Steal This Strategy
Inc. case study
A 25-employee company, fittingly called Best Practices, routinely plunders big-company ideas and prunes them for its own use. Its methods for doing so are yours for the taking, too
Ideas. Strategies. Statistics. Given the explosion in business information that's taken place over the past decade, you should have no trouble finding them. But you don't need us to tell you that the abundance of sources of business ideas hasn't made finding practical ideas any easier. And what's the point of combing through business books, magazines, case studies -- this very article -- if you can't implement your findings at your own company? But a few folks have mastered the fine art of filtering useful wisdom out of oceans of hype. Led by CEO Chris Bogan, the staff at the appropriately labeled Best Practices LLC (BP), a benchmarking group-cum-consultancy in Chapel Hill, N.C., has been spotting -- and swiping -- fruitful best practices since 1992. BP efficiently implements and monitors the results of the new ideas, too. How the company does all that is a practical strategy in itself.
Scene of the Crime
Chris Bogan had spent one summer day in a Chicago suburb interviewing the top managers of a major pharmaceutical company. Most of the sessions had taken 90 minutes. Then, in the late afternoon, he sat down with a regional sales manager. That interview lasted twice as long as the others. "I remember thinking, 'Wow. This fellow is a great manager. If he were playing baseball, he'd be a .600 hitter," Bogan says.
What mesmerized Bogan was the manager's technique for launching a new product. The manager's sales squad covered a small midwestern region, yet it had consistently outsold teams in much bigger urban markets. Though the comparative performance of his team was singularly impressive, the manager's success in product introduction dazzled Bogan. This was the pharmaceutical industry, after all, where swarms of sales reps compete for doctors' attention. Yet the manager had found a way to jump-start new-product sales. By using market research that recorded daily drug sales, he tracked where in his district the first few prescriptions for any new drug had been written. For each prescription, he made a phone call to the rep who had made the sale to ask what had sold the doctor on the drug. Then the manager sent out a global voice-mail message to all the other district sales reps to share with them the successful sales pitch.
Soon after the interview, Bogan realized that the pharmaceutical manager's insights could help his company launch its new database product. The offering was BP's fourth and newest line; the other three were online benchmarking reports, membership services, and research and consulting projects.
The company's consulting clients were typically Fortune 500 businesses looking to improve performance in operational areas like customer service or sales and marketing. Over time BP had developed a Rolodex of more than 30,000 large-company contacts that it could survey in search of examples of excellence in those areas. After sharing its findings with its consulting clients, BP would leverage the information by selling it through, say, another product line such as online benchmarking reports with titles like Managing World-Class Call Centers: Site Visit Findings. And now, with the database product, BP hoped to sell customers on the concept of buying unlimited Internet access to BP's archives.
Initially, BP saw database access as a tool for middle managers who wanted to understand performance excellence in their areas of responsibility. But when BP followed the regional manager's strategy of quickly examining where sales came from and why, the company learned that, in fact, database access was often purchased by managers looking to brief senior executives on certain subjects. "We had never positioned it as a briefing tool," recalls Bogan. The company retargeted its marketing efforts. Database-access revenues grew 40% within a month -- all because Bogan had stolen, adapted, and executed the regional sales manager's idea.
Business-school brains would call such idea theft "the transfer of a best practice" -- and testify that such transfers often fail because of change-resistant employees and disorganized managers. "Sometimes you can create a trauma within an organization by forcing people to do things a different way. Employees then resist future changes because of what they were forced to deal with the last time," says Gabriel Szulanski, a Wharton professor. A study last year by Harvard Business School professor Michael Beer corroborates Szulanski's point: it found that few companies manage corporate transformations as well as they would like and that about 70% of all change initiatives fail.
Yet incorporating new initiatives is all but de rigueur for Bogan's business. Granted, a company of 25 should not have the hardest time breaking habits and forming new ones. But smallness raises other hurdles. How do you downscale a big-company idea to solve a small company's problems? How do you implement and monitor the idea without springing for new employees or expensive technology? So often has BP answered those questions that its methods for adapting borrowed strategies have become institutional procedures. Its own best practice may be the informal system it's developed for copying the best practices of others. Here are the three steps the company follows.
Step One: Gathering Ideas
BP gathers ideas in three ways. The first method, what Bogan calls a "lessons-learned review," pushes employees to collect ideas from projects and the company's everyday activities. Those activities might include conducting a survey for a consulting project, planning the agenda for a conference, or drafting and editing a report.
Most employees work on both product and internal project teams. Upon completion of a project, each team conducts a "debrief," a meeting at which teammates review the effort's highs and lows. Teams devote part of the debriefing to the lessons-learned review, discussing ideas encountered during the project that could, if implemented, improve life at Best Practices.
Small lessons often are acted on quickly. Early last year some members of the benchmarking-reports team were debriefed after doing studies with Motorola and FedEx. In the surveys, employees said that they wanted their companies to recognize their successes as a group rather than as individuals. That finding raised concerns on the BP team about the company's sales bell. The bell, which a team member was supposed to ring with pride following his or her sale of a report, actually annoyed most employees, who disliked its emphasis on individual selling and the internal competitiveness such an emphasis spawned. Seeing a parallel in the Motorola and FedEx situations, the team -- now with firm grounds to protest -- finally spoke up about the bell, leading to the development of a group-recognition method, a whiteboard that showed both individual and group sales.
When a lessons-learned review produces a suggestion that takes time to enact, the project group leader assigns a team member or two to the implementation. That happened at the benchmarking-reports team's planning meeting for fourth quarter 2000, when the team considered lessons from the previous quarter. The big one? To boost sales, competitor META Group had timed E-mail marketing pitches to go out near the end of each quarter, putting a date in the subject line and offering a discount for reports purchased before the date. All during the fourth quarter, two teammates worked on how BP could ape that strategy. It paid off. "We saw a 200% increase over final-week sales from the previous quarter," recounts Jason Richardson, who manages the benchmarking-reports team.
There was another reason for the jump, though. It came from BP's second method for gathering ideas: an internal review process. Instead of producing their first projects for clients, new workers at Best Practices do their first projects inside the company. Instead of researching sales-force productivity at, say, GlaxoSmithKline, the rookies explore the topic at BP by interviewing and surveying their coworkers.
Last July a batch of rookies investigated how well the company's press releases drove traffic to BestPractices.com and whether the releases contributed to subsequent sales. The rookies talked to experts both inside and outside the company and combed Best Practices' archives for information about big companies' press-release strategies. They found that -- contrary to common public-relations wisdom -- the E-mail releases should not contain the company name in the release headline or the E-mail subject line. Potential readers cared about the insights in the press releases, not the company behind them. Best Practices changed its headlines and subject lines and reduced to two sentences the company description at the end of each release. "Working so long on something, you don't ask certain questions," notes manager David Wang. "New people help you examine all your assumptions again."
The third way Best Practices gathers ideas is through Bogan's own efforts to lasso them -- both from his company's projects and from the business world at large. The company is small enough that Bogan, like an editor-in-chief, reads final versions of all research and consulting reports. So if a lessons-learned review overlooks a valuable idea, he wastes no time pointing it out to the staff. Bogan also keeps an eye out for ideas that teams can tap during projects. Which is why, as the database team struggled not long ago, he was able to direct it to some ideas he'd encountered one summer day just outside Chicago.
Step Two: Implementation
Obviously, finding ideas is useless if you can't put them into effect. BP's secret to implementing ideas is to swallow them in digestible chunks. The process of determining what those chunks are -- and which ones to swallow first -- begins with the lessons-learned reviews.
The reports team, for example, came up with a list of 17 ideas at its last second-quarter planning meeting. Only the top 3 will be acted on, says team leader Jason Richardson. How does the team determine which are the top 3? It charts all ideas on a graph with "ease of implementation" on one axis and "impact" on another. The top 3 ideas are the ones that score high on both scales. "It's a way to target the low-hanging fruit first," Richardson says.
Based on the lessons-learned reviews, some sifting takes place before implementation. But the brunt of sifting takes place during implementation.
Early in the spring of 2000, for example, Bogan asked Webmaster Larry Weaver to create Web pages for BP's customer-account management. Bogan wanted the pages to be just like ones he had seen on Dell.com. Each major BP customer would have its very own Web page, listing all the products and services the customer had bought and promoting other BP offerings targeted to that customer's interests. That way, a customer that ordered only human-resources-related products would not have to canvass the entire Best Practices site to find new material on the topic. Instead, an announcement of the new material (and an electronic link to it) would automatically appear on the customer's individual page.
Weaver did as he was told, and the cross-promotion brought an immediate increase in sales. That caused a problem: every new purchase meant that BP had to update a customer's personal Web page. Pronto. And Weaver didn't have the time to do the updates all by himself.
Had Weaver's Web pages been exact replicas of Dell's, there would not have been an issue. Most large companies have pricey systems that automatically update customer pages. BP didn't have such a system. But after some tinkering, Weaver found an intuitive, low-tech way to update the pages regularly, one that any staffer handling an account could use -- even while on a sales call. To the customer, the update seemed instantaneous. In reality, Weaver had winnowed down a high-tech idea from Dell so that Best Practices -- with its IT staff of two -- could implement it.
Best Practices founder Chris Bogan says his company's mission is to combat the perception that every idea has to come from within an organization.
Because the staff saw an immediate, positive reaction to the Web pages from customers, getting the BP employees in the habit of constantly updating the data wasn't difficult. There are times, though, when a new idea is not the easiest thing for the staff to swallow. Take, for example, what the rookie employees learned about the wisdom of dropping company names from the headlines of press releases that pitch BP's review of best corporate practices. How can a company enforce a lesson like that when people who write press releases are used to employing a specific format?
For starters, the rookies gave the staff a PowerPoint presentation on the topic. Hardly a groundbreaking training method. But Best Practices makes it effective by stressing brevity: three to five top findings. Even new hires know to keep it short and sweet, because their company orientation emphasizes BP's "rule of three-five-seven." The rule pushes employees to think constantly about topics in terms of three to five (and, at most, seven) top issues. Conceived to help staffers boil things down for summation to clients, the rule also assists Best Practices' digestion of new ideas. Richardson's team may identify 17 ideas in the planning meeting, but the team thinks in "a three-five-seven mentality" the whole time, says associate Elio Evangelista.
To prevent post-PowerPoint amnesia, Best Practices archives new processes in a directory on its computer network in what Bogan calls a "checklist library." The library contains lists of procedures for things like writing a press release, drafting a cover letter, and creating an invoice. There's also a library of blank templates for such documents. Those tangible resources supplement the changes that, to many employees, happen not through official channels but through everyday interaction. Says David Wang, gesturing at the company's setting of newsroom-like cubicles, "You walk around and share stories."
Step Three: Does the New Idea Work?
The frequent interaction among staff members also helps when it comes to gauging the effectiveness of new ideas. Bogan didn't need a sales report to know the Dell-esque pages were a smash. He heard the phones ringing. And he didn't hear employees griping about added work.
Nonetheless, the company has two formal means for monitoring how well an idea is working. The first is through crafty use of technology. The method was developed by senior associate Rachel Porter, who heads the company's Global Benchmarking Council, an annual membership service that includes conferences among its benefits. In January 2000 she began offering other Best Practices products to council members. As it pitched the company's reports and database access to the council members, Porter's team borrowed cross-selling techniques from Citigroup and Verizon. But like Weaver, Porter could not borrow the real-time Web-based tracking systems that the large companies used to buttress those techniques. She had to improvise.
So she decided to take software that BP already owned -- Excel and a client database -- and adapt it into a tool that could track her team's cross-selling efforts. Her standout idea was to insert a link to the Web on the spreadsheet. The spreadsheet was linked to the customer-specific Web pages that Weaver had designed. Weaver had already made the pages easy for any BP employee to update, and Porter knew that the pages would be updated shortly after any sale. After updating the database, Porter could get the up-to-the-hour status on any account by clicking on the link she'd placed in the Excel file. The spreadsheet, meanwhile, provided a value of its own. Porter used it to tabulate totals and averages on each account. Whereas the Web page might tell her how many conferences a given member had attended in a year, the spreadsheet could compute how many products, on average, each member had purchased.
Porter smiles and calls the spreadsheet a "Chris-management device," referring to Bogan. The phrase has dual meanings: indeed, the spreadsheet allows her to "manage" Bogan, but it also allows Bogan to keep tabs on the council. Porter is far less jocular when discussing Bogan's other means for keeping tabs, both on her division and on the entire company: time-tracking reports, which the CEO has tried for four years to persuade employees to use. Though many employees hate recording their time -- and they often, in acts of civil disobedience, don't -- the software furnishes key statistics for the company's second means of monitoring new ideas: a Friday-morning session called the "resource-allocation meeting."
Adapted from Custom Research Inc., a past Baldrige Award winner, the meetings last 30 minutes max, as do nearly all the meetings at Best Practices. Managers scan a spreadsheet that categorizes the percentage of time each employee spent on the previous week's tasks, broken down by project and product or service area. During the week of April 6, for example, Evangelista spent 45% of his time working on consulting projects, 28% on writing reports, and 27% on other projects. Such statistics, and the discussions that surround them, let managers keep a weekly tab on whether a new idea (or anything else) is consuming an inordinate amount of employees' time. After perusing the numbers and addressing their potential inaccuracies, managers discuss what changes they'd like to see in the upcoming week. "You're arguing over the human resources," notes Keith Symmers, who heads the database product line.
During a week in March, Porter noticed that staffers were devoting far more labor hours to Symmers's team than they were to hers. She "freaked out," she says, because her team "brings in way more revenue" and because she faced deadlines that week. She and Symmers amicably settled the situation. But Porter still abhors logging her time, even though as a team manager she sees the benefits of doing so. Along with her colleagues, she complains that accounting for her every hour makes her feel "micromanaged." Bogan says 60% of staffers record their time beautifully, 20% to 30% grudgingly, and 10% only when nagged.
Bogan understands the resistance. "We hear things like, 'I went to Harvard, Duke, UVA; tracking my time feels like I'm in a factory," he says. But he remains committed to the idea. To him, the battle over time tracking is a tiny skirmish in a larger and much more profound war: the campaign to convince people and companies of the value that can come from studying others' proven techniques.
That's the philosophical component to Bogan's agenda. In the end, isn't benchmarking just about overcoming the limitations imposed by ego? Isn't it about stemming what Bogan calls "the white-collar urge to demonstrate how bright and good you are" by coming up with all your ideas on your own? Bogan thinks so. What BP is up to, he says, is "cultivating the mind-set to ask, What can we learn from others?"
A lot, Bogan contends.
Of course, he knows there might be money in it if he can get you to agree.
Ilan Mochari is a staff writer at Inc.
Best Practices LLC, in Chapel Hill, N.C.
Business: Best Practices researches the world's leading companies to find superior strategies and establishes benchmarks in certain operational areas (for example, customer service or sales and marketing). The company then packages the information into sellable formats.
Financial summary: Projected sales of $8 million this year, with targets of $3.6 million in revenues from direct consulting and custom-research projects and $4.4 million in sales of products (reports, database access, and membership services).
CEO: Chris Bogan
Year founded: 1992
Capitalization: Bogan and his wife own 95% of the company, and Michael English, Bogan's coauthor of Benchmarking for Best Practices, owns 5%. Of the company's stock, 10% has been allocated for an employee stock option plan.
Strategy: Maintain a 45% to 55% split between revenues from onetime consulting and research projects and revenues from products and membership services, which generate multiple, recurring sales. That policy ensures that the brunt of the company's projects will be highly profitable.
Competitors: For some projects, large management consulting firms like McKinsey & Co., the Boston Consulting Group, and Accenture. For others, boutique consultancies that specialize in particular operational areas or industries (especially pharmaceuticals and telecommunications).
The four-year-old swung awkwardly. Repeatedly. His hands, inches apart, held the bat incorrectly. Chris Bogan adjusted his son's grip and guided him through the motion. No luck. Bogan kept at it. The boy did not. Frustrated with the lesson, he threw down the bat and headed toward the house.
Days later, Bogan and son watched a video that showcased the ultra-athletic feats of basketball legend Michael Jordan. The boy promptly went out to the hoop in the driveway, where he attempted to mimic Jordan's movements for nearly an hour. "That's when I realized," recalls Bogan, "that my son had been inspired by seeing a best practice."
Bogan, 47, tells that story when describing his company to young recruits. As Bogan sees it, the mission of Best Practices LLC is finding examples of superstar performance in the business world -- then selling their secrets to others.
The lesson his son taught him? Just because you know how to improve people's performance doesn't mean they'll want to listen. The key is presenting the advice in a form that inspires imitation.
Just as Jordan moved Bogan's son to play ball, Robert Frost influenced Bogan's decision to write a book of poems -- back in 1976, when he was a senior at Amherst College. Bogan went on to work as a journalist for 11 years. During a year that he spent at Harvard on a fellowship, he was intrigued by some business classes that he took. Years later, feeling hemmed in by his career path in journalism, Bogan enrolled at Harvard Business School.
The more he learned, the more his intellectual affinity for business grew. He realized he could apply the techniques of poetry and journalism -- "using language and storytelling to clearly communicate an experience" -- to explain the power of self-improvement through the study of superior behavior. In 1994, Bogan cowrote a business book called Benchmarking for Best Practices. The book aims to sell readers on the concept that businesses don't need to rely solely on inventing ideas themselves. Instead, they can improve on their own practices by stealing ideas from companies that are highly successful. After all, Bogan notes in his book, "performance improvement is blind to the lineage of good ideas."
The idea thief's M.O.
To find ideas, scrutinize yourself as you would a customer. During orientation, new employees at BP receive consulting assignments. But instead of giving the rookies a customer's problem to solve, managers ask them to assess a problem within the company. Rookies research the topic just as they would an assignment for a customer: They interview and survey employees to specifically diagnose the problem; then they talk to experts and research successful practices at other companies to generate solutions. They share their findings in a brief PowerPoint presentation.
To implement ideas, keep a library of checklists of internal procedures. To prevent employees from reverting back to old habits, BP frequently updates its library of checklists of internal procedures, which it keeps in a directory on its computer network. The checklists spell out required steps for such tasks as drafting cover letters, making cold calls, and sending invoices to customers.
To monitor whether the ideas are working, meet weekly to review the deployment of workers. BP has half-hour "resource- allocation meetings" each Friday. Managers review time-tracking data for the past week to see how employees have spent their time. They anecdotally fill in gaps in the data. If a new idea or initiative consumes too much of employees' time, every manager will see it and be on hand to discuss a remedy.
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