by Soren Eilertsen, Ph.D. January 26, 2017.
Best practice knowledge research from within and outside an industry plays an important part in organizational learning. It provides an understanding of approaches and processes that have been validated to produce optimal results and established as standards suitable for widespread adoption. On the other hand, a best practices approach can hinder learning, derail organizations and have a negative impact on business success, particularly when those who are responsible don’t pay attention to the dynamics. This makes it important to look at the limitations that come with using the best practices concept in business.
Four Limitations of Best Practices Approaches:
- Diluting an organization’s strategic differentiation.
Any decision to differentiate in the market place requires an investment decision—one that is often at odds with industry best practices. If everyone followed industry best practices, all businesses would look the same to the customer. For example, in the banking industry, it is customary to charge usage fees from customers for some services in order to boost income. Some financial services institutions, particularly some credit unions, have decided to break the mold and eliminate such fees to strengthen their strategic marketplace differentiation. Inside these credit unions, this can cause ongoing dialogue and tension since some executives may argue for a best practice approach. Maintaining a strategic differentiation takes courage and, if this position is not a deliberate one, dilution will happen over time.
- Enforcing a limiting industry paradigm.
Take the example of the movie theater industry. Twenty years ago none or few theatres in the U.S. offered “reserved seating.” Now it has become common practice, but gaining acceptance was not easy. The concept was first proposed as a result of best practices research from Europe. At the time, several industry executives laughed out loud and completely rejected the notion. Somehow, in the movie theatre industry paradigm the movie studio or distributor was treated as the “customer” and economic buyer since auditoriums were technically rented to the studios. Additionally, due to archaic industry practices, once a movie theater occupied a location, others were discouraged by film allocation practices, from opening nearby. In this way, movie theater chains were not entirely competing for the movie-going customer. One movie theater chain in Los Angeles, Arclight Cinemas, decided to put the moviegoer at the center of their paradigm to set the new top standard for a movie experience. They asked a question that seems obvious in retrospect: “How do we remove obstacles for the moviegoer?” With that question, they changed an industry paradigm.
- Exposing underlying worldviews.
On a personal as well as on a shared cultural level, the mindset of a worldview can be limiting. For example, some individuals and organizations are very rules-based. In other words, they follow or establish a new procedure to solve every problem. Others are primarily results-based with a competitive behavior and a notion that the end often justifies the means exist. Yet, others are humanistic-based placing a high value on people and learning. This generalization does not imply that someone doesn’t have the capacity to embody more than one worldview, but typically both individual executives and shared cultures gravitate towards one of these perspectives. Obviously, an organization where procedures and the “rulebook” take precedent will select different best practices than a humanistic perspective organization where people and learning come first. What is seen as best practice varies significantly depending upon the perspective and worldview of the businessperson.
- Preserving functional area power.
Best practice understanding can be a great starting point for thinking about a company’s practices, or it can be used as a defensive maneuver by executives who seek control and power. Using the ominous words “functional area best practices” in team meetings can limit innovative thinking and shut down cross-functional dialogue. When used defensively from a functional silo outlook, it represents a roadblock that can appear difficult to challenge. This makes it important for leaders to listen actively and use skillful means to confront defensiveness when appropriate.
Overcome the negative aspects of best practice knowledge and research
So, what’s the solution? Recognize that a clear and communicated understanding of the company’s strategic differentiation that highlights important elements will limit dilution over time. Cataloging industry paradigms that influence thinking and decision-making within the organization makes it easier to challenge them when appropriate. Be mindful of the worldviews that are predominant in the leadership circles and the impact they have in creating the corporate culture so they don’t hold the business back. And, continue to challenge leaders who misuse functional power by using best practice defensive excuses in order to integrate and innovate cross-functionally. Most importantly, be aware of the dynamics to avoid the slippery slope of best practices approaches that limit opportunities for new learning and growth.
A version of this article appeared in Chief Learning Officer, January 2017.