Tuesday, April 27, 2010

The Tyranny of Best Practice

I'm at Convergence this week. This is Microsoft's Dynamics conference for all things CRM, SL, AX, NAV and GP. To get news and info released, check out my twitter feed (http://www.twitter.com/leontribe ).

I am writing this blog because of a comment made at least a couple of times during the opening keynote. Specifically, that Dynamics CRM is designed to allow for flexible business processes. This is great and, as it should be. The last thing we need Dynamics CRM to do is help us achieve best practice.

I understand this is a curious statement for me to make as surely we want to run our companies as well as possible; If someone has analysed an industry, say, engine manufacture, and has determined the best way to do it, why would we not adopt the process?

The answer is in the assumptions behind 'best practice'. If we review a specific process within an industry, the concept of ‘best practice’ assumes that all companies are trying to achieve exactly the same result. The thing is one of the key differentiators for a business is their processes and the products and services that result from those processes.

If all companies adopted precisely the same technique to make an engine, all engines would look the same and the manufacturers would need to find another source of competitive advantage. The obvious alternative is competing on price.

There is nothing more dangerous than players in an industry competing on price. Margins shrink, internal spending is reduced and ultimately everyone, including the consumer loses.

I will reiterate a statement I made earlier as it key to my thinking on this issue. One of the best places to derive a sustainable, competitive advantage for a company is its processes and the products and services that result from them. This is true whether you are making engines, selling encyclopaedias or implementing software.

Therefore, if you have a software package that forces your business to follow its way of doing things (best practice), you will be doing things in exactly the same way as anyone else with that software package and you have removed any competitive advantage from the business process that software controls.

CRM systems, as evidenced by Microsoft’s xRM marketing campaign, are becoming the key system for managing many of a business’ processes. Therefore, while it is virtuous that your CRM system assist you in managing the quality of the processes your business follows, it is a mortal sin for that CRM system to dictate to the business what that process should be.

If you are considering implementing a CRM system to manage areas of your business, ensure it is one that allows you to determine how the process works and allows for flexibility in your business processes (as nothing is set in stone in business) and not one that forces you to adopt the tyranny of best practice.


Carlene said...

That's true. Even though CRM provides all the processes on how to have a successful owner-client relationship, the main purpose should still be about your products core value. Yes, CRM teaches us how to be firm and confident on our decisions, but it disregards the personal connection between you and the clients. We should be aware on that matter.

Carlene Schnitzer

Leon Tribe said...

Hi Carlene,

It should always be about the customer, not the product. It can be argued a product's value is different to different people. I do agree though that it is important to know the specific value a specific customers gains from your product or service.

As for disregarding the personal connection, I completely disagree. CRM systems certainly provide a framework to work within but, again, the customer must come first. A CRM is there to stop you neglecting customers but should not be there to force customers through 12 steps when they only need 2.