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Your Company’s Bad Habits are Killing Innovation Says Freek Vermeulen

“Best practices” can lose their meaning over time and eventually ossify innovation. Don’t be afraid to shake things up.

Your Company’s Bad Habits are Killing Innovation Says Freek Vermeulen

By: Anne Fisher

Ever wonder why your company, or your industry, does something a certain way, even though it doesn’t seem to make sense?  

If you’ve asked about it and been told, “Because this is the way we’ve always done it,” says a new book called Breaking Bad Habits by Freek Vermeulen, you’re probably looking at a longstanding best practice that just hasn’t kept up with the times.

Lest you freak out, keep in mind that outdated methods are by no means a rarity, says the author. As a strategy and entrepreneurship professor at London Business School who frequently consults in large companies, Vermeulen has found that even the best-run organizations have at least a few bad habits.

“The encouraging news is that obsolete best practices are great starting points for innovation,” he notes. “Changing old habits that are no longer working can put you way out ahead of your competition.”

Monster recently spoke with Vermeulen on how leaders can spot, and get rid of, best practices gone wrong.

Q. You point out that the biggest problem with bad habits is that they stifle innovation. How?  

A.  Well, by definition a habit is something we do over and over again in the same way, regardless of changes in the environment, so it is really the opposite of innovation.

Of course, habits can be useful, because they keep us from reinventing the wheel. But everything a business routinely does should be reexamined now and then, to make sure it still fits the current conditions. Circumstances have a way of changing all the time. Habits rarely do.

Q. One way that bad habits spread and persist, you have found, is through benchmarking. So you recommend “reverse benchmarking” instead. What is that?

A.  Unfortunately, benchmarking has come to mean everyone in an industry doing things the same way, like sheep—or lemmings—in a herd. There are many businesses where firms are scarily alike, often much more so than the customers they’re seeking to serve.  

Look for practices and policies that all, or most, of your competitors are using. If you can’t explain why all employees and customers are best served by that one-size-fits-all approach, see if you can depart from the crowd.

This is something you can brainstorm with colleagues. Your co-workers are likely harboring suspicions that particular longstanding habits, although widespread in your industry, just don’t make much sense anymore. Ask your employees, too. Since they usually understand the internal workings of the organization better than anyone, you might be surprised at what you learn.

Q. Your book includes 10 ways that managers can identify former best practices that are now just getting in the way.  Do you have a favorite?

A.  Yes!  Ask outsiders for their impressions. When anyone new comes in and starts looking around in a company, perhaps as a journalist or a consultant, they will have questions about why things are the way they are, and those are often useful questions.

But the best source of insight is new employees. At first, new hires may not be familiar enough with the business to grasp why things are a certain way. But after three months or so, if a new employee is still asking why, he or she may be showing you an outdated practice.

I think companies need to be systematic about gathering this information. Make it standard procedure to bring new hires together in a room, three or four months after their start dates, and ask for their observations.

As a consultant, I constantly hear leaders and employees explain things by saying, “This is just how we’ve always done it.” Beware of that sentence. It’s usually a sign of a longstanding habit that needs a closer look.

Q.  You recommend continually making changes, even when things seem to be going well. Isn’t that hard to explain to employees?

A.  It can be, but what’s the alternative? Most companies wait until something isn’t working anymore, and then rush to change it. But by that time, the business is usually in so much trouble that change is much harder than it would have been ahead of time.

Eventually, everything becomes obsolete—products, markets, strategies, technology. So the capability to manage change is a critical skill for leaders now, and it is a case of “use it or lose it.” You build it by using it.

If you tell employees why you are making a change, and why you see the need to be proactive about it, it may be hard for them to initially accept it.

But it gets easier. As change becomes part of the company culture, people get accustomed to it, and especially to reevaluating everything the company does. 

In most organizations, a frequently overlooked source of innovation comes down to three golden rules: Take a hard look at everything you do, figure out what doesn’t work anymore, and then stop doing it.