Anyone who went to business school around the same time I did remembers “excellence”. Specifically, that was Tom Peters’ book In Search of Excellence, which described how companies could improve by copying what great companies did well. That book sparked a management fad of benchmarking – which then morphed into the idea of “best practices”. But now, unfortunately, it looks like the very sound ideas behind “best practices” are being lost and corrupted by corporate doublespeak.
In the last couple of weeks, I’ve come across more than a few examples of organizations using “best practices” as a reason to reduce or cancel services. The explanation usually goes something like this: the organization has “benchmarked” itself against similar organizations, or looked at other organizations’ “best practices”, and allegedly found that other organizations are doing less of a certain thing, or doing that thing less expensively. This then becomes a justification for the organization to downgrade its own offerings.
This use of “best practices” is not what was originally envisioned. Although Peters has admitted that his investigation of “excellence” was not as rigorous as it could have been, nevertheless his book had a powerful practical message. Companies could learn by comparing themselves to their competitors, or to other companies offering the same services or products. “Best practices” were intended to help companies improve and grow, not get smaller or do less. The origin of the term “benchmarking” relates to that same idea – that a benchmark, or a survey of best practices, produces a consistent measure of minimums or basics that the organization can then build upon.
Using “best practices” as an excuse to reduce services is a deeply flawed strategy, if for no other reason than that customers can usually see right through that excuse. (Take a look at this discussion of Air Canada’s recent changes to the rewards in its frequent flyer program.) And “best” is an extremely subjective term. What is “best” for the organization in terms of profit maximization may not be “best” for all of its stakeholders – for example, for economically or socially disadvantaged customers who may not have any other choices.
But the strategy is also flawed for other reasons. As this article indicates, best practices may be self-perpetuating myths. Competing companies may be doing the same thing because, well, everyone else does it, and everyone else has done it for a long time, so it must work. But very few organizations look at the original reason for the practice, or consider whether it is truly working for their organization. Thoughtful analyses of the relevance or usefulness of other companies’ “best practices” often get lost in the rush to over-achieve or not be left behind.
Critics of the “excellence” idea have also pointed out that “excellence” for an organization is rarely achieved by doing only one thing. Truly excellent companies get to be that way by coordinating all their efforts – a point that is very well made in Bob Sutton and Huggy Rao’s book Scaling Up Excellence. So organizations that copy a single “best practice” of an excellent organization are not guaranteed that the same excellence is going to happen for them. And, as Sutton and Rao also emphasize, getting to excellence for an organization often means going through times of not being so excellent. So adopting “best practices” is not going to be a quick fix for an organization’s problems.
But there’s also a larger, strategic issue around “best practices” as a reason for doing less. Doing less of something just because everyone else does less of it is like the old argument of “if all of your friends jumped off a bridge, would you do it too?” The product or service that is different might be the organization’s competitive advantage, or the reason why customers do business with the organization. In other words, customers prefer that particular service or product precisely because it’s different. Offering the service or product might be expensive for the organization, or might cost it more than what its competitors spend to offer something similar. But those extra costs might generate greater customer loyalty or a better organizational reputation – both of which can have sustained long-term financial benefits.
So when organizations claim that “best practices” are the reason why they’re reducing or eliminating services, not only are they misusing the idea of “best practices”, they are also potentially making major strategic mistakes. There may be short-term financial gains from reducing services, but there may also be long-term damage to the organization from losing loyal customers and having its reputation tarnished. Losing customers, revenue and goodwill is not a “best practice” for any organization.