Every organisation follows a series of best practices but many are inefficient, stupid or even harmful. Removing them will enable you to reinvigorate your business and become more innovative
A Darwinian view of management leads many to believe that the most successful organisations must be following the best management practices. Add to this the fact that firms often adopt practices because they enhance their legitimacy – being the 'industry norm' – and then continue with them as they are 'the way it's always been done' and you have a recipe for disaster. For, as Freek Vermeulen, professor of strategy and entrepreneurship at London Business School, says: "Once adopted, a bad practice is hard to identify and often refuses to quit. And, like a virus, it begins to spread to other organisations."
Vermeulen says a blindness to understanding and identifying harmful practices in organisations is hindering innovation. The speed of change today only serves to exacerbate this – firms are often not quick to adapt and can be using a once-successful practice well after its sell-by date.
"Bad practices are covert killers. Since their effects are subtle and slow, you may not realise that a practice you implemented years ago is making your innovation pipeline run dry, your employees demotivated or unprepared, or your customers frustrated," he says.
In a book to be published next month, Breaking Bad Habits: Defy Industry Norms and Reinvigorate Your Business, Vermeulen suggests 10 ways in which individuals and organisations can identify and break bad habits and practices.
1. Cut out the benchmarking
Benchmarking can be a 'real dud' for innovation and a great way for bad practice to spread. Don't follow the herd unless you thoroughly understand why their path is the right one. It's just an excuse not to think for yourself.
2. Reverse benchmark instead
If all your competitors are doing pretty much the same thing and you cannot explain to yourself why all customers and employees are best served by that approach, see if you can depart from the crowd. Ask 'Why is that?'. If you can't get a satisfactory answer, there could be a good opportunity for innovation. Reverse benchmarking won't catch all bad practices but it's a great place to start.
3. Experiment if you can (but make sure to do it well)
When you make several changes at once in a complex system and observe the performance outcome, you have no idea what is really driving those results. You need to change one element and nothing else. If you run a genuine, controlled experiment you can resolve the causal ambiguity that keeps bad practice afloat and disentangle the complexity that slyly conceals a damaging practice. If you are unable to run an objective experiment but only a flawed one, you are probably better off not doing it at all as the harmful practice that will result will emerge even stronger and more tenacious than before.
4. Monitor entrants and companies in distress
If you are unable to do the above, the next best thing is to monitor new entrants in an industry and those in distress to see what they are experimenting with. Entrants have little to lose. Emboldened by lower risks, they are most likely to abolish a practice and experiment with something new. Meanwhile, companies in distress have even less to lose and are willing to try a range of new ideas to survive.
5. Ask insiders for concerns
What's the easiest way to uncover bad, antiquated practices in your company or industry? Ask employees. Employees understand the internal workings of their part of the organisation. Your colleagues are likely to harbour suspicions about a particular practice. When they mention one, challenge yourself as to why you do that practice that way. If you can't explain the reasons for adopting that practice, something is amiss.
6. Ask outsiders for suspicions
It is generally agreed that newcomers can challenge existing ways of doing things. However, in reality, employees more usually adapt to the ways of the organisation than the organisation adapts to the employees' novel ways of doing things. Outsiders may notice flaws but most of the time don't even speak up. Even if they do, they are likely to be ignored. So, as a standard operating procedure, it makes sense to systematically ask recent hires about practices that might be detrimental, inefficient and antiquated.
7. Create bundles of practice
Many practices, good or bad, come in bundles. If a bundle of practices forms a set of interrelated choices that fit together, we tend to refer to it as a business model. Sometimes just one practice is bad but more often several are antiquated. Ridding bad practices implies eliminating certain elements from the bundle that don't make sense any more, thus creating a new business model that represents a series of practices that do fit well together for your customer today
8. Take aim at a chunk of the market
Even though a practice can be universally bad for every firm in an industry, sometimes it is only nonsensical in a particular part of the market. What may be good practice and bring success in one part of the market is likely to be detrimental to another. Identify a practice that is universally used in your industry and you will likely make great strides to finding one that is bad practice in some chunk of the market. If you find a substantial corner of the market where the industry's long-standing conventions no longer make sense, you can thrive by eliminating those practices
9. Just stop it
Innovation is often as simple as just stopping a practice that doesn't work. One that is harmful, inefficient or overly expensive. Companies, and industries, are inclined to optimise a variable for too long, for example piling so many frills on customers that many no longer care. Too much of a good thing can still create a bad thing. If most companies in your industry are offering something customers don't really care about any more, you've probably discovered a bad practice
10. Watch out for 'that's the way we do it around here'
Whenever you hear the above line, suppress a smirk but pay attention. You may have encountered a bad habit. Animals, including humans, replicate behaviours and practices from their predecessors without really knowing the reason for that behaviour/practice and why it came about in the first place. It's just always been done this way. Spotting this situation is important to breaking antiquated habits.
Identifying and eliminating bad practices will help to build an organisation that constantly and automatically renews itself, shedding antiquated practices and embracing change. Then you can start reinvigorating the organisation.
Once adopted, a bad practice is hard to identify and often refuses to quit. And, like a virus, it begins to spread to other organisations