Why Recreate the Wheel - Using Best Practices in the WorkplaceDocument Transcript
Why Recreate The Wheel? UsingBest Practices in the Workplace August |2010
Why Recreate The Wheel? Using Best Practices in theWorkplaceMany a company aspiring to be a trendsetter or market leader like an Apple or aMcDonalds doesn’t have to be as innovative as them to succeed in their respectivesectors / countries – they just need to learn (and borrow liberally) from the best…Be it in the products or services they sell, the channels they sell them through, orin the way they communicate with potential and existing customers, companiesare constantly looking to outdo their competitors, trying to gain an edge in anyway possible. Quite often, these efforts fail, with no discernible advantage gained,and significant financial and human resources wasted. Some companies failbecause they try to bring something brand new to the market but receive littleresponse to their offering, others fail because they rely on a certain strategy thatjust doesn’t fit their set of circumstances.Companies need not recreate the wheel when they try to enhance themselves;rather, they can do what thousands of others before them have done – copy fromthe best. There are cases abound of companies that have gained an advantage intheir market / sector in this manner, though few admit it. Some examples thathave been openly announced and documented include:Danaher Corporation: Considered by many to be the USA’s most successfullymanaged conglomerate, the company openly admits its “Danaher BusinessSystem” (a set of management tools, which it cites as the main reason for itssuccess) is borrowed liberally from the famed Toyota (TM ) Production System.The program requires all employees (be it the CEO or a janitor) find ways to getthings done in a better manner every day. Over the past two decades, Danaherhas returned 25% to its shareholders annually, far outpacing companies like GE(16%) and Berkshire Hathaway (21%), two other conglomerates in their market.BankAtlantic: Struggling to grow, the US bank rebranded itself as “Florida’s MostConvenient Bank” in 2002. The branding and strategy was almost completelytaken from Commerce Bank, a larger and highly successful bank operating inanother region in the country. By staying open seven days a week and untilmidnight at some locations, the bank was able to grow impressively with this newstrategy – in 2001, the year before the rebranding, the bank managed to openonly 40,000 checking accounts – in 2006, this figure was up to 270,000.Woolworth’s: Constantly learning and benefiting from the practices of its globalpeers Tesco and Wal-Mart, Australia’s largest retailer Woolworth’s copied Tesco’smodel of selling fuel via it’s retail network (a practice which has been extremelysuccessful and profitable for Tesco, as they are now the UK’s largest fuel retailer).Fuel-related income now account for 12% of the company’s overall revenues.
Ryanair – Another company that openly touts it copied another company’s model,the European airline was losing significant money in its first six years of operation.The airline’s executives then studied Southwest Airline’s operating model in theUSA, and copied many aspects of it. Ryanair is now highly successful, carrying over60 million passengers last year alone. Most recently, the airline copiedSouthwest’s customer software program “Ding,” which allows consumers to getspecial offers, by launching its own version called “Bing.”Ikea: This behemoth furniture company was inspired by Caesars Palace in the USwhen designing its store layouts. The casino was the first to launch a routingmodel whereby its hotel guests have to walk through the casino before they getto check in to the hotel, a scheme which significantly boosted the company’scasino revenues (as people can’t help but want to gamble when walking throughthe casino). Ikea used the same concept in designing the layout of its stores,whereby customers have to walk through the entire store to get to the checkoutregisters – thus driving up the average basket, as people tend to buy things theynormally wouldn’t when forced to visit the entire store.Companies looking to rely on best practices in bettering themselves need becareful, however. Each best practice must be thoroughly vetted from numerousperspectives before making a decision on whether to copy it or not. Werecommend the best practice be looked at from five specific perspectives beforemaking such a decision:1. Recency: How recently the practice was a success is important – borrowingan idea that has long since been bettered won’t do, as competitors will copy thenewer practice and achieve more success in the process (i.e. using physical cardsrather than mobile phones as the loyalty program mechanism, with mobilephones slowly but surely replacing physical cards in many countries / sectors).2. Relevancy: What works in one market or sector may not work in another.The practice has to be applicable in one’s own environment – taking intoconsideration one’s competitors and their offerings, the customer base, thecountry culture and dynamics, regulations, etc. (i.e. trying to apply the drive-through lane concept in a fast-food chain that has restaurants primarily located inurban areas where there is little room for expansion).3. Measurability: The relied on best practice must have actually contributed tothe bottom line of the company being mimicked – just because it’s the practice ofa given successful company doesn’t mean it’s the best practice out there (i.e.copying any given aspect of Wal-Mart simply because of their overall success,when some of their practices may not be). The measurable benefits it has broughtthe company should be understood before making a decision to launch a similarpractice.4. Feasibility: The concept here being that not all companies have the capabilityor skill-set for applying a given practice, the abilities and / or limitations of one’s
own company need to be considered before trying to mimic another. Whatbenefits Tesco achieves from its best-in-class loyalty program cannot be achievedby a small grocery store chain in a third-world country that does not have thecapabilities or skill-set for doing so – in this case, it requires extensive data-miningand scientific marketing capabilities (skills which can be difficult to find inemployees even in advanced countries).5. Compatibility: Whatever practice is to be copied needs to be compatible andaligned with one’s own high-level strategy, vision, and employees, as a mismatcharound this can cause the enhancement effort to fail. An organization and itsculture cannot be transformed overnight, thus requiring a careful assessment ofthe intended change and the overall impact it may have on the company (i.e.bringing in a Six Sigma quality management program to a company that has neverhad a performance management system in place and has employees that radicallyresist being measured, simply because a company in another country in the samesector began using the program and achieved significant results from it).We recommend that companies make researching and understanding thepractices of best-in-class peers around the world a part of everyday business. Therapidness in which companies now need to evolve and adapt to better serve theircustomers requires adeptness and readiness, which can only come through havinga deep sense of the best practices out there at any given time.Of course, there is no substitute for innovation (especially at companies like BMWor Google, or those in advanced markets like Japan or the UK) – copying from thebest only works if there is someone out there doing it better. But for others,relying on best practices to better themselves is a proven and sound method forgaining an advantage against competitors. As highlighted above, however, simplybecause one company succeeded from the practice doesn’t mean it’s going towork everywhere.
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