The APQC Blog

When Do You Know a Practice Is Truly ‘Best’?

Business practitioners often use the term “best practices” when discussing improvement initiatives. That term represents practices that, when adopted, will have a positive impact on business performance. But there is more to best practices. To move past the label, business leaders must answer the question, "How do I know this practice is truly ‘best’?” Benchmarking can help answer that question.

When it comes to best practices, business leaders should momentarily become Missourians and be guided by a “show me” mindset. That is to say, to determine which practice merits the label “best”, objective, fact-based assessment is needed. Benchmarking can provide leaders with a means to objectively identify practices directly tied to superior performance and breakthrough improvement. Naturally, decision makers will have greater confidence in adopting practices that have been validated by facts instead of opinion.

Benchmarking brings visibility to best practices by uncovering and verifying the link between performance and practices employed by a variety of organizations. The example below demonstrates benchmarking results. They reveal a strong link between a practice (employee training) and better performance (lower cost per unit) through correlation analysis.

Note: Figure data is for illustration purposes only. Correlation does not guarantee causation.

Benchmarking helps eliminate the guess work regarding which practices are “best”. By validating practices linked to better performance, decision makers can forego expensive and time-consuming pilots to determine which practice is worth adopting. Choosing the right practice from the start helps business leaders increase quick wins for an improvement initiative and build momentum and buy-in for future improvement efforts.

Benchmarking distinguishes between cutting edge practices and those that drive better performance. Cutting-edge practices may or may not be tied to improved performance. Many leaders are lured into adopting new, leading-edge practices without a clear picture of their connection to improved performance. Innovative practices have appeal and seem like the right way to go, but that thinking will fade if improved results don’t materialize in a timely manner.

Finally, there is no practice that is best for all organizations or in every situation. In addition, no practice remains “best” forever, as business practitioners constantly find better ways of doing things. Benchmarking helps bring context to a set of conditions (e.g., demographic, environmental, cultural) that are best for a given practice. To properly assess that context, factors that should be taken into account include:

  •    people,
  •    process,
  •    technology and partners,
  •    leadership,
  •    organizational structure and culture, and
  •    market.

Benchmarking represents a proven way to reduce uncertainty related to choosing management practices, and many benefits can result from this process. Perhaps the most important benefit to business leaders: Benchmarking helps reduce the “Cost of Not Knowing”.

What examples can you share regarding how your organization selects management practices? APQC appreciates your input.