Volume No. 8

Fishing for "Best Practices"?

How many times has your company asked you "What is 'Utopia Limited' doing well in the area of asset management?" Or "How does 'Neighbor Industries' manage its supply chain?" "What about Perfecto International? – what are they doing in the area of employee retention?" Sound familiar?

Hey, there's nothing wrong with wondering how other companies approach certain areas of their business. After all, we're taught by our leaders and mentors to be open to new ideas...to be "out of the box" thinkers! So why do I poke fun at this kind of best practice exploring?

The short answer is that the pursuit of best practices should not begin with looking at practices. Sound strange? Ironically, best practices should be the last thing on your mind when you begin your exploration. Why? Because industry is littered with companies who have implemented ideas they "think" might work, with little or no grounding to them. In reality, many of these practices end up failing miserably. But because they are implemented within big name, or strong brand organization, they are picked up by their peers without a second thought. After all, who's gonna argue if you implement a practice straight from the management of Perfecto International?

All joking aside, I've spent a lot of time in the power industry, and have watched the likes of Duke Energy, FP&L, PG&E, and others in the big name class, dominate discussion at best practice sharing forums. I'm not saying these companies are not good at what they do, nor am I saying that some of their practices are not downright super. What I am saying (with quite a bit of experience behind it) is that if you only looked at these companies, you'd be selling yourself way short. And you'd be implementing many practices that have a lot to be desired in terms of the value/cost tradeoff. Our research has shown less that 20% of true "best practices" originate from big brand companies. Most emanate from their smaller and far more nimble competitors. Real food for thought if you're in the business of finding best practices.

What we preach extensively to our clients is that companies should start with a good picture of relative performance. From there, you can isolate two or three companies that really stand out. I'm not talking about companies that look 5-10% better on the surface. I'm also not talking about companies that achieve high marks simply because they are four times your size and have an implicit scale advantage. I'm talking about companies that, all things being equal, stand out like huge anomalies (aside: normalizing comparisons here is a BIG MUST and will be discussed in future columns). You poke and prod at these indicators and when you're relatively confident that its not some structural difference driving the gap, then you're probably onto something. Talking to a company about practices at that point will not only yield a treasure chest of ideas, but ideas that are also likely to have some real economic value to them.

Why don't more companies do it this way? Well, like anything else, it takes time, skill, and patience. And in a world that moves at lightening speed, we all look for short cuts. But in the end, the right approach usually prevails. In this case, that translates into fewer implementations that go south, fewer false starts, less time aimlessly searching for ideas and more time understanding the practices that count.

As you move forward in your hunt for best practices, try starting with the data, and allow the benchmarks to be your "tour guide." It will save you a lot of time, and generate far more valuable results.

Author: Bob Champagne is a Vice President of Performance Management Solutions with UMS Group, Inc., a privately held international management consulting organization specializing in Performance Management tools, systems, and solutions. Included in UMS Group's product portfolio are a wide variety of performance tracking, reporting, and benchmarking solutions, as well as customized performance assessments and diagnostic services. UMS Group has consulted with hundreds of companies across numerous industries and geographies. Visit UMS Group at http://www.umsgroup.com or contact us directly at 973-335-3555.