Wednesday, July 28, 2010

Signature Processes

The big discussion of last week's Strategic Management class was around inability of other companies to replicate the successes of their competitors. On the surface, it is a piece of cake, but still - why is there only one Wal-Mart and why has Continental Lite failed trying to repeat the success of Southwest Airlines? All information is publicly available and we know exactly how each one of those praiseworthy enterprises have built their successes, yet nobody have been able to do that stunt again.

Glow: How You Can Radiate Energy, Innovation, and SuccessThe answer might be in the research done by Professor Lynda Gratton at London School of Business. In her recent book Glow she talks about signature processes as opposed to best practices. The Wikipedia definition of a best practice says:
A best practice is a technique, method, process, activity, incentive, or reward that is believed to be more effective at delivering a particular outcome than any other technique, method, process, etc. when applied to a particular condition or circumstance.
 Elaborating on this definition, it is easy to see that the driving words are "technique", "process" or "method" - those are action words. Such are easy to document, map, describe, and therefore - replicate. When you see your neighbor mowing the lawn at 10 in the evening to avoid the excruciating Madrid heat during the day, you might realize that you are being a fool doing that at 3 in the afternoon (which guarantees you skin cancer, a heat stroke and disdainful looks of passers-by) and copy your neighbor's way of labor organization, which in this particular case will be considered best practice.

The difference of a signature process (practice) is that it is awfully easy to understand, but virtually impossible to replicate. Consider a couple of examples provided by Gratton:

All those processes are public, everybody knows about them, still nobody has been successful in replicating those. That constitutes the basis for competitive advantage, and establishes the ground for future success, just because you can be sure that it is among those few things that the competitors will not be able "steal" from you.

The interesting commonality of those signature processes is that all of them reside in the HR-related areas. The moral of the story? People/change/culture innovations or practices are critical to your business profitability in the long run. Technology (no matter how complex it may be) or patents will not protect you for long - anything can be back-engineered or reconstructed and slightly modified and you are facing fierce competition in no time. Thus, to avoid the red oceans of competition, make sure you find your own value-adding people processes that will leverage your business capabilities and distinguish you in the market.

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