Why Recreate the Wheel? Using Best Practices in the Workplace

Many a company aspiring to be a trendsetter or market leader like an Apple or a McDonalds doesn’t have to be as innovative as them to succeed in their respective sectors / countries – they just need to learn (and borrow liberally) from the best…

You can download PDF version of this whitepaper here.

Be it in the products or services they sell, the channels they sell them through, or in the way they communicate with potential and existing customers, companies are constantly looking to outdo their competitors, trying to gain an edge in any way possible. Quite often, these efforts fail, with no discernible advantage gained, and significant financial and human resources wasted. Some companies fail because they try to bring something brand new to the market but receive little response to their offering, others fail because they rely on a certain strategy that just 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 from the best. There are cases abound of companies that have gained an advantage in their market / sector in this manner, though few admit it. Some examples that have been openly announced and documented include:

Danaher Corporation: Considered by many to be the USA’s most successfully managed conglomerate, the company openly admits its “Danaher Business System” (a set of management tools, which it cites as the main reason for its success) 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 get things done in a better manner every day. Over the past two decades, Danaher has 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 Most Convenient Bank” in 2002. The branding and strategy was almost completely taken from Commerce Bank, a larger and highly successful bank operating in another region in the country. By staying open seven days a week and until midnight at some locations, the bank was able to grow impressively with this new strategy – in 2001, the year before the rebranding, the bank managed to open only 40,000 checking accounts – in 2006, this figure was up to 270,000.

Woolworth’s: Constantly learning and benefiting from the practices of its global peers Tesco and Wal-Mart, Australia’s largest retailer Woolworth’s copied Tesco’s model of selling fuel via it’s retail network (a practice which has been extremely successful 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 the USA, and copied many aspects of it. Ryanair is now highly successful, carrying over 60 million passengers last year alone. Most recently, the airline copied Southwest’s customer software program “Ding,” which allows consumers to get special offers, by launching its own version called “Bing.”

Ikea: This behemoth furniture company was inspired by Caesars Palace in the US when designing its store layouts. The casino was the first to launch a routing model whereby its hotel guests have to walk through the casino before they get to check in to the hotel, a scheme which significantly boosted the company’s casino revenues (as people can’t help but want to gamble when walking through the 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 checkout registers – thus driving up the average basket, as people tend to buy things they normally wouldn’t when forced to visit the entire store.

Companies looking to rely on best practices in bettering themselves need be careful, however. Each best practice must be thoroughly vetted from numerous perspectives before making a decision on whether to copy it or not. We recommend the best practice be looked at from five specific perspectives before making such a decision:

  1. Recency: How recently the practice was a success is important – borrowing an idea that has long since been bettered won’t do, as competitors will copy the newer practice and achieve more success in the process (i.e. using physical cards rather than mobile phones as the loyalty program mechanism, with mobile phones 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 into consideration one’s competitors and their offerings, the customer base, the country 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 in urban areas where there is little room for expansion).
  3. Measurability: The relied on best practice must have actually contributed to the bottom line of the company being mimicked – just because it’s the practice of a 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 brought the company should be understood before making a decision to launch a similar practice.
  4. Feasibility: The concept here being that not all companies have the capability or 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. What benefits Tesco achieves from its best-in-class loyalty program cannot be achieved by a small grocery store chain in a third-world country that does not have the capabilities or skill-set for doing so – in this case, it requires extensive data-mining and scientific marketing capabilities (skills which can be difficult to find in employees even in advanced countries).
  5. Compatibility: Whatever practice is to be copied needs to be compatible and aligned with one’s own high-level strategy, vision, and employees, as a mismatch around this can cause the enhancement effort to fail. An organization and its culture cannot be transformed overnight, thus requiring a careful assessment of the 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 never had a performance management system in place and has employees that radically resist being measured, simply because a company in another country in the same sector began using the program and achieved significant results from it).

We recommend that companies make researching and understanding the practices of best-in-class peers around the world a part of everyday business. The rapidness in which companies now need to evolve and adapt to better serve their customers requires adeptness and readiness, which can only come through having a deep sense of the best practices out there at any given time.

Of course, there is no substitute for innovation (especially at companies like BMW or Google, or those in advanced markets like Japan or the UK) – copying from the best 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 for gaining an advantage against competitors. As highlighted above, however, simply because one company succeeded from the practice doesn’t mean it’s going to work everywhere. To learn more about utilizing best practices in the workplace, please contact info@forteconsultancy.com.

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