A very common management style of today is “Management by Objectives”. Management strives to set SMART targets to each unit. A unit could be Purchasing, R&D, Production, Sales, Finance etc. The way of reaching these targets is up to each unit – a number of parallel solutions and decisions is a fact.
On the whole this is not optimal. It results in higher costs having parallel resources working on unit specific solutions, instead of having one company team working on one cross-functional solution. As a result, the best possible solution was not used throughout the whole business. Moreover, there are few or no incitements for a unit to cooperate with another unit in order to share best solutions. It is more a fact that existing targets and their related key performance indicators hinders cross-functional cooperation between units.
Theoretical Example: Who would choose to miss out the local sales bonus in favor of helping out global key account initiatives? Even though the business potential for the company could be a lot higher for a specific global initiative?
Management by objectives generates silos. There is little benefit for a silo to cooperate with another silo.
To counteract the negative effects almost every company seeks different paths in order to solve this problem. Best Practice is a commonly used tool; that is making the co-workers re-use existing good solutions from other units in the company.
The companies can make great savings if they manage to create and implement these common solutions. There is great potential for improvement if the most efficient method in production or service can be identified and be made available to everyone within the organization. This has been a big focus for many companies for a long time.
The difficulties lie not in finding a good, or good enough, choice of product or process, but in getting all the co-workers to want to use the suggested standards. To get acceptance. Sometimes they have their own solutions that take care of the same situation, process or product. This fact normally makes the implementation incredibly more difficult and Not Invented Here is a very expensive luxury. Besides, local understanding versus global best practice is often lacking, which leads to a quick dismissal as they are judged too expensive, complicated, heavy, and of low value to the customers.
To be fair, it has been tried again and again without any major success. It is not particularly strange that the exchange of ideas, and the readiness to utilize other people’s solutions, work better if there is a good and respectful relationship between parties. If the relationship between individuals or teams is similar to the one you have between good colleagues or friends, it is natural to both give and receive support.
When companies create cross-functional forums where protectionism, friction, conflict and criticism are replaced by respectful work, sensitivity, and a search for company common solutions, it is natural for everyone to realize that it is very advantageous to borrow good solutions from each other.
Best Practice is not a technical question, a gigantic database or process descriptions, but a question of approach, interaction, openness, and trust. It is a company culture where the co-workers see the chance of learning from others as a support to their own work in driving their development process.
How could you as leader act in order to succeed with Best Practice?