, without this similarity, business research and business books would be a complete waste of time, and Customer Think would not exist). Does a mobile telco marketer recognise the practice of marketing when he visits a colleague in a bank? Sure he does. Much of what marketers do is based upon marketing best practices. And much of what the rest of business does is too.
The key to using best practices well is in understanding how much of what others do is applicable to your industry, whether your business capabilities can implement them, whether they will help you deliver mutual value to customers and whether they will help you achieve your business goals. And then adapting the best practices to more closely suit your situation. Often this is a process of discovery by doing, as much as it is one of conscious planning.
Best practices can provide very useful insights for business. But like most things in life, the devil is in the implementation detail.
Graham Hill
Independent CRM Consultant
Interim CRM Manager
Graham
As is usually the case, I believe you and I are essentially in agreement on this subject. It’s just that you say it so much more persuasively.
My point was, as I think yours is, that business ideas come from many different places, including other businesses. But, assuming simplistically that what works for one firm will necessarily work for another is naive and dangerous. The key message lies in your penultimate paragraph. Before adopting “best practices” that are borrowed from others, assess their applicability to your customers, market conditions, and capabilities, adapt as needed, and implement carefully.
Jim Barnes
I think the term “best practices” has been misused and abused over the years. They may not actually be the “best” and even if they are, should not be blindly applied like some kind of a template for success.
To me, a “best practice” should mean a real analysis has been done between what a business does (practices) and what it achieves (results). Then you have same basis for saying the practices are “best.”
We’ve done this in research on CRM and CEM practices, and have discovered practices, or at least groups of practices, that seem related to success. But, when I present these practices, I’m also careful to say they are no guarantee of success. For one thing, statistical relationships don’t prove cause and effect. Furthermore, what works in one industry may not make sense in another, and developed markets behave differently than developing markets.
And, as Jim pointed out, if you just copy the practices of your competitors, how will you create any real differentiation? It’s difficult and risky, but without innovation, adopting best practices just means you’re trying to catch up, not get ahead.
Too bad we don’t have a clever term for “pretty good practices that may give you ideas you can apply to your business so you can learn from the experience of others.”
Bob Thompson, CustomerThink Corp.
Blog: Unconventional Wisdom
Responding to Bob’s statement ‘Too bad we don’t have a clever term for “pretty good practices that may give you ideas you can apply to your business so you can learn from the experience of others.”‘
Maybe the word we are looking for is “principles.” We could use best practices to develop the principles we use to implement our strategic initiatives because they act as “guides” to developing an internal practice based on markets, capabilities, and other unique factors the company must take into consideration.
For example, Toyota has a manufacturing “best practice” which is based on, I sure, several principles that probably include 1) people know their jobs best and can best find innovations and improvements, 2) lots of little innovations and improvements discovered and implemented by these people is better than a “big bang” program, and 3) management trusts people to make sure innovations and improvements don’t negatively impact other activities – communication is key to their successful implementation.
Can others who want a “best practices” manufacturing process directly implement Toyota’s? Probably not. But if they adopt the principles behind Toyota’s process then they might be able to develop the practices they need for their company’s goals and customers.
Just a thought.
Jonathan Narducci
CornerStone Cubed
Building Customer Powered Value
Jonathan
I think you make a very useful point, namely the distinction between principles and practices. What I was arguing against is the wholesale adoption of tactics which are framed as best practices. I think we are all in agreement that there are overarching principles that should guide the development of customer strategy and the customer experience. For example, I’ve been doing a lot of research recently with customers in a variety of industries. Certain principles relating to how they want to interact with companies have emerged, such as wanting to avoid being handed off to several agents before having their problem resolved, wanting companies to show up with the delivery when they said they would, etc. Some of these seem rather obvious principles, but they are often absent from the value proposition or they have been sacrificed in the interest of cost-saving.
Jim Barnes
Jonathan
The principles idea is a great idea of best practice (sic, or is that business principles?). As a consultant, I always and I mean always, base consulting work around agreed design principles. They act as both a guide during the assignment (which can easily get lost in best practice details) and a check at critical stage gates during the assignment.
Seeing as you mentioned Toyota.
Toyota’s business principles are described in the now famous Toyota Way. As a long-term Interim CRM Manager at Toyota Financial Services, I can vouch for the fact that they really do drive everything that Toyota does.
Graham Hill
Independent CRM Consultant
Interim CRM Manager
Graham,
While you foresee Jim “tarring himself black”, you are probably not aware that the last statement you make in your answer to Jonathan is actually strongly supporting the point that Jim made at the outset. The famous “Toyota Way” was developed by the company as the way to be “different” and deliver “unique” value to its customers. The company developed its own principles and practices on the basis of its own customer needs as well as the needs of its employees, products and processes and as we all know it works wonderfully. The Toyota way is neither a copycat of its competitors’ (or even other industries) best practices, nor even inspired by its competitors’ best practices, it is the “Toyota Way”, punctum finale. Many have tried to “copy” it but very few, if any, have succeeded in doing so.
I firmly believe and support what Jim is saying,namely that companies should find their “own way” (to parody the song),because they have their own clients, customers, employees, know how, products and processes and NOT those of the competition or looking further, those of companies which are successful in other industries.
I believe that best practices have become a management excuse (lazyness?), “let’s see what other do and we will (try to)do the same”. This approach is the road to delusion but many company managers experience it. They spend huge amounts of money and time trying to emulate “best practices”, only to see their results stagnate, or even worse, drop.
If only they had read Mauborgne and KIM (Insead): “The more you try to imitate your competitors, the more you become like them”
Pierre Chenet
Director of R&D
Deep-Insight Ltd
Pierre
Thank you for your erudite comment. Your challenge is much appreciated.
Of course, I recognise the wisdom in Jim’s position. Companies are better placed competitively when they develop a unique set of capabilities that enables them to gain a temporary competitive advantage. This is the basis of the resource-advantage theory of the firm that has become the dominant approach to strategy formulation in recent years. But temporary competitive advantage is just that, temporary, so leading companies have to reinvent themselves continuously to remain in the lead. As the sad fate of many once great companies shows, this is not always possible.
For every industry leader, there will be any number of not so fortunate followers, or even struggling ex-leaders, who can only compete for the scraps the leaders have left on the business table. Sure, these companies could invest in developing their own unique capabilities and perhaps become leaders themself, but the uniqueness of capabilities, the time-path dependence of their development and the emergent nature of modern business makes knowing what capabilities to develop incredibly difficult. For these companies, taking someone else’s best practices is a far more effective way to increase their relative competitiveness than developing their own expensive and risky uniqueness.
Toyota is an industry leading company. But so is Tesco, Boeing, Microsoft and the Royal Bank of Scotland. Each has its own set of unique (and often copied) capabilities developed over many years. But not every company can afford to spend 20 years in developing their own Toyota Way (it took Toyota that long). For these companies, adapting someone else’s best practices is by far the best way to sail into a blue ocean.
Graham Hill
Independent CRM Consultant
Interim CRM Manager
Thank you, Pierre, for your contribution to this discussion.
I can not see that there would be disagreement with the notion that, before one adopts the practices or ideas of other organizations and makes them one’s own, there would be careful examination of their “fit” with the circumstances of the adopting organization. My point, as you have said, was that what works for one may not work for another, simply because every firm faces different market conditions and has a different set of resources, not to mention values, positioning, target customer segments, etc.
I thought John made an important distinction between principles and practices. I meet too many firms that are fixated on simply grasping ideas from others (not necessarily competitors) without doing the due diligence required to determine if there is any fit at all. In addition to the fact that these “best practices” may not be best in the first place, there is very little ownership demonstrated by the people who are asked to implement them.
Jim Barnes