Bootstrapping Your Way to Best-In-Class

Benchmarking and best practices are searches for answers to the questions of “How are we doing?” and “What are our opportunities to improve?” To a far lesser extent, they provide an answer to the question of “If we act, will we improve?” As we shall see, the last question is at the heart of the effectiveness of both inquiries.

Benchmarking 

Benchmarking is the process of comparing your company’s practices to the practices of another company you admire. The idea is to get a handle on how to improve. At first glance, this can seem a worthwhile pursuit; however, for any company with a strong culture, it is a largely irrelevant comparison. That’s because the standards within a strong culture are always internal. In the vision statements that we have helped to create, the company’s leaders go to great lengths to describe a unique way of competing at a very high level that results in achievement.

Perhaps that is why one of the most common leader reactions to benchmarking results is to dismiss or explain them away. Obviously, this reaction does nothing to move a company forward. This is not a blanket statement against benchmarking, but a call to be discriminating in its use. While it may be delightful to discover that your company has surpassed or, at least, is staying up with a key competitor, an understanding of why the numbers are what they are may not be available. Those “whys” are typically cultural rather than strategic and are what makes it difficult to fully understand the benchmark data.

Best Practices

It is in the search for answers to the question of “What are our opportunities to improve?” that best practices come into play. However, what is considered a best practice in one company may not work at all in another company. This was certainly the case in the early 1990’s with Outback Steakhouse and its unique practice of requiring a restaurant manager to buy a stake in his or her restaurant. Many companies tried the program only to abandon it after making a substantial investment in the procedures and a commitment to their managers that could not be kept.

The difficulty of wholesale copying of best practices has two sources: skill and culture. A best practice occurs within a unique culture and is invariably tied to it. Culture determines whether a practice will be accepted, let alone be embraced. Skills drive any best practice and a company that seeks to adopt a best practice needs to be realistic about the skills and resources required to implement it. It is not that best practices should not be pursued but that they should be adopted with an informed degree of caution. This is particularly true of culture-bound practices such as many human resource or service procedures.

Bootstrapping

Bootstrapping is the tool of the entrepreneur as it has its roots in an ageless truth: Necessity is the mother of invention. Most startups (and many turnarounds) have very limited financial and talent resources. Often, they cannot afford access to benchmarking studies, nor do they have the time required to do a proper best practices analysis. We invented Bright Spot Analysis™ for just this situation.

Bright Spots

In more than 25 years of looking at data across many industries, one thing has become clear: No matter how bad the situation, someone somewhere in the company is getting it right. A company that has the worst reputation in its industry for customer service will inevitably have a store or handful of people that get it right – that consistently take care of customers. These are the company’s Bright Spots. These bright spots are a rich source of answers to “What are our opportunities to improve?” and a low cost answer to “If we act, will we improve?”

Bright Spot Analysis represents a way to move forward at a low cost and a low risk of failure. In any company with more than a handful of business units or employees, there are positive outliers that set the standard for excellence. It is these Bright Spots that present the opportunity for internal benchmarking and internal best practices analysis.

For example, one of the company’s with whom we have worked came out of bankruptcy in bad shape in terms of its reputation with customers. Nonetheless, one of the company’s stores consistently achieved customer service ratings that were 2.6 times higher than the all-store average. This store was one of the company’s bright spots. The question then became this: “What are the employees doing in this store that is not happening in the other stores? In effect, the company had found a benchmark and went in search of a best practice. As it turned out, the difference was largely attributable to how the general manager spent his time – getting to know personally know customers – versus primarily doing the administrative task that the company’s headquarters kept asking him to do. His practice amounted to a best practice that was shared and copied throughout the company. The result was a steady rise in ratings of customer satisfaction and change at a very low cost and with very little resistance.