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.

SUBSCRIBE TO THE GROWTH WHISPERERS:

    

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.