A
couple weeks ago, I raved about Better: A
Surgeon’s Notes on Performance, in a post I wrote over at The Working Life on Masters of the Obvious. Author and surgeon Atul Gawande provides a
series of compelling essays about how, through one tiny small step at a time,
by gathering, studying, and using evidence, and by focusing on small seemingly unimportant
details, mortality and complication rates can decline steadily in everything
from battlefield injuries, to children suffering from cystic fibrosis, to
halting the spread of polio. It is a
compelling read, and has many implications for what it takes to be a great manager,
not just what it takes to keep improving the quality of medical care throughout
the world. I was especially struck how
the best doctors and hospitals have what Jeff Pfeffer and I have called “the attitude
of wisdom,” they have courage to keep acting on the best knowledge that they
have right now and the humility to doubt what they know, so that when new
information comes along, they can change their beliefs about what works –and
their behavior too.
I
was also taken with Gawande’s suggestion that, if a hospital or medical unit
wants to improve its performance, one of the most effective ways is to study “positive
deviants,” those statistical outliers that are doing far better than the
rest. As I read his stories, especially
about the best versus the average hospitals that treat cystic fibrosis, I was taken with the approach. At the same
time, I realized that it is remarkably similar to what many companies do when
they benchmark: they find the very best performers in their industry – or another
industry – and then try to imitate everything they do as closely as
possible. This method can be useful, but
at the same time, as our work on
evidence-based management shows, it is a risky method if done in a casual
way, without thinking about what you are imitating and why.
If
you are going to try to learn from top performers, there are at least five
pitfalls you need to keep in mind:
1. What seem like characteristics
of top performers may actually not distinguish them at all from poor performers –Don’t just look at
winners, look at winners and losers. This was the main flaw with Peters and
Waterman’s huge best-seller In
Search of Excellence. They only looked at excellent companies, so it
was impossible to tell if what the winners were doing was any different from the
losers!
2. Watch the correlation is not causation
problem. Everyone learns this in statistics, but a lot of leaders forget it
when they benchmark. Just because something
is associated with performance, doesn’t mean it causes performance. For an enduring example that seems to persist
despite our complaints in the Harvard
Business Review (as well as directly to Bain partners), go to www.bain.com. The very first thing you see is chart the says “Our Client’s Outperform
the Market 4 to 1.” I remain amazed that
the smart people at Bain have had this on their website for so many years. Do they really mean to imply that using Bain
has a huge positive wallop? They have
some bold sounding and meaningless text beneath the chart (e.g., “Companies
that outperform the market like to work with us; we are as passionate about their
results as they are.”). The marketing people seem smart enough to duck
the question of if using Bain really drives these results, because they are
smart enough to know there are so many alternative explanations (e.g., perhaps firm that make more money can better afford an expensive management consultant). But they aren’t wise enough to take the chart down — I suspect it is one of those sacred cows, something that many people realize is dumb, but are afraid to change. I also want to emphasize that I am a big fan of Bain, in part,
because I think they are among the most evidence-based of the major consulting
firms, but again, I urge them to take this down – it makes them look bad.
3. When you compare winners
and losers, beware of “untested” differences. Just
because every winner you look at does something and every loser you look at doesn’t
do it, isn’t enough – it may just be the result of a bad sample. This is the one of the main problems with Jim
Collins’ best-seller Good
to Great. I find this a compelling read and would like
to think, for example, that firms with level 5 leaders, those who are unselfish and
relentlessly driven to improve firm performance, will trump firms with
selfish and less driven leaders. But note that Collins reaches this conclusion
by comparing his 11 “great” firms to an equally small matched sample of firms
that didn’t make the leap. He fails to
point out that no attempt was made to find firms that also had level 5 leaders, but
failed to make the leap –- and he could have left out thousands of firms from this tiny sample that had level 5 leaders, but didn’t make the leap. Again, I like a lot of things
about this book, but I do wish that Collins wouldn’t hold it up as up as such a
rigorous study, as while I think it has helped a lot companies, it is not a model of a rigorous research, and could only be published in a peer reviewed journal if it made careful links to the prior research that supports his conclusions (something the book doesn’t do) and if he acknowledged the numerous methodological flaws. See The Halo
Effect for a more damning attack. I am not as negative about Good
to Great, as I think it has helped many managers despite the excessive
claims Collins makes about the research. But the well-crafted critique in The Halo Effect is
worth reading and, frankly, I wish Collins would acknowledge some of these problems. It would still be a great book — everything has flaws and few books are as compelling as Good to Great. Also, admitting the flaws strikes me as something a level 5 leader would do!
4. What is good for them might be bad for
you Consider the case of a quality movement. If General Motors had not
massively improved the quality of its cars ands trucks (despite its other persisting
problems), I believe that the company would simply no longer be alive
today. Yes, Toyota continues to be a very tough
competitor, and GM struggles, but their quality has improved massively in the
past decade, and without it, the company would be in far worse shape – if not
out of business. BUT that doesn’t mean
that every company needs a quality movement. Kodak, for example, had a fairly effective quality effort some years
back, but the problem was that it was focused on their soon-to-be obsolete chemical-based film business –so it helped them to be more efficient at doing the wrong.
5. Winners may succeed
despite rather because of some practices. This brings me to my favorite example. It
is very well-documented that Herb Kelleher, who was CEO of Southwest Airlines
during an unprecedented run of growth and profitability in the industry, smoked
a lot of cigarettes and (according to multiple reports, including his own)
drank about a quart of Wild Turkey whiskey per day during this period. If mindless imitation of successful companies
is the key to success, this means that you need to get your CEO to start
smoking and drinking a lot – or to keep it up if he or she is already doing it.
Sounds absurd, doesn’t it? But it is no different than the arguments that
armies of consultants are making right now about GE, Google, and P&G – you should
do it because they do it, and are successful.
In
closing, I want to emphasize that you can learn a lot from “positive deviants.” But you need to stop and think carefully about why they succeed and what work for your organization. And, consistent with the argument I make
again and again here and elsewhere — following from design thinking — if you are going to do something new, try a small some cheap
experiments if you possibly can: It is a lot cheaper than rolling out a big
program that turns out to be a bad idea. That is also why, although some mergers are a good idea, it is one of
the organizational changes that I see as most risky because it so difficult to reverse once it is started. Also, as I’ve written
here before, mergers have high failure rates, despite the success stories
you may hear from your local investment banker.
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