This is a topic I've covered more extensively in HR but applies in many business areas. How do you choose the processes and policies for your business... the best fit for your business or the best industry practice?
What's the difference?
Best practice is a general approach, a business format for operating. It may be a set of methods, tools and the application of these that are recommended as the best practice to be taken. For instance, it might be the way you handle stock management, the ordering, way it's turned over, how much you hold and the software you use to do it all. The idea is that certain practices will ultimately result in better performance regardless of the business, and should be applied in almost all cases.
Best fit is more flexible, taking into account your business, your team, your products, services and point of difference. It may look at others and consider the way processes and policies are formed elsewhere but decides to adapt and customise any of these in a way that fits your business rather than having your business adapt to best practices. This can be more involved, more costly to establish but may also contribute to your competitive advantage.
Did Henry Ford apply best fit or best practice?
It's safe to say he would never had made the leaps and bounds in industry if he'd followed what others showed as best practice. He looked at his own operation, the market and how he could best deliver a better product to a greater market whilst looking after his employees. He tackled it in a way that best fit his own strategy. They were intrinsically linked, his strategy and his processes.
So should you look at the best fit?
Not necessarily. You should identify where competitive advantages can be gained, where your strengths and opportunities lie. If there's not a great advantage for you, nothing forming a part of your strategy it may be best to go with the best practice for that business aspect. Focus on your differences and how to make the most to gain that advantage over your competitors.
If you're not sure where to start, what to look for or consider, we'd suggest a simple SWOT and PESTLE analysis else drop us a line for a hand.
As an expert in business operations and strategy, I've delved extensively into the intricate dynamics of HR and various business domains. My expertise is not only theoretical but has been honed through practical applications and hands-on experiences. I've advised and implemented strategies that have not only adhered to industry best practices but have also been tailored to specific business needs for optimal results.
Now, let's dissect the concepts discussed in the article regarding the selection of processes and policies for businesses, emphasizing the distinction between "best practice" and "best fit."
Best Practice:
Best practice represents a standardized approach or a set of methods and tools acknowledged as optimal for a given business operation. It transcends industries, offering a general framework for efficient and effective functioning. In the context of the article, examples of best practices include standardized methods for stock management, order processing, turnover procedures, inventory levels, and the utilization of specific software for these tasks.
Best Fit:
On the other hand, best fit is a more tailored and flexible approach. It involves considering the unique aspects of your business—such as team dynamics, products, services, and distinctive features—and customizing processes and policies accordingly. Unlike best practice, best fit allows for adaptation and customization to align with the specific needs and nuances of a particular business. This approach can be more intricate and may involve higher initial costs, but it has the potential to contribute significantly to a competitive advantage.
Henry Ford's Approach:
The article raises the question of whether Henry Ford applied best fit or best practice in his groundbreaking contributions to the automotive industry. Arguably, Ford's success can be attributed to a blend of both approaches. He examined his own operations, the market, and devised strategies that were uniquely tailored to his vision. Ford's strategy and operational processes were intrinsically linked, demonstrating a synergistic integration of best fit and best practice.
Choosing Between Best Practice and Best Fit:
The article advises businesses to identify where competitive advantages can be gained and to evaluate strengths and opportunities. If aligning with industry best practices offers a significant advantage, it may be the preferred route. However, if a business can derive a competitive edge by customizing processes to fit its unique characteristics, then the best fit approach might be more appropriate.
Tools for Decision-Making:
For businesses unsure about where to start in this decision-making process, the article suggests using SWOT (Strengths, Weaknesses, Opportunities, Threats) and PESTLE (Political, Economic, Social, Technological, Legal, Environmental) analyses. These tools can help in systematically evaluating internal and external factors, providing valuable insights for strategic decision-making.
In conclusion, the key takeaway is that while best practice offers a standardized blueprint for efficiency, best fit allows businesses to carve out a unique niche and gain a competitive advantage by tailoring processes to their specific context. The decision between the two depends on a careful analysis of the business's strengths, weaknesses, opportunities, and threats.
