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Southeast
Construction Magazine: April 2006 Issue |
By Ted Garrison
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The answer to the title of this month's
column is a definite yes... and no! Let me explain.
A better question would be, "Is it better
to do things right-or better to do the right thing?" This question
stimulates some interesting discussions, because our society has
taught people to do things right. For example, if you didn't do
things right in school you received poor grades. However, it doesn't
matter how well you perform a task that doesn't need to be performed.
Obviously, both are important. However, companies
must start with the "right thing" and then learn how to do it the
"right way". Ralph Strayer, the co-author of The Flight of the
Buffalo, has said, "Anything worth doing is worth doing poorly."
His quote often confuses people, but the key word in his quote is
"worth". He isn't advocating poor performance. He's merely giving
you permission to perform poorly while you learn.
Benchmarking is about measuring a company's performance
on how well it does things compared to the best performers doing
the same thing. Therefore, it makes sense to benchmark operational
skills - the "how" operations are performed. Since there are many
tasks that all contractors must perform, it makes sense to maximize
a company's performance of these tasks by benchmarking them against
the best company's performance.
However, while benchmarking works to improve
the "how" of a business, it would be a disaster with regard to the
"what" the business does. The reason is simple. The "what" of a
business is the strategy that makes that business different from
its competitors. The greater the difference between one company
and its competition, the more unique that company becomes and potentially
the more profitable. In contrast, when companies benchmark the "what"
of their business they merely become a "me to" company, which is
a very week position.
Al Ries and Jack Trout reported in their book,
Positioning: The Battle for Your Mind, that the strongest
position is to be first. They added that unless the company in the
first position does something drastically wrong, it's almost impossible
to dislodge it from its power position. The book indicated that
being first is the most profitable position. The further argued
that in most cases it doesn't matter if the contenders do a better
job or offer a better product, they would find it almost impossible
to dislodge the leader. The conclusion is the company that gets
there first wins the battle for the customer's mind.
The most successful companies have both a sound
strategy and an effective operational process. The strategy is the
"what" of the company while the operational process is the "how"
of the company. So while it makes sense for the contractor to benchmark
its operational processes, benchmarking strategy doesn't work.
Michel Roberts, CEO of the consulting firm Decision
Processes International, confirms the importance of focusing the
"what". He explains the obvious that companies that master neither
strategy or operations fail and companies that master both do very
well.
The last two options, namely focusing on either
operations or strategy explain why strategy is more important. The
company's research found that most companies focus on the operational
processes. They concluded that is a result of the fact that since
most people spend their careers dealing with operational issues,
they tend to focus on improving operational issues. Because they
have little strategic experience, they avoid it, with the result
that they are often working on the wrong things.
Unfortunately, if you don't take the time to
determine "what" needs to be done, the effort expended on operations
may be wasted. DCI's data supported this position as they discovered
that companies that do the "right" thing outperform companies that
focus on doing things right. In essence, a company must have the
right strategy if it hopes to succeed at beyond a marginal level.
(A lack of clear strategy is why many construction firms have such
low profit margins.)
Strategy is about creating a defensible competitive
advantage. In other words, it is about doing something different
or unique. Therefore, contractors can't benchmark their strategy
because that creates a "me too" approach to business.
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