by Michael Arbow, MBA
Partner, RSD Solutions Inc.
In the mid-1960’s an eager young teen space traveller named Will Robinson would rush into activities he believed were for the greater good only to be warned by the Robot of the coming danger. While the show “Lost in Space” lasted a brief 3 seasons, its lesson of think before you leap is something the business and investment world should still consider especially when the idea of “benchmarking” is discussed as a cure for department/company ills.
Recently the good people at the Harvard Business Review pointed out three questions one should ask before following industry or department best practices. These being:
- What are the downsides of following the leader?
- Is a competitor’s success really linked to a particular management aspect of the corporation?
- Are the (market and economic) conditions face by the market leader similar to yours?
Of particular note is the first point which is similar to the dreaded idea of “group think”. The financial markets most recently witnessed this when a number of Wall Street and City firms decided to follow the best practice of bundling mortgages and utilizing the same algorithm to price the package. Yes it was profitable,… originally.
So before your risk department decides to follow the leader, heed the word of the Robot and take a closer look at their best practices and pick them apart to see if it really is a best practice and one that will survive the test of time.
Note: A thank you to the good people at Harvard University and the HBR’s Management Tip of the Day for the idea.
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