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March 1, 2018

Best Practice or Just Bad Habits?

Rachel Salaman

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Best practices. Those two words carry a lot of weight. These are the activities that can help you and your company to raise your game, right? They can get you up onto a level with your leading competitor.

They can even help you overtake that competitor, if they can be spread effectively throughout your organization. But, what if you asked yourself, "Are these really the best practices for my company – or does someone just say they are?"

Is It Best Practice, or Just Bad Habits?

Bad Habits
Freek Vermeulen

This might be a difficult question, but it could yield surprising and beneficial answers, according to Freek Vermeulen, Professor of Strategy and Entrepreneurship at London Business School.

His research has revealed that many presumed "best practices" don't deliver on their promises, and he urges us to take another look at our assumptions.

For instance, we may think that if we do what a successful competitor does, we will also flourish. But that may not be the case.

"We look at high-performing companies and imitate their practices," Vermeulen explains. "But, sometimes, inadvertently, we're just copying some company that basically got lucky."

In other words, that practice we’re adopting with such gusto may have nothing to do with our competitor's wins.

Long-Term and Short-Term Effects

Then there's the issue of perspective. Something that works well in the short term may well be risky as a long-term approach. Take cost cutting, for example.

"In the very short term, cost cutting reduces your cost and therefore improves your performance," says Vermeulen. "What we also know from research is that in the long term it can lead to problems: problems with employee morale, problems with innovation, and so on.

"Hence, because of the short-term benefits we may not realize that this is a bad practice. The harmful effects only happen in the long term and are much more intangible."

All this makes sense, yet organizations often resist challenging and changing the way they do business, because their best practices have become habits.

Recognize Your Bad Habits

In his book, Breaking Bad Habits: Defy Industry Norms and Reinvigorate Your Business, Vermeulen presents some well-grounded tips for recognizing and avoiding bad practices. As you might expect from a book that's all about swimming against the tide, his advice is not designed to make you feel comfortable.

For instance, what's your view of "change for change's sake"? For Vermeulen, organizations should be in a perpetual state of transformation, continually assessing the effectiveness of how they do business.

"I'm not advocating that more change is better, and all change is good," he tells me in our Expert Interview podcast. "What I'm really advocating [is] to change before you're in trouble. If you do change proactively, cumulatively, you will probably get away with less change than when you wait for trouble."

Make Your Life Difficult

We should also should try to make our lives difficult, says Vermeulen. "I do not mean 'difficult' in the sense of, 'Go enter the Chinese market in a completely different product category,’" he clarifies.

"That's certainly difficult, but you're unlikely to benefit from it. What I mean with 'make your life difficult' is do difficult variants of your job, or of your product," he adds.

As an example, he tells me about his research into the in-vitro fertilization industry. It makes commercial sense for fertility clinics to focus on patients who are likely to get pregnant through standard procedures – the easy cases, if you will.

But, in clinics that choose to focus on more complex and problematic patients, doctors stretch themselves and become more skilled at treating all patients, not just the difficult cases. "This makes the whole organization better," Vermeulen points out.

Everyone Has a Role to Play

As a Professor of Strategy, Vermeulen's focus tends to be on organizational decision making.

But he believes that everyone has a role to play in identifying and kicking the bad habits that plague organizations, no matter what their position – as he explains in this audio clip from our Expert Interview podcast:

 

Question: How often do you analyze your "best practices"? Join the discussion below!

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