The Questionable Value of 'Best Practices'

By Lewis Perelman (© 1998, 2001)
Principal, Perelman Group
McLean, VA, U.S.

One of the most discussed aspects of knowledge management is the transfer of "best practices" and other efforts to "benchmark" within and between industries. However, I am convinced that such initiatives are of questionable value and may in fact do more harm than good. Intel Corp. offers an alternative - what it calls "best known methods" - that, for many reasons, represents a more sensible approach. First, no one knows what the "best practice" is. There are multiple possible criteria of "best" and it's not generally obvious which "best" is "best." Even if one knew what the best practice was at a particular moment, something better is likely to come along within a matter of weeks, or even days, hours, maybe seconds, depending on the scale and volatility of the business.

Intel's "best known" puts the emphasis more where it belongs: on what we know, an immediate reminder that our ability to practice/perform is limited first by our ability to know what's going on. I even like "method" better than "practice" - it suggests a bit more concern with understanding how to do than just with mimicking what is done. It's also a more humble and realistic quest for the "'best," since:

• human nature being more inclined to report success than failure, "best practices" are likely to reflect more "spin" than reality; and
• ·"best known" is elastic enough to embrace (at least in principle) bad methods - i.e., worst practices, failures, mistakes, traps, and other "lessons learned."

Of course, failure and error generally offer more valuable lessons than success. As I noted in my series on "worst practices" in Knowledge Inc., history in sports and other competitive fields suggests that victory usually comes to the player that makes the fewest mistakes, that eliminates the worst practices, errors, and such.

One of the earliest theorems of cognitive science was that learning comes from trial and error. Statistically, because there are many more ways of doing something wrong than doing it right, more knowledge is spawned by errors and failures than by successes.

Had Edison invented a workable light bulb after the first experiment, rather than the 5000th, his prospects for commercial success might have been seriously impaired. Something that seemed that easy to do might have been harder to patent or to attract investors - who might have anticipated a flood of competitors. Edison also would have lacked the empirical database to further refine the design. Moreover, experimental failures in one time and place often hold the seeds to a breakthrough in another context - Penicillin, AZT, the phonograph, and Java are a few examples.

Benchmarks, meanwhile, are limited by time and by market boundaries. They are useful to track up to a point, but they entail a risk of self-deception and limiting innovation. There are no "benchmarks" for the truly innovative: the first Xerox copier; the first PC; Lotus123; the Web; the Wright Flyer; the Model T; and so on. A company that is obsessed with matching or beating benchmarks will not leapfrog the competition to stake out the future. What's more, the pace of change in the Knowledge Age can obliterate benchmarks of "success" overnight. Look at how suddenly the Asian "Tigers" got de-clawed in 1997 and of course how rapidly many "dot-com" shining stars recently collapsed into black holes.

There are many examples of companies that failed to understand the boundaries of their business and market. They ended up benchmarking the wrong things and the wrong competitors.

A.O. Smith, for instance, once tried to convince General Motors that cars with frames were "better" than those with the unibody construction that was then becoming fashionable. GM's key needs at the time, some 20 years ago, were not driving quality but production cost and fuel economy.

Such myopia also has punished established players in the financial industry. Banks worried about local banks at best, if they cared about "competition" at all. But the digitization of money and the deregulation of their industry gave many bankers a rude awakening. Competition suddenly has become global, coming not only from other banks but players in other industries as well.

Apple offers yet another case study. It still touts its computers as "fastest" and "best" - still not grasping that consumers don't want to buy the best computer, they want to buy the best software that will solve their problems. And with market share down to three percent and falling still, the best software does not run fastest and best on a Mac - it doesn't run at all since developers can't be bothered with a "niche" platform.

Finally, there's the tale of the SS United States - designed and built to trump every benchmark in shipbuilding, and blown away by the jet airliner.

All that's not to say that the "best practices" that companies are intent on transferring are bad or stupid or unuseful. But if they are performed with their typically narrow and tactical focus, unguided by strategic vision and discipline, they are likely to prove unproductive at best and downright destructive at worst.

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