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Best Practices

Overall:

  • They may well not be perfect, and even include much waste, but they demonstrate that better performance levels can and are being achieved, and therefore should attract the question ‘why?’

  • They let you quantify performance gaps and demonstrate there are better ways of doing things

 

Internal BPs:

  • Internal BPs provide worthy targets, at least to start with – if you were a competitive athlete, you’d always be striving to beat your personal best – your ‘PB’ – the same applies to organisations
  • To establish internal BPs, find the best performances achieved by your own team, or other in-house teams working on similar work, over the last year 
  • Question why these internal BPs are not achieved all the time
  • At Heinz, you could always find one food processing line that produced 600 bottles of ketchup a minute while an identical line produced only 400 – was the difference down to process variability, management and method, or machinery?
  • At British Steel, the CEO ‘Black Bob’ Scholey once asked me to take a detailed look at how four ‘special steel’ plants in the UK differed in their operations, and whether any one could benefit from copying another –  a relatively straightforward exercise, no complex models, yet millions of pounds worth of benefits resulted
  • In the private sector, details of internal best practices that give a company its competitive edge are obviously kept confidential – they’re not ‘in the public domain’
  • In the public sector, however, a national BP database should be available to all units – hospitals, schools, primary care trusts, fire services etc – underperformers could then copy ‘beacon’ units, or have good reasons not to
  • For instance, if it became known that one local council mended five times more pot holes in a week than all others, and employed no more road-workers, council tax payers would surely want some answers
  • Such simple comparisons, open to the public, would exert powerful pressure on service units to continually improve themselves
  • No such pressure exists at present

 

External BPs – Non-competitors:

  • To find best practices outside, many organisations compare their modus operandi against national standards – the UK uses the BEM (Business Excellence Model), the USA the Baldrige Award – see Appendix E
  • Others compare themselves against non-competing best performers – companies who are known leaders in specific fields – for instance:
    • Ford use Dell, not Toyota, to benchmark their order cycle times
    • The US Marine Corps use Wal-Mart to review their supply chain activities
  • The Japanese, when starting to rebuild their economy in the 1950s, wanted to learn from the most successful company they could find – they chose IBM where Thomas Watson Senior, the CEO at the time, had already installed employment practices that others considered revolutionary 
  • Following the teachings of Deming et alia plus copying the West enabled Japan to grow rapidly, at least until the late 80s when they couldn’t play catch-up anymore – they’d become world leaders themselves, in design, technology and manufacturing, and others had started to copy them

 

External BPs – Competitors:

  • The best way to convince any ‘doubting Thomases’ amongst your team is to let them see ‘impossible’ targets being achieved enthusiastically by others in your sector – when they realise this could put them out of a job, attitudes soon change
  • But there are problems in getting the detail you may need

 

 

                                        ‘Best practice’ drawbacks

 

  • Chasing the same BPs encourages all to do the same thing:
    • In the public sector, this could be a good thing
    • In the private sector, not so – differentiation is the key 

   

  • If you want to get ahead, or leapfrog to the front, copying others is not enough – you must develop new stuff as well – ‘tail-gating’ condemns you to follow, at best catch up, but never overtake

 

  • Any private sector ‘best practice’ information in the public domain will be suspect – winning companies do not reveal their most useful secrets

 

  • There are no two organisations alike – each employs different people, managers, procedures, systems, layouts, equipment, plant, customers and suppliers – their BPs are idiosynchratic to them, having evolved within their specific working environment – they may also include considerable faults or waste – thus, they may not be suited to you

 

 

  • At Lucas, every business unit had to compare its performance with its best international competitor, identify any shortcomings and detail how it intended to close any performance gaps in the shortest possible time – plans had to be credible and affordable – those units that couldn’t hack it were earmarked for disposal
  • In the 70s, when the US motor industry found the Japanese were landing cars there at $2,000 each less than Detroit’s production costs, annual targets to reduce unit costs by small percentages, previously groaned about, had to be scrapped – and employees accepted this
  • A pity they didn’t continue to keep close tabs on their competition – at the end of the noughties, GM and Chrysler lost out to Japanese carmakers on both productivity and design fronts and had to rely on government handouts to keep going – this may have been welcome for their employees but it deprived more worthy competitors of extra sales and profits to develop even better products, and customers of better choice and VFM

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