On ignoring best practices

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Jeffrey Pfeffer has a very interesting article in Newsweek about layoffs and how they are much less effective than people think they are. One of the closing paragraphs caught my eyes:

Despite all the research suggesting downsizing hurts companies, managers everywhere continue to do it. That raises an obvious question: why? Part of the answer lies in the immense pressure corporate leaders feel—from the media, from analysts, from peers—to follow the crowd no matter what. When SAS Institute, the $2 billion software company, considered going public about a decade ago, its potential underwriter told the company to do things that would make it look more like other software companies: pay sales people on commission, offer stock options, and cut back on the lavish benefits that landed SAS at No. 1 on Fortune’s annual Best Places to Work list. (SAS stayed private.) It’s an example of how managerial behavior can be contagious, spreading like the flu across companies. One study of downsizing over a 15-year period found a strong “adoption effect”—companies copied the behavior of other firms to which they had social ties.

That reminded me of a post I wrote about how when we did a case about SAS in our organizational behavior MBA class at AGSM. I was surprised that all three teams in my class suggested to change to a commission based sale force. This is part of what I wrote back then:

This is the reason I was truly surprised to discover that all 3 teams recommended changing the pay system for the sales representatives and adding a commission based system. My simple question is WHY? It seems to work. More important than that, this is what makes SAS unique. You know how I feel about the importance of being remarkable.

You can argue about the question whether the commissions approach is the right approach generally (or maybe argue about using a joint approach), but it seems to work for SAS. So why change it?

You might say that people think that if they are motivated by money than other people are the same. But we know they are not. People are different.

I am not sure how, but this point connected with a point I was reading in a post on the Harvard Business Review blog today, by Dan Pallotta, titled – Real Leaders Don’t Do Focus Groups:

Apple is famous for not engaging in the focus-grouping that defines most business product and marketing strategy. Which is partly why Apples products and advertising are so insanely great. They have the courage of their own convictions, instead of the opinions of everyone else’s whims. On the subject, Steve Jobs loves to quote Henry Ford who once said that if he had asked people what they wanted they would have said “a faster horse.”

And this in turn reminded me of a number of things I wrote about, especially, this post:

If you look at some of the best successes in the last few years, they come from companies that looked at the market and did not ask themselves – how do we compare? How can we do what are competitors are doing, just differently or better?

It came from companies that reinvented the game. That left the confines of the industry and created new industries where they excel. Itunes; Google; Twitter; Iphone; are just some of the examples that spring to my mind.

What are the best practices you should be ignoring but instead are trying to imitate?

Elad

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6 Responses to “On ignoring best practices”

  1. productionengineer Says:

    Startups can reinvent the game. Owner/managers of private companies can reinvent the game. The rest of us won’t, for we have bosses – and nobody gets fired for buying from IBM.

    Heck, today’s “best practice” of outsourcing all of your core work to outside consultants gets you a nice two-fer: you protect yourself by doing what everyone else is doing, and you protect yourself in the future by purchasing a ready-made fall guy.

    I used to get angry over this, but the Soma is slowly working on me.

  2. sherfelad Says:

    Thanks Proudctionengineer. I appreciate your comment and the sentiment behind it. your comment is… how shall I put it… a bit pessimistic. It is hard and maybe will just dent the wall, but it worth was trying. I have seen changes even in the most headstrong organizations with headstrong managers. And you know what, even standing up, leaving and going to the competition is doing something. Although this blog might suggest otherwise, I do think there are good bosses out there. If you haven’t seen one, I hope you will soon.
    Hope to see more of your comments on this blog…
    Elad

  3. Anne Says:

    I’m glad I’m not the only one who notices the “Copy Corp’s”… They have even copied the reinventing thyme… It amazes me that adults are making these decisions but not all are equal when it comes to common sense…
    With regard to the focus groups including employee feedback let’s recognize them for what they are… Simply a “document” to support a decision… An executive “CYA” if you will…
    Unfortunately they are designed around an expected outcome…. Making them useless… This has been known far to long to be ignored… Why are corporations hanging on to something they know to be flawed?
    When they can justify a decision it helps them create a justification… Ultimetly benefiting the decision maker…
    As you can see I’m not a go along type person…
    Nice article,
    Anne

  4. sherfelad Says:

    Hey Anne,
    Thanks for the comment. I agree. These tools could be beneficial if used properly and if taken with care and not as the whole truth. I guess it is “safer” and “easier” to do it this way. But we know that safe and easy are the riskiest things you can do…
    Hope to see more of your comments!
    Elad

  5. Phil-Am OSI Says:

    Anyone could reinvent the game, if they want to. All is possible in this world.

    To be honest, we are thankful with our bosses because they treat us as part of their family and we are sure that only few bosses doing this kind of practice. I agree with what you think sherfelad that there are still good bosses out there but only few.

  6. sherfelad Says:

    Thanks Phil-AM OSI,
    It makes me happy to hear that that are some great bosses out there. I am more and more convinced that managers need to have a certain type of personality to be really great managers. That is not to say that only one type of personality could succeed or that it always the same type in every situation, but I feel like trying to teach the behaviors is not enough…
    Everybody, I would love to hear your thoughts on this issue…
    Elad


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