Saturday, October 21, 2020

Why "Industry Standard" is a Dumb (Hamburger Management) Idea

Bob Sutton's extended rant against companies that use the excuse that their bad behavior is "standard in the industry" is well worth reading in full: Why "Industry Standard" is a Dumb Excuse. As he writes:
. . . mindless imitation of what has always been done in an industry or a company is one of the surest paths to destruction. And even great companies . . . often do many stupid things. Think of the most successful people you know—many do unwise and destructive things, and they succeed despite themselves.

Breaking out of a dumb industry standard is how newcomers—or reformed old-timers—come to dominate an industry.
Following "industry standards," or so-called industry best practice, is an essential part of Hamburger Management. It makes decisions quick and easy (both HM obsessions), because there's no need for thinking; you simply do what everyone else does. It also offers a degree of imagined safety from personal accountability. If things go wrong, you shrug and point out that all you did was what everyone else does, so it's not your fault.

Of course, companies still look for ways to find some competitive advantage. If everyone is doing the "simple" thing, there's not much leeway there. So they go for quicker and cheaper. "Hey, never mind the quality, feel the speed!" Imagine using this excuse in other areas of life. Wouldn't that lead to the ultimate "Wham! Bam! Thank you, ma'am!" approach?

"We're the lowest cost producer." So what, if the quality and value are rubbish? Being cheap isn't much of way to recommend yourself. Like most of the mantras of Hamburger management, it's also totally inward looking. It really means: "We can make the same kind of stuff as everyone else, but because we do it more cheaply, it brings us much more profit." Never mind the customer, look at our bottom-line profit.

As Bob Sutton write of his experience with HP:
The people at HP were very polite and never argued with me, but like at AOL, are just trapped in a bad system and are apparently trained to say dumb things. It also smells like one of those cases where, to hit short-term numbers, a company puts in place a system that can cause long-term damage to customer relationships—like AOL.
Good business is not about being quick, simple, or cheap. It's about being better at what you do than anyone else. And that includes service, quality, and innovation too.

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Why people do "Industry Standard":

If you're a major player already, you're looking for gains a few small area's, and holding still or small growth in others.

So how do you not lose grounds to your competitors? You do EXACTLY what they do in area's that aren't your specialty. You will match their moves, and if you *do it at a higher profit* you will win.

Big companies ALWAYS go for lower costs OR are a botique, looking for higher quality and higher prices to support that quality (in area's that aren't their concentration).

This is a business strategy. It sucks for the people it grinds up, but will persevere until forced to changed by the market (labor or that of the good they produce) or an new innovator in the field (who they then must copy).

Thinking Strategically by Avinash Dixit goes more into this "Follow the leader" scheme:

Thanks, Michael.

I guess I understand why managers do it (Your explanation is excellent and will help people understand the process very easily), but I still think it's a dumb idea in the long run.

And it will continue until people do something to make a change. At the moment, companies sidle around copying each other like two tom cats getting ready for a fight, each one trying to look stronger than the other, but matching one another move for move. It wastes huge amounts of time and resources and, as you say, it grinds people up and makes their working life suck.

I'm sure there has to be a better way.

Keep reading, my friend.
I'm not too comfortable with the apparent blending of "industry standard" and "best practice".

Industry Standard I understand to be "lowest common denominator"

"Best Practice" I understand to be a usually good slow idea from acadaemia that got dilluted by capitalist principles, polished, then sold.
Good point, J. I think you are pointing to something important. Phrases like "industry standard' or "best practice" are too vague to be very useful. My "best practice" could be your "industry standard."

What both phrases have in common is imitation. That's what I think is the underlying reason why neither is such a good idea. Imitation may be the sincerest form of flattery, but it's still playing follow the leader.

What makes more sense is to see what others have done, think about it, look to your own circumstances, then come to an answer that combines the best lessons of experience with innovation and independence of mind. That takes sime, which is what Slow Leadership recognizes, but it is the only authentic way to behave.

Keep reading, my friend.
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