When should I NOT use Best Practices?

As “we all know” Best Practices are techniques, methods, processes, activities, incentives or rewards that are believed to be more effective at delivering a particular outcome than any other techniques, methods, processes, etc. The general idea is that with proper processes, checks, and testing, a desired outcome can be delivered with fewer problems and unforeseen complications.

I find it somewhat problematic to buy into the term “Best Practice” as the term has implications of generality and universality applicability. I sense that some universal source has settled all disputes and the matter is closed decided, set and resolved. In addition, because of the wide spread use of best practice as a buzzword, I’ve found it easier and more precise to use this term or sometimes “better practices”, or “current thinking in the industry”. At least these terms may imply that the practices are not universal, but depends on the specific situation.

For deciding when to apply best practices, I have found it to consider two axes:

  • External service provider vs. Internal service provider
  • Degree of reward for differentiation (doing business significantly different from your competitors has a high return and lies within your expertise – or at least it should)

This creates a matrix with four quadrants.

Q1: The first quadrant describes the sitation where differentiation pays off and the services and competence is contained within the company, i.e. produced internally. This is typically where your core business is and where most of your competence and effort should be built around. I see no reason for applying Best Practices here. You should probably go for “best in class”.

Q2: The second quadrant describes a situation where differentiation pays off, but the service is produced outside your company. Here’s where you rely on close partnerships and probably some kind of shared rewards.

Q3: The third quadrant describes a situation where differentiation doesn’t have a significant benefit (your aim should be that it is “good enough”) and often where work processes are standardized, volumes high and economies of scale significant. Here’s where you give it to someone who makes a living from doing this kind of work as efficiently as possible.

Q4: The fourth quadrant describes a situation where differentiation doesn’t pay off, but for some reason the services are produced internally. This could be because of regulatory issues (e.g. safety or social responsibilities) or for historic reasons (e.g. a lot of competence in this area). I have found this situation to be generally “unstable” and tend to die out.

By mapping your business functions or processes in this matrix, I believe you can easily sort out where to focus your effort. A humorous friend of mine once said, let’s not become the  “United States of Generica”. I tend to agree, especially now that you know how to consider when to use Best Practices…

Regards,
Kevin

What I learned – from dr. House

house-cartoonI don’t consider myself a TV-slave, but I have to admit I sometimes catch myself watching and very much enjoying TV-shows.

One of the shows I happen to watch from time to time is the critically acclaimed Fox series House, about Gregory House MD the a-social yet excellent doctor who often clashes with other doctors including his superiors. These clashes are primarily due to his controversial theories and insights and let’s face it – his lack of social skills.

Although I watch TV for mere relaxation and entertainment, I have found that my brain is somehow wired so that it is impossible for me NOT to analyse what goes on in a wider perspective.

Over the years, I have often thought it strange that great management consulting firms like McKinsey and BCG, employ doctors and then transform them into management consultants. Amond my friends I have several who are excellent doctors, but I have great difficulties seeing them as management consultants.

However, some time ago, while watching House, I was struck by doctors deriving an accurate diagnosis based on vague symptoms and lack of reliable information. I quickly related this process to my own field of work, and discussed it with my best friend (who happens to be a  doctor).

During our discussions we found that the fundamentals of being a good doctor is not that different from doing good management consulting work. They are both based on the same three fundamental principles

  • Get an accurate diagnosis (what disease could each symptom potentially indicate?)
  • Build a hypothesis based on structured thinking (which hypothesis/hypotheses do you believe are more probable?)
  • Apply scrutiny and subsequent testing trying to disprove or tighten the diagnosis (what circumstances would indicate that the hypothesis is wrong?)

Realizing this, I no longer wonder how a medical background can be a valuable for management consulting firms (“McKinsey style”) and what we can learn from doctors to become better professionals.

Now, maybe it is time business knowledge gives something back to the hospitals in terms of competence…

Rgds,
Kevin

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