Breaking Bad Habits: Defy Industry Norms and Reinvigorate Your Business

Written by Freek Vermeulen

Narrated by Daniel Henning

It's very likely that best practices-ideas, processes, and strategies that are commonplace in your industry-are actually hurting your business. Although best practices can help businesses operate more competitively and efficiently, they are often outdated, harmful, and a hindrance to innovation. The problem is, managers and executives are usually blind to the negative effects of best practices, so they don't question their purpose or measure their effectiveness. As a consequence, outdated or harmful practices spread and persist without their knowledge. In Breaking Bad Habits, Freek Vermeulen, a strategy professor at London Business School, offers the tools to identify bad practices eliminate them from your organization, and then move on to create new sources of innovation and growth by outthinking your competitors. Brimming with examples of norm-defying organizations in an eclectic range of industries, Breaking Bad Habits will make you rethink your long-held beliefs about industry norms while encouraging you to reinvigorate your business by breaking out of the status quo.

• Language: English
• Publisher: Recorded Books, Inc.
• Release date: Nov 14, 2017
• ISBN: 9781501978043

Reviews for Breaking Bad Habits

[rivkat_2 · Rating: 3 out of 5 stars]

Business book as self-help. Some interesting factoids, such as: take on hard cases even though that decreases your success rate. The things you do to deal with the outliers train and improve your skills overall, as with IVF clinics that took on patients with a poor prognosis. Don’t do things just because your competitors are doing them; they might be jumping off the proverbial cliff without knowing it. Or everyone may be optimizing on one metric for too long—he gives the example of TVs whose images are so sharp that we now have to make screens bigger and bigger before we can detect any improvement. Watch out for practices that have an initial success rate (like selecting IVF patients with simple cases) or that rely on firm culture for success, since it’s hard to transplant an entire culture and tacit knowledge, as with Japanese car production techniques that didn’t work for US companies. “In an attempt to replicate a best practice, firms end up transforming a complex practice into a much simpler one, and this simplified version, which is much more alluring and easier to copy, is transferred from one firm to the next, becoming less and less useful—and eventually harmful.” Beware of survivor bias: business schools focus on the best companies, “ignoring the less-sexy average types”—if you look at how a practice works in an entire industry, you may see that on average it’s harmful when it looks good because it’s in use at the top companies (it may even producer greater-than-average variance, so it has really good and really bad outcomes).I liked the discussion of the hidden harms of outsourcing—losing understanding and insight from the entire production process. For example, firms that outsourced patent filing lost some ability to identify potential competitors, and those competitors’ strengths and weaknesses, early in the process. Vermeulen also suggests asking dumb questions about why a practice is shared by your competitors, like “why is the newspaper printed the size it is?” It turns out that everyone does it that way because of a 1712 tax on the number of newspaper pages, in response to which publishers made the pages larger. But now one can succeed without doing that. He also suggests targeting specific groups, in a way that won’t necessarily scale up: e.g., find a specific group of consumers or employees, and eliminate things they don’t care about, decreasing your costs while enabling you to charge them a lower but still profitable price. His example is a consulting firm that only has senior consultants, no juniors—more expensive at the outset but also more experienced (thus outsourcing the process of developing junior talent to others in the market, by the way). Another example: he argues that pharma detailing doesn’t make as much sense in today’s information-risk environment, and that firms can succeed by having a few drugs that they promote well without detailing. The biggest example, and possibly the most troubling, is low-cost airlines, which eliminated all the frills but also all the comfort, and offloaded costs onto employees and passengers, and yes we all went along with it, but probably to our collective detriment at this point. (Among other things, we now load planes in the least efficient way possible, with the people who pay more for aisle seats and overhead space allowed to board first, instead of boarding from the back of the plane.) But he does make the point that many of these practices only make sense in tandem—a traditional carrier doesn’t actually save much by only eliminating onboard niceties if they don’t also shift their routes, aircraft, and ticket sales. For full-service airlines, having some nonprofitable segments, meals, etc. is instead quite sensible.More advice: Borrow solutions from other domains, not your competitors (this is also a common theme in creativity research generally). Try out changes just for change’s sake—this is disruptive but also provides useful lessons, such as forcing employees to interact with new sets of people, which can lead to new connections and innovations. While “never make a happy baby happier” is good parenting advice, for businesses it can lead them to ignore subtle changes either in the market or in their own operations that are losing opportunities.