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How Best Practices Make You Worse Off

The Importance of Market Discipline

Market discipline is what allows a company to maintain its competitive advantage. This is achieved when processes, systems, and culture align with your strategic intent.

Market discipline starts at the top. Leadership must have the ability to communicate a defined strategic intent (what sets the organization apart from the competition) and express the vision for achieving this (what needs to be done to deliver results). Once this is clearly established throughout the organization, then processes, infrastructure, and assets can be aligned.


Answer the questions below. If you answer “No” at least once, you may need to clarify your market positioning:

  1. Are all processes, systems, and cultures reinforcing the delivery of the customer value proposition?

  2. Are you focused on adopting the right practices over industry best practices?

  3. Can your employees explain how your company differentiates itself in the marketplace?


In a legitimate effort to gain a favorable market position, companies can default to adopting best practices. As counterintuitive as this may sound, there is a risk in seeking to improve value delivery by only developing industry best practices.

A best practice is defined as the most efficient and effective way of accomplishing a task based on repeatable procedures. Best practices can be applied throughout an organization in techniques, methods, processes, activities or incentives. Generally, these practices have proven themselves over time by being used by many individuals or organizations.

Best practices essentially level the playing field by making operations similar across industry players. However, they are one size fits all solutions that do not take into account your unique context and can make you more like your competition, rather than differentiating you from them.

When used with thoughtful consideration, such as in back-office operations, best practices can remove pain points. Therefore, it is essential for leaders to ensure the entire organization remains crystal clear about their market differentiation and executes accordingly. Suppose widespread use of best practices by other players allows them to catch up on an organization’s market position. In that case, the leadership’s responsibility is to develop distinctive execution advantages that re-establishes its lead. For example, an organization competing on cost may become fiercely innovative in its quest for continued cost reduction.

The bottom line: distinguish between best practices - that level the playing field but may erode unique positioning - and right practices - that are well-suited to the particular market positioning of an organization. Right practices will balance the delivery of best-in-class performance with tight alignment, precise positioning, and value proposition.

In our next blog, we will focus on the importance of having Balanced Metrics.


How well is your business executing? To find out, contact us, and we will initiate an assessment of your execution capabilities.

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