1Good morning, everyone.
2In the last few lectures, I've been dealing with business finance,
3but now I'm going to move on to business systems.
4And in today's lecture,
5I'm going to talk about what can go wrong when businesses try to copy their own best practices.
6Once a business has successfully introduced a new process -
7managing a branch bank, say, or selling a new product -
8the parent organisation naturally wants to repeat that success,
9and capture it if possible on a bigger scale.
10The goal, then, is to utilise existing knowledge
11and not to generate new knowledge.
12It's a less glamorous activity than pure innovation,
13but it actually happens more often, as a matter of fact.
14However, surprisingly,
15getting things right the second time is not necessarily any simpler than it was the first time.
16Now, there's been a lot of research into how companies can repeat their previous successes,
17and it certainly hasn't been confined to the United States.
18It seems that most large industries are trying to repeat their own successes,
19and manage the knowledge they've acquired -
20but even so, it has been shown that the overwhelming majority of attempts fail.
21A host of studies confirm this,
22covering a wide range of business settings:
23branch banks, retail stores, real estate agencies,
24factories, call centres... to name but a few.
25So why do so few managers get things right the second or third time?
26Let's consider one reason for failure -
27placing too much trust in the people who are running the successful operation,
28the 'experts' shall we say.
29Managers who want to apply existing knowledge typically start off by going to an expert -
30such as the person who designed and is running a successful department store -
31and picking their brains.
32Now, this approach can be used if you want to gain a rough understanding of a particular system,
33or understand smaller, isolated problems.
34The trouble is, even the expert doesn't fully grasp the whole thing
35because when it comes to complex systems,
36the individual components of the process are interwoven with one another.
37The expert never has complete access to the necessary information.
38And the situation's complicated even further
39by the fact that experts are usually not aware of their own ignorance.
40The ignorance can take various forms.
41For instance, a lot of details of the system are invisible to managers.
42Some may be difficult to describe -
43learned on the job and well known by workers perhaps,
44but impossible to describe in a way that's helpful.
45And there are some things that people know or do that they're not even aware of.
46Now, let's consider two types of mistake
47that can occur when a manager actually starts to set up a duplicate system to replicate a successful process.
48Firstly, perhaps he forgets that he was just trying to copy another process,
49and starts trying to improve on it.
50Another mistake is trying to use the best parts of various different systems,
51in the hope of creating the perfect combination.
52Unfortunately, attempts like these usually turn out to be misguided and lead to problems.
53Why?
54Well, for various reasons.
55Perhaps there weren't really any advantages after all,
56because the information wasn't accurate.
57Or perhaps the business settings weren't really comparable.
58More typically, the advantages are real enough,
59but there are also disadvantages that have been overlooked.
60For example, the modifications might compromise safety in some way.
61So, what's the solution?
62Well, I don't intend to suggest that it's easy to get things right the second time...
63it's not.
64But the underlying problem has more to do with attitudes than the actual difficulty of the task,
65and there are ways of getting it right.
66These involve adjusting attitudes, first of all...
67being more realistic and cautious really.
68Secondly, they involve exerting strict controls on the organisational and operational systems.
69And this, in turn, means copying the original as closely as possible.
70Not merely duplicating the physical characteristics of the factory,
71but also duplicating the skills that the original employees had.
72Reliance on a template like this offers the huge advantage of built-in consistency.