Monday, May 04, 2015

Stop following the successful companies

It is a common practice to look at successful people and learn the “best practices” as much as possible. The belief is that, by copying the successful practices, we become successful as well. My question is, does that really work ?   Can you become successful investor like Warren Buffet by reading every article/book written about him?

Even many organizations are obsessed trying to copy the practices from Google, Facebook, Amazon, etc. There is nothing wrong with it. However, I believe that one could learn more from failures than successes. So, focusing on the stories from failed companies would be more valuable than popular/successful companies.


There are couple of other reasons why I believe it is time to stop following successful companies:

1. Successful companies became so while they learned from many failures during their journey. Each failure would have enabled them to build some kind of structure to support from future failures and making them resilient. The media in turn focuses only on the “final” state of the company rather than the journey.

One would never get a chance to understand the “resilient structure” that has been built in place to withstand failures.  That’s why, copying only the “practices” from the final state without having a proper resilient structure in place will cripple companies even with a small tremor.

2. There is always a third dimension that you would never get to see.  In another research, the scientists found a pattern of increase in ice cream sales to increase in deaths due to drowning. They were baffled until they realized the 3rd dimension to this data/research.

The ice cream sales increased mostly during the summer, and this is the time where most kids would like to relax and enjoy swimming in rivers/pools as compared to winter months. This increase in swimming proportionality increased the fatalities as well.  As a researcher, if you ignore the 3rd dimension, in this case, the seasonal impact on ice cream sales, one would end up banning the ice creams.

Similarly, the success of every organization would involve some kind of 3rd dimension which is difficult to know/understand. Trying to copy simply the practices could be more harmful than helpful.

Toyota is my favorite example. 1000s of books have been written about Toyota Production system, Lean thinking, etc. Even Toyota allows people to visit their factories and learn from them. The question is, can you become like Toyota by copying their practices?   One would never be able to replicate Toyota or any other successful company. The success comes only from learning that typically happens through failures.  One should try to build their own set of practices based on their context/experiences.

That is; it is very important for organizations to build safe to fail and fail-fast/fail-often culture.

Going forward, start chasing the stories from failed companies and stop following the successful/popular companies.

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