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November 29, 2004

The Ineffability of "Best Practices"?

Rees Morrison, a longstanding observer of all matters law and business, opines that vis-a-vis in-house law departments, at least, there is no such thing as management by following "best practices," because they simply do not exist.

To buttress his thesis, he cites no less than philosophy, economics, psychology, and sociology.  Never let it be said that I shy from a deep conversation, so let's plunge in and evaluate Rees' arguments.

Philosophy:  Here he makes essentially an epistemological argument: That no one can define the "best" to begin with ("despite thousands of years of effort,...we cannot reach consensus on what it means to lead a 'good' life"), that determining cause and effect is elusive, and [oddly enough—I would have thought this belonged under "economics"] that lawyer productivity is notoriously difficult to measure. 

Economics:  First, he observes non-controversially that every management practice involves "trade-offs."  Indeed, this is a paraphrase of the textbook definition of economics as the study of the allocation of scarce resources.  Yes, you can use your first-round draft pick on a quarterback or an offensive lineman but not both, and if your department chooses to spend its annual IT allocation on knowledge management rather than document management, you have in some tautological sense "traded off" DM for KM.  Next, he notes that in a competitive marketplace today's innovative best practices will be copied by the competition (thus failing to provide enduring competitive advantage), and also, as something of a non sequitur, that the "law of diminishing returns" means the spread of a "best practice" to every corner of the department will not be as valuable as its initial introduction.  Innovation can indeed be copied, but that scarcely implies one shouldn't try.  Who out there thinks DuPont's decade-long lead in introducing the "DuPont Legal Model" hasn't conferred a lasting advantage?   As far as "diminishing returns" goes, he's simply confused.  Sure, learning curves flatten and [the rate of increase in] returns diminishes, but both the fat part of the learning curve and the fat part of the returns are genuine.

Psychology:  As I understand him here, he's essentially arguing that because human decision-making is flawed (we over-emote and under-reason, hate cognitive dissonance, tend to prefer confirmation of pre-existing attitudes over genuine receptivity to new information), then no decision-making can be trusted.  This is a bridge too nihilistic for me:  If he's really serious on this score, then his column is meaningless because everyone will choose to see in it what they want to see, and he in fact only wrote it at the urging of some ill-understood subconscious drive.  Whoa, boy!

Sociology:  Group think, peer pressure, and dysfunctional group dynamics all infect decision-making, so who's to say that the chosen course is "optimal" and not merely "politically feasible?"  Reasonable questions all, but I've worked in offices with an open, collaborative, "think out loud" dynamic, and in offices where the playbook was "Lord of the Flies."  Guess what?  You can tell the difference, and act accordingly.

What does this add up to?  To a degree, the argument that there is no such thing as [enduring] "best practices" is obvious and non-controversial.   The goalposts are always receding, after all.  IBM Selectrics justifiably had a corner on the market in their day.  But ultimately I must conclude that the essay fails the essential test of common sense.   That we cannot know everything does not mean we know nothing; that we make mistakes does not mean we're incapable of enlightened judgment; that decision-making under uncertainty can get things wrong does not entitle us to wait until all the facts are in.

And that you read it from the pen of a distinguished observer of this landscape, or an analytically minded economist/blogger, does not mean it's gospel.

Posted by Bruce at November 29, 2004 3:41 PM | TrackBack
Posted to Cultural Considerations | Finance | Leadership | Strategy

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