A well recognized management maxim in today’s world is that each business activity should find “best practices” and seek to achieve at least that level of performance. While this might seem an obviously “good” idea, it may lead to several undesirable outcomes.
Some of the more apparent limitations to an across the board, unilateral “best practices” approach include:
- It assures that each of your practices will be no better than the best you can find. Even if you are able to find the true best practices, simply emulating those practices may be insufficient to achieve a competitive advantage.
- Following best practices assures you a position as a follower, not a leader. Finding valuable new management methods can give you a significant competitive advantage.
- A corporate philosophy of mimicking best practices can create a culture that does not seek better than “best” practices.
Beyond these three, there is a fourth and possibly more important issue: knowing what to do first. To improve the throughput of any system requires an understanding of where the constraint to throughput resides. A “mindless” focus on best practices assures that investment is made everywhere in an attempt to improve everywhere. While continuous improvement is a proven management principle, and is necessary to maintaining a competitive position in today’s world, it is not sufficient. Missing in the analysis is an understanding of where to apply additional resources first to improve results.
Constraint theory tells us that applying more resources to an unconstrained process element will not increase throughput. Therefore investing in so-called “best practices” across the board in your business is unlikely to be the optimal approach. It is analogous to attempting to increase output in a factory by maximizing the output of each work cell. This will absolutely maximize output. It will also maximize work-in-process and all related costs. Similarly, attempting to improve the performance of your company by maximizing the performance of each business activity is unlikely to be the optimal approach. The key is in understanding where the constraint to improved performance in your company is today, and focus on relieving that constraint first, then moving to the new constrained activity. This process continues indefinitely resulting in continuous improvement and optimal results.
Best practices and benchmarking are useful tools to set a minimum standard of performance. They should not be the ceiling. To adapt current best practices or to find ways to create best practices involves significant investment. That investment won’t pay off if it is applied to an activity that is not a constraint to your company’s performance. To adapt another old maxim: first strive to understand what to do, then focus on the most efficient way to do it.