Commentary —
Best Practices Myths
Business process reengineering efforts, including those driven by enterprise software, led inevitably to communication of practices among businesses. As some practices seemed to be more effective or efficient, they came to be labeled "best". But are they really "best", or just "best" in certain contexts? How do they impact process innovation? Could they bring you down to the level of your competition?
The enormous amount of process documentation, most of it digital, resulting from business process reengineering projects during the 1990s provided the foundation for widespread communication of process knowledge. Some of the communication was facilitated by industry and professional associations. Some was packaged and sold by vendors. Most process and practices knowledge, however, moved with the technical people who created it. Best practices were collected from these people and marketed aggressively by virtually all of the large consulting firms.
Best practices have thus become more a product than a performance standard.
Who says that a "best practice" is best? A vendor or consultant? Do they provide supporting data — criteria used to rank practices, measurement procedures, how context differences were reconciled? Of course not. What they really have are practices that appear generally better than others they have observed. If they have only one practice in a given activity, then it is by definition "best". Is it best for you? Maybe, but more likely, not.
Best should have a clear basis for its ranking, and that basis should be from your specific business, not a "typical" business.
Some business processes and practices are so mechanical and well-known that nearly everyone adopts them. Many of these are tightly specified by protocol standards such as electronic data interchange (EDI) and funds transfer systems. EDI would be considered "best" only by its vendors and consultants who make a good living helping business implement it. New practices based on emerging "standards" like XML are being marketed as the newest best thing but are just another step in process and practice evolution. Most are barely able to meet the weakest definition of "standard".
Business context for any practice can differ greatly between companies in the same industry. Systems environment, technology, competitive strategy, core strengths, organizational knowledge, culture, and many other factors make up a business context. A practice that works in one context may be a dog in another. As for a "best practice", unless your context is known to be identical in all critical aspects to the source organization's context, then the practice should be considered only as a reference point.
Few organizations, fortunately, adopt a "best" practice as is, unless forced to do so by an enterprise or other software package requirements. Most adapt the practice in some way to peculiarities of their own business context, making the practice more of a starting or reference point. This is good because it emphasizes context over reference point. It may not be good because the adaptation might adversely affect important performance capabilities. You may end up with a worse practice. The way to avoid this is to start with clear metrics for performance that reflect your organization's needs, culture, strategy, and other context elements. Practice alternatives evaluation, done we hope before implementation, should point to a practice that is at least "best" within the set of alternatives you have identified.
This brings us to a particularly nasty downside of the whole best practices movement: innovation often suffers. "Best" tends to be understood as the pinnacle of achievement. Why struggle to develop something better when someone has already found it? Even if this view is not verbalized, it is often accepted implicitly. Innovation in process and practices is limited to local adjustments needed to make it work, chiefly involving interfaces and terminology. Once an organization has implemented "best" practices broadly, what motivation is there to innovate in this area?
If every business in your industry were to adopt best practices from a common source such as an industry association, then all would be forced to a common level of performance. Even though this level may be better than in past, it is still just average — offering no competitive advantage and, worse, tending to discourage the innovation that can produce sustainable advantages. If your business is just one of many in your industry that has adopted best practices from a small set of sources ...
...then you have achieved nothing more than mediocrity in terms of competitive advantage.
Here are some ways to make your practices and processes "best" in terms of creating a significant competitive advantage:
þ Develop sound performance criteria for your particular business context for each practice area that you intend to tackle.
þ Collect a set of practice alternatives from external sources
þ Develop your own practice alternatives (i.e., innovate)
þ Rank alternatives using your context-specific criteria
þ Implement the highest ranked practice in pilot form
þ Measure its performance and make adjustments (i.e., continue innovating) to correct problems and improve performance
þ Roll out the revised practice
þ Never stop measuring, innovating, adjusting
The result will be best practices that are truly best for your business and, best of all, they will be largely unknown to your competitors for at least a while. Continued innovation will help ensure that your competitive lead is maintained.
— Gerry Allan
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