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Worst Practice

Worst Practice

The practice of solving problems by importing best practice is not a best practice.

The manufacturing arm of a major fashion retailer (MFR) wanted a world-class "production tracking system" for its rapidly expanding chain of stores. Inventories and deliveries had been getting dangerously out of hand. The heads of production and IT agreed to collaborate. They sensed a big win.

They retained a (very expensive) consultant to identify best practices for monitoring the flow of goods in global retailing supply chains. Just to make sure, the tracking system design team travelled the world to benchmark the best. They did a good job.

After intense internal debate, the team concluded that a best practice implementation should track products beginning from the contractor's factory floor rather than from the shipping dock. In close consultation with finance, the team presented its plan to the MFR's operating committee.

When the committee grasped the proposal's implications, its members went ballistic. The proposed tracking system might assure timelier deliveries and potentially save more than a hundred million dollars, but it would radically reduce the flexibility and discretion of the MFR's buyers.

The software would highlight last-minute order changes and their associated costs. It thus would make buyers accountable for costs as well as sales. The buyers would revolt.

Precisely because the company fancied itself more a merchandising trendsetter than a mere merchant, its buyers ruled. The CEO had been a buyer. The plan was killed.

Instead, the design team was instructed to come back with a production tracking system that produced the greatest economic efficiencies with the minimum organisational unhappiness to the buyers. Six months of buyer focus groups and analysis later, production, IT and finance still couldn't devise a tracking system that would pay for itself. The best practice benchmarking proved to be meaningless.

The moral of this story? Best practice isn't. Best practice is a fiction, a lie and a con job that has ruined the credibility and reputation of many good CIOs. CIOs should never, ever allow their IT investments to be determined by anyone else's best practices. Instead, CIOs should find ways to creatively challenge every effort made to import best practice transformations into their company.

Why? Because even the most brilliant analysis of a best practice has virtually nothing to do with the ultimate effectiveness or impact of its implementation. Most overweight people fully grasp the best practice of exercising more and eating less. Alas, they tend to do neither consistently.

In reality, identifying best practices is astonishingly easy; implementing them is astonishingly hard. Telling American Airlines to be more like Southwest or advising HP to be more like Dell is an act of intellectual laziness and professional cowardice. Someone telling your company that you would be so much more agile, responsive, innovative and profitable if only you emulated the best practices of Company X is similarly mindless and gutless. But C-level executives do this to themselves all the time.

The root of the problem is that organisations have foolishly inverted means and ends. A best practice should never be the goal; it should be a means to an end. MFR's major mistake was defining its growing problems with excess inventories and delayed deliveries as an opportunity to create a best practice-driven production tracking system. The company would have been better off if management had defined explicit inventory and delivery objectives and then challenged its departments - buyers included, of course - to recommend viable solutions. Would those proposed solutions likely represent a best practice? Of course not; the best is seldom a creature of compromise.

"What should we imitate?" and "Who should we imitate?" are reasonable questions any organisation should be constantly asking. But they also beg the critical question of how well do we imitate the best practices of others.

Sometimes the answer to that question determines whether a key business process evolves into a "core competence" or gets outsourced. But CIOs know that effective implementation requires more than imitation. Effective implementation requires companies to constantly assess the trade-offs between adoption (lifting a solution outright from someone else) and adaptation (customising it). If there's a single best practice CIOs should own, it's giving their company the technologies and tools to decide which trade-offs are the best for it. In the final analysis, that's the only best practice that's both sustainable and honest.

Michael Schrage is co-director of the MIT Media Lab's eMarkets Initiative. He can be reached at schrage@media.mit.edu

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