Tag Archives: Jim Collins

The Sad Truth About Best Practices

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… is that most of the time, they won’t work for you or me. They worked for somebody, some time, in some situation, in the past. Sure, the idea of best practices is attractive. Supposedly you or I can follow along, obediently, and succeed using so-called best practices. Too bad it doesn’t work.

For example, Jim Collins’ blockbuster business book Good to Great, published in 2001, featured 11 supposedly great companies. All of them did extraordinarily well on the stock market for 10-20 years. But by 2008, when Steven Levitt posted Good to Great to Below Average on Freakonomics, two of them had died. He wrote:

Nine of the eleven companies remain more or less intact. Of these, Nucor is the only one that has dramatically outperformed the stock market since the book came out. Abbott Labs and Wells Fargo have done okay. Overall, a portfolio of the “good to great” companies looks like it would have underperformed the S&P 500.

I don’t mean to criticize Jim Collins, his book, or his methodology. I do mean to question the whole idea of so-called best practices. There are so many built-in problems. What works in one case is hard to translate to the next case. It’s different times, places, people, resources, problems, and so forth.

The best use of the so-called best practices is as generator of new practices, new ideas, new possibilities for you, in your business, that you might be able to take in, digest, and adopt to your situation. It’s a lot like business cases and business stories, not intended as recipes to be followed, but rather as examples of what other people did.

However, you have to be careful. Don’t ever just blindly follow. You always think about it, consider the options, how it might be different in your case, and then, if it still sounds good, try it. Carefully.

If I ever give you any advice, I want you to please never take it without thinking first, analyzing, and deciding for yourself whether or not, and how, and to what extent what I say fits your situation.

Is Good Management Luck, Science, or Art?

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It’s been a while now since somebody pointed out to me that most of the companies featured in Jim Collins’ 2001 book Good to Great have since fallen back down from Great to mediocre, struggling, or failed. His greats include Fannie Mae, a now-famous disaster; Gillette, which no longer exists as an independent company; Circuit City, which failed a couple of years ago; … and some others that are just not great anymore.

So was Collins wrong? No, it’s a good book, well researched, full of wisdom. But it can’t be taken literally. It’s stories, not fact. It’s about some specific companies, in their specific situations. You can’t just translate some other situation into your own, without digesting.

I’ve been thinking about this since I read Dan McCarthy’s Great Leadership: Management Best Practices or Just an Illusion? post on this topic from a week or so ago. He lists several successful and widely respected management books that cite examples that didn’t last. Not just Jim Collins’ book, but what he calls a genre, business success studies, including In Search of Excellence, Good to Great mentioned above, Breakthrough Company, What Really Works, Stall Points, and others. He cites a study by Deloitte called A Random Search for Excellence, in which researchers report that companies’ sustained high performance may simply be luck.

I don’t think you can take management out of context and make generalizations easily. I agree with McCarthy that these studies are valuable as stories, almost like fables, that give you useful ideas. Study examples, fit them into a framework, and draw conclusions. These stories are valuable as food for thought, but dangerous when they become crystallized and inflexible. One company’s great management is another company’s fatal flaw. Management is more art than science.