Podcast Ep 102 | The Problem with Best Practices, and What to do About it

There’s a prob­lem with best prac­tices. Peo­ple often talk about need­ing to imple­ment best prac­tices, but what they real­ly mean is com­mon practices.

And the prob­lem is that com­mon prac­tices might not be best for your busi­ness, and in fact, com­mon prac­tices might weak­en your busi­ness. In this episode, Brad Giles and Kevin Lawrence talk about the prob­lem with best prac­tices and what you should do about it. It takes think­ing and dis­ci­pline ver­sus grab­bing what oth­ers have done and think­ing it’s going to be the best thing for your company.

EPISODE TRAN­SCRIPT

Please note that this episode was tran­scribed using an AI appli­ca­tion and may not be 100% gram­mat­i­cal­ly cor­rect – but it will still allow you to scan the episode for key content.

Brad Giles 00:13

Wel­come to the Growth Whis­per­ers where every­thing that we talk about is build­ing endur­ing, great com­pa­nies. As always, I’m joined by my co host, Kevin Lawrence, Kevin. Hel­lo. How are you doing today?

Kevin Lawrence 00:35

Awe­some Brad. Excit­ed to be get­ting into this pod­cast. I think this is going to be a great show. I’m look­ing for­ward to it. It’s almost like a bit of an Eng­lish les­son. Like we were pick­ing the def­i­n­i­tion of words. It’s gonna be real­ly interesting.

Brad Giles 00:57

Because there’s some under­ly­ing frus­tra­tions with this sub­ject, right? Because we get frus­trat­ed by medi­oc­rity and peo­ple’s accep­tance of medi­oc­rity. As always, we’d like to start with a word or phrase of the day, what’s on your mind?

Kevin Lawrence 01:24

Oh, it’s today, it’s free­dom. You know, I had three days in the back­coun­try in like way back in the moun­tains of British Colum­bia. And for those you can imag­ine, you know, kind of two or three moun­tain ranges back in the mid­dle of nowhere, hav­ing a grand adven­ture, and then a place called Dis­ney Land, and Los Ange­les with my daugh­ter, which is anoth­er great sense of adven­ture, wan­der­ing around and check­ing out a city and explor­ing and hav­ing fun and look­ing for short­cuts to find short­er lines and Dis­ney­land. So, but it’s a real sense of free­dom, just kind of wan­der­ing around a whole bunch of extreme, dif­fer­ent envi­ron­ments. If you call Dis­ney extreme envi­ron­ment. Yeah. So I feel I feel very refreshed and reju­ve­nat­ed by all of that.

Brad Giles 02:10

So we don’t talk about the word or phrase before­hand. So yeah, that’s, that’s pret­ty cool. Well, I am sur­prised because mine is sim­i­lar for dif­fer­ent rea­sons. So the big thing that’s hap­pened here in the last, I guess, week or two has been that for the first time in two years, my state has opened its bor­ders. So yeah. And we also have, which would be quite shock­ing for peo­ple out­side of Aus­tralia. We’ve got our first COVID Wave, two years after oth­er places did. So. We’ve got about, I don’t know, 10,000 cas­es now, per day. And we had zero cas­es or, you know, two or three cas­es. Over­all, we had a closed econ­o­my. So it’s real­ly qui­et, in terms of free­dom is real­ly quite unusu­al to be hav­ing peo­ple fly­ing places now, peo­ple com­ing in, we’ve got I’ve, you know, I’ve had peo­ple come from Eng­land, and peo­ple com­ing from Amer­i­ca for work­shops at the moment, and it’s all real­ly very weird to have that new free­dom. Yeah, so free­dom and free­dom. For the first time. I think we’ve matched.

Kevin Lawrence 03:32

Great minds think alike. Brad. Share with our lis­ten­ers, what we’re dig­ging into today.

Brad Giles 03:44

Yeah, the prob­lem with best prac­tices and what to do about it. I know that if I want to pick a fight with Kevin Lawrence, I would always start by say­ing, this is the best practice.

Kevin Lawrence 04:01

You’ll see the steam come out of my ears because the phrase is freakin wrong. It’s not best prac­tices best is in con­text. And I remem­ber sit­ting with some exec­u­tives of com­pa­nies and also some best prac­tice loss­es. It’s like, it’s like a free pass to take any bad idea and make it valu­able. Best Prac­tice means com­mon prac­tice. You know, Apple has what I would call a very smart prac­tice of hav­ing their devices locked. Like you can’t open them up and swap out parts, right? They’re like sealed units. But if you were look­ing at PC man­u­fac­tur­ers, every­thing is open and swap­pable in a lot of cas­es. So what’s which one’s the best prac­tice? Well, it depends on your strat­e­gy. So best prac­tice is a col­lec­tion of ideas that peo­ple throw around as being the smartest idea in the room. And it could well be the smartest idea. And it could be the dumb­est idea, depend­ing on your con­text, depend­ing on your strat­e­gy. So I want us to get real clear up front. It takes a lot of work to decide if some­thing is best. And even then there’s very few things in the world that we can say are best because it’s so sub­jec­tive. So best prac­tices, we want to rede­fine it real­ly as com­mon prac­tices, right prac­tices that will get your right into the mediocre mid­dle, guar­an­teed like a high prob­a­bil­i­ty of putting you into the mediocre mid­dle and what­ev­er you’re doing. But there are a lot of nuances and think­ing and analy­sis to tru­ly fig­ure out what is best for you in your sit­u­a­tion. So best prac­tices, in my books and my pas­sion­ate opin­ion are com­mon prac­tices. If you’re going to artic­u­late­ly, artic­u­late­ly define them, or accu­rate­ly define them. So com­mon prac­tices, let’s use the right words, we’ve seen them all over the place.

Brad Giles 06:11

Best prac­tices is a word that’s thrown around a phrase part of me that’s thrown around quite a lot. We had such a great dis­cus­sion about this before­hand. And the when we think about peo­ple using the phrase best prac­tices, we should replace that with com­mon prac­tices, because that’s real­ly what they’re say­ing the com­mon prac­tice that most com­pa­ny US com­pa­nies use is this. Now, it does­n’t mean that you should­n’t under­stand that. But it does mean that that’s the com­mon prac­tice. And it’s got to adapt. You’ve got to think okay, so. So what should we do? As you said, it must encap­su­late your strat­e­gy, we’ve got to think, How can we get the prob­lem that we’re try­ing to solve what­ev­er it is, work in our strat­e­gy the best.

Kevin Lawrence 07:15

Just because your neigh­bour buys an elec­tric vehi­cle or a bat­tery pow­ered vehi­cle, does­n’t mean you should just because your neigh­bour paints their host pur­ple, does­n’t mean you should just because your neigh­bour likes to go vaca­tion and go camp­ing does­n’t mean you should. Those are just ideas, pos­si­bil­i­ties, it’s com­mon think­ing and he got to break it down to have a stronger filter.

Brad Giles 07:43

The prob­lem with that anal­o­gy, right? Is that paint­ing your house pur­ple does­n’t have any neg­a­tive consequences?

Kevin Lawrence 08:22

Anoth­er idea is if all your friends are invest­ing in Bit­coin, that does­n’t mean you should invest in Bit­coin. It depends on all your friends are invest­ing. Yeah. Okay. We are get­ting off track with the anal­o­gy, the anal­o­gy, sir. But the idea is, is that we just need to be scru­ti­niz­ing with our think­ing when some­one declares some­thing as best to be able to clear some­thing as best in this world is rare, because there’s always like, what is the best car to buy? There’s no answer. There’s the most expen­sive car. There’s cheap­est car, there’s most fuel effi­cient car. There’s most car­go room car, but their best as a deceiv­ing term in almost any sit­u­a­tion because it needs so much context.

Brad Giles 09:12

In any sit­u­a­tion, when it comes to prac­tices, there could be 20 dif­fer­ent prac­tices or ways to do some­thing. Yes. And, and some­one is prob­a­bly call­ing every sin­gle one of those the best prac­tice, okay, so that’s what we’re say­ing is actu­al­ly a com­mon prac­tice. And so a com­mon prac­tice means that under­stand what they are, but the best prac­tice for you is the one that aligns with your pro­tect radio strat­e­gy or your strategy.

Kevin Lawrence 09:46

Yes, exact­ly. It’s best for you in your con­text. And the main thing is, is that we don’t want peo­ple to get stuck in is com­modi­tized self com­modi­ti­za­tion or self inflict­ed com­modi­ti­za­tion. If you just go around and do every­thing that every­one else com­mon­ly does, your busi­ness becomes com­mon. And you most like­ly erode your com­pet­i­tive advan­tage. Because if you’re doing all the same things that your com­peti­tors do, you’re going to be just like your com­peti­tor. And it’s going to be same, same with the cus­tomers do when it seems I’m say­ing, well, they nego­ti­ate price down, because there’s no dis­tinct advan­tage or no rea­son to jus­ti­fy pay­ing more.

Brad Giles 10:30

And so you become com­modi­tized. And then with only one lever to pull, it erodes the prof­it mar­gins, and then one slip up here, or one inef­fi­cien­cy or one per­son resigns. And sud­den­ly, you’re into loss mak­ing ter­ri­to­ry, right.

Kevin Lawrence 10:49

So it’s the dan­ger rise to the bot­tom, is in the dan­ger of it some­times, you know, some of these best prac­tices are, they often lead to stream­lin­ing rarely, often like stream­lin­ing your oper­a­tions. Rarely do they lead to things that grow your busi­ness, or improve your com­pet­i­tive advan­tage by nature of the think­ing, if they’re gen­er­al­ly more oper­a­tional. But the chal­lenge also is that you start to get lost in chas­ing and fol­low­ing oth­er peo­ple. I’m a big fan of going and study­ing what oth­er peo­ple are learn­ing doing to learn and get ideas, right suc­cess leaves clues, and it leaves options. So it’s good to do. But if you do too much of that, again, you’re going to be fol­low­ing oth­er peo­ple. And that might not be the right thing to do.

The prob­lem with this think­ing is very clear. And don’t wor­ry quick­ly, we’re going to get to solu­tion here. We’ll fin­ish our rant, and we’ll get to some ideas that will help.

Brad Giles 11:47

Yeah, so you can’t help but get an effi­cient, but less com­pet­i­tive busi­ness, you’re get­ting short term ben­e­fits, per­haps that you’re get­ting long term loss­es. If you focus entire­ly on oper­a­tional effec­tive­ness, copy­ing what oth­er peo­ple are doing.

Kevin Lawrence 12:07

Yeah, and some­times it does pay off short term because you’ll, you’ll cre­ate some great effi­cien­cies. But then that ener­gy could have went to increas­ing your advan­tage and it went to sav­ing you, you know, two cents a unit, which is not a bad thing. And we ide­al­ly, we need to do both. And, again, best prac­tices tend to focus on this.

Brad Giles 12:25

So let’s just use an exam­ple of this in an area such as account­ing, okay, so let’s say some­thing like accounts receiv­able. So sure­ly some­one would be think­ing, and this is not my thing, it’s some­one in the audi­ence would be think­ing, Okay, we’ve got accounts receiv­able, sure­ly we must be able to iden­ti­fy best prac­tice for accounts receiv­able, and get our accounts peo­ple to fol­low that. That would be their line of think­ing. But if you fol­low that best prac­tice, it’s, it might, it might deliv­er a result. But what we’re encour­ag­ing you to do is to not think about that com­mon prac­tice, but instead, think about advan­tage enhanc­ing prac­tices. So how can you get your accounts receiv­able, who often talk with cus­tomers to improve the cus­tomer expe­ri­ence? Or how can we get your accounts receiv­able who often deal with the cash con­ver­sion cycle days? So how quick­ly we get paid to reduce the num­ber of days that we get paid? So that’s two exam­ples of advan­tage enhanc­ing prac­tices rather than com­mon practices.

Kevin Lawrence 13:50

Which is a much bet­ter way to think about this. And if we take the receiv­ables exam­ple, the thing is the prob­lem with the term best prac­tice well, again, it’s this even just take the term of com­mon prac­tices, which is bet­ter. There’s a whole bunch of com­mon prac­tices, right. But some com­pa­nies might demand EFTPS or, or do cred­it cards or not do cred­it cards, or charge a 3% extra fee for cred­it cards, or auto­mat­i­cal­ly charge cred­it cards after 30 Because there’s all these vari­ables. But if we don’t want to do a switch off our think­ing, we want peo­ple to explore these vari­ables and go through what’s going to improve our posi­tion in the mar­ket and give us more of an advan­tage. Right now it might be that we choose to soak up the 3% cost to accept cred­it cards, because we have lots of small­er trans­ac­tions, all of our trans­ac­tions are under $1,000. And it would increase the effi­cien­cy and it would pay for itself with less admin­is­tra­tive sup­port or man­u­al pro­cess­ing or I’m mak­ing this up but if you’re sell­ing you know equip­ment For $500,000 A piece, you’re not going to do that. So there’s so much con­text required to be able to make these deci­sions. And the main idea here is we want a Strate­gic Eval­u­a­tion of the prac­tices, and always have, okay, what is going to give us more of an advan­tage in the mar­ket, or at least not take away our advan­tage in the mar­ket. And that’s why advan­tage enhanc­ing prac­tices is a much bet­ter term, which we came up with about 17 min­utes ago before we start­ed record­ing this episode. But advan­tage enhanc­ing and it fits into our think­ing that I love that term.

Brad Giles 15:38

Com­mon prac­tices lead to lazi­ness. They stem from lazy think­ing, your strat­e­gy, the dif­fer­ence that you cre­ate in the mar­ket should be dri­ving down through to your every­day prac­tices, to turn them into advan­tage enhanc­ing prac­tices. Exact­ly, and so what do you do about it?

Kevin Lawrence 16:09

So let’s back­up. So peo­ple want to talk about best prac­tices, teach them a lit­tle bit of Eng­lish, right? And a bit of con­text, best prac­tices are nor­mal­ly com­mon. What we want is advan­tage enhanc­ing prac­tices, because we’re busi­ness peo­ple, and we want to have a stronger, bet­ter busi­ness. So we’re clear on that. Now, what the heck do you do about it with our eyes wide open? And putting a strate­gic fil­ter over these ideas? The first thing is, fig­ure out where do we want to improve our busi­ness? Like where’s the biggest oppor­tu­ni­ty in our busi­ness that we want to, but not nec­es­sar­i­ly the biggest prob­lem? Because chas­ing prob­lems can be I mean, if it’s a gap­ing issue that affects your cus­tomer, then sure. But what is gonna have the biggest impact on our busi­ness, it could be fix­ing a prob­lem or an oppor­tu­ni­ty. That’s the biggest thing is decide that and, and nor­mal­ly, you got to attach some num­bers to it when you’re eval­u­at­ing. It’s not how pas­sion­ate I feel about it. Like, tru­ly, what dif­fer­ence is it going to make? Is it going to make a dif­fer­ence in cus­tomer reten­tion or employ­ee reten­tion? Prof­itabil­i­ty mar­gin, who knows, but show me the mon­ey, good old Jer­ry Maguire, you know, and I love the movies, show me the mon­ey. So show me the mon­ey and fil­ter your ideas to see where you’re gonna have the biggest impact. I always remem­ber the sto­ry about unin­sured before about an air­plane com­pa­ny. I test drove, you know, test dri­ve test flew one of these air­port air­planes. It’s called a seri­ous air­plane. I know anoth­er coach that we know, Ethan, Ethan down in Col­orado, we were talk­ing and I talked about how I took fly­ing lessons did­n’t like it. He goes, You did­n’t fly the right plane. So Ethan Mar­tin, thank you for that. Ethan set me up to do a test flight in a seri­ous air­craft because I love Motor Sports and speed. It was a great expe­ri­ence, I decid­ed not to do it. In the end, it was­n’t the right time for me to get my pilot’s license. But the thing I learned how I stud­ied the air­craft, this is a seri­ous com­pet­i­tive advan­tage is that if all goes wrong, you pull a han­dle and you got a para­chute on the air­plane. And it sets the air­plane on the ground, which is cool. So as seri­ous what they did, is that they start­ed opti­miz­ing pro­duc­tion with start­ing with the prob­lems that were $6,000 or more per plane on a mil­lion dol­lar plane. They start­ed at 6000 Then went down to 50 505,040 500. And they start­ed work­ing on the from the biggest down to the small and their pro­duc­tion went through the roof in the same space. They did amaz­ing things. So long way to say is fig­ure out the biggest oppor­tu­ni­ty, apply some math to it. So it’s not just a pas­sion debate. It’s a busi­ness debate.

Brad Giles 18:47

The exam­ple that we pro­vid­ed before about recounts receiv­able around the prac­tices there. We were say­ing improve the cash con­ver­sion cycle days. Yes. So how can we look at our and we’re pick­ing accounts just because it’s prob­a­bly the one that most peo­ple would think should be the same as every­one else? How can we improve our cus­tomer NPS and Net Pro­mot­er Score? How can we improve our rela­tion­ships with our cus­tomers through our accounts receiv­able process? How can we improve the col­lec­tion days?

Kevin Lawrence 19:21

And again, there’s lots of ideas and it depends so much on how your busi­ness oper­ate. But you can gath­er a lot of these ideas. So fig­ure out what you want, whether it’s man­u­fac­tur­ing costs, accounts receiv­able, and then to then go scour for what oth­er peo­ple would call best prac­tices. We just know they’re not best we just know their ideas and prac­tices com­mon prac­tice go scour to see options, it’s ideation or it’s my favourites called r&d. It’s called rip off and dupli­cate. Go learn the best ideas that peo­ple have already fig­ured out, go learn from them, talk from them, study them, what­ev­er it is. Come back with all of these options. It’s like, yeah, it’s ideation almost like decid­ing all the places your fam­i­ly could take vaca­tion. Here’s a whole bunch of options. But again, let’s not apply the word best because we don’t have con­text yet.

Brad Giles 20:13

So in order to answer the ques­tion, what do we do about it? Okay, we under­stand com­mon prac­tices is mis­la­beled as best prac­tices. What we want is advan­tage enhanc­ing prac­tices. So what do we do about it, we’ve got a few steps that you can fol­low here. So the first one is, the side the area of your busi­ness where the biggest oppor­tu­ni­ty is, like, start with the begin­ning. And think of the prac­tices that we have? Where could we focus with the lens of advan­tage enhanc­ing? How can we improve that?

Kevin Lawrence 20:53

So we got that, and then we go and scour the mar­ket to get a whole bunch of ideas to choose. And then the third thing is fil­ter­ing them. fil­ter them based on what we know is think­ing of our core cus­tomer, will we take a stand for deliv­er­ing to our cus­tomer, think about our employ­ees, what we stand for cre­at­ing as an oppor­tu­ni­ty for employ­ees. And of those, which ones will help to enhance or at least not detract most from our com­pet­i­tive advan­tage. And maybe it’s none of them, maybe you com­bine a few but fil­ter them with that lens of the cus­tomer, the employ­ee, or our com­pet­i­tive advan­tage in our in our ecosys­tem. And then from there, you can come up with a pret­ty good idea of this would be the best way for us to enhance this.

Brad Giles 21:43

And fol­low through ensure that we’re exe­cut­ing the whole thing, because one of the prob­lems with try­ing to imple­ment new prac­tices is that they actu­al­ly just don’t stick. So make sure that if it is dri­ven by your strat­e­gy that these things are going to stick around. And one of the ways that we can do that is some­thing called after action reviews. There’s a great HBR arti­cle about after action reviews that you may want to, to read. But yeah, look at what’s work­ing, what isn’t pro­vide a review with the team or under­take a review with the team so that you can iden­ti­fy how to con­tin­ue to improve, and then cel­e­brate and move on.

Kevin Lawrence 22:34

Move on to the next thing that you want to look at at your advan­tage enhanc­ing your piece of your busi­ness. What’s the next oppor­tu­ni­ty or prob­lem? How do you get ideas and fil­ter some­body basi­cal­ly worse, actu­al­ly, six very sim­ple steps, fig­ure out where you want to focus and improve, scour the mar­ket and get lots of ideas, fil­ter them through what’s going to give you the biggest advan­tage enhance­ment, relent­less­ly exe­cute it, get it done. And I also have a note here, make sure that you have a smart goal around what the project will cre­ate when it’s done. A lot of times peo­ple get 90% done, but don’t get the val­ue out of imple­ment­ing these sys­tems, it should cre­ate some mea­sur­able improve­ment, fol­low through to make sure it sticks and sus­tains and then final­ly the end review how you did. Let’s get a lit­tle smarter for next time. Let’s find a way to cel­e­brate and you know and build some some some feel­ing of good­will and enhanc­ing the cul­ture from what we’ve done. And then go do it again. Again. So the main dis­tinc­tion here is be care­ful of the trap of this term called Best Prac­tices. gath­er lots of ideas that would improve the biggest thing, but then fig­ure out what’s best for you. And that takes work that takes think­ing and dis­ci­pline ver­sus just grab­bing what some­body else did and think­ing it’s going to be the best thing for you.

Brad Giles 23:50

Awe­some. Okay, so very quick­ly remem­ber that best prac­tices is a prob­lem. We’ve made that point quite strong­ly today, instead of hav­ing best prac­tices or what peo­ple would call that we’ll call them com­mon prac­tices. And instead you want to think or frame it as advan­tage enhanc­ing prac­tices. Good chat today, Kevin, I think you’ve done the sum­ma­ry. If you would like to find Kevin you can find him at Lawrence and co​.com. If you’d like to see the video ver­sion of this, you can go to YouTube and just search the growth whis­pers Kev­in’s got a great newslet­ter that comes out every week that you may want to check out and I’ve got a good newslet­ter that comes out every week as well. That newslet­ter that you may want to check out where we’re just shar­ing ideas on how how to build great com­pa­nies. And so I hope that you’ve enjoyed the episode. I look for­ward to chat­ting to you again next week.