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.