Paul Hunter from the Institute of Strategic Management tells LeadingCompany, an unthinking focus on best practice can undermine the strategic positioning of a company.
The reason for this is very simple.
“Best practice is about standardisation,” Hunter says. “It doesn’t provide any basis for competitive advantage. It’s just about becoming as efficient as the next person.”
But of course, if everyone does the same thing, the competition sees everyone’s margins get squeezed.
When you’re looking at a particular industry, each competitor should have different strategy, explains Chris Dubelaar, a marketing professor at Bond University. “If everyone has the same strategy some of the firms are going to die.”
Companies who copy their competitors could even end up helping the opposition, Dubelaar continues.
“If you’re copying your competition, you can end up helping them by giving them additional credibility,” he says.
If you have ever wondered why I’m not keen on benchmarking – particularly around intranets – this goes to someway of explaining why. This article also talks about when best practice is useful.
Australia’s big four banks (Commonwealth Bank, Westpac, ANZ and NAB) might well be the most profitable in the developed world, but its all relative in their home markets when they are all jostling for customers. How much is social business playing a part in this competition? It wasn’t that long ago that the Australian banking sector was lagging behind the rest of the world.
A slick video case study from Commonwealth Bank (CBA) and Salesforce presented at Cloudforce Sydney 2012 shows how far one bank has come:
What is interesting about Commonwealth Banks’s story, which isn’t mentioned in the video, is the importance of their core banking system overhaul with SAP, started in 2008:
In a live demonstration, [head of its core banking overhaul project, Dave Curran] showed the audience how the system’s new real-time banking functionality allowed customers to create new accounts, gain greater visibility over their transactions and transfer funds quicker (even with cheque deposits) than had previously been possible. He also demonstrated how the new system allowed campaigns to be run by the bank in a much simpler way.
“We are real-time, we are seven days [a week], the other banks aren’t,” said Curran later in the briefing, in answer to a question about whether the other banks’ slower systems were slowing down the processing of cheques between banks. “We would naturally like to see that change over time … we are held back by the other banks in this regard.”
This is the reaction they saw last year through social media from those back-end improvements:
(Source: CBA PDF)
On reflection, NAB’s use of social internally looks relatively unsophisticated although Yammer and Salesforce Chatter (at a fundamental level, not feature set) serve the same purpose:
So does this mean that movements like Enterprise 2.0 (afterall, the first case study was about a bank) and solutions social intranets aren’t really worthwhile or have any impact? (Incidentally, CBA has a SharePoint intranet but I’m not aware that Chatter is integrated into it – there is some discussion here about the Yammer vs Chatter debate in relation to CBA)
Bearing in mind the relationship between systems of record and systems of engagement, lets say right now that no single social tools can fix poor or failing transactional systems although it might provide a stop gap temporarily. In fact, as you scale social interactions they need to be supported by solid systems and processes. Note that this is different from using Web 2.0 and social technologies to completely redesign existing systems or business models.
However, there are still implications to consider:
How much could other banks, like ANZ, Westpac and NAB, really use social software internally to overcome comparative deficiencies in their core banking systems in the short-term? I wonder if those institutions are really taking full advantage internally of Web 2.0 and social technologies readily available to them to deliver better services. I suspect they could do more in the interim, as one of the NAB anecdotes in the video suggest.
What happens once everyone overhauls their core banking? CBA has, in their own opinion, a massive head start. But once implemented by other banks and if done well, core banking technology isn’t a source of long term competitive advantage. For example, another second tier Australian bank is also talking about overhauling their core banking systems. IMHO people, product innovation and customer engagement remain the key differentiators. Internal use of social software can both help with a smoother upgrade and enable those differentiators. Also worth considering is the relationship between systems and the phyiscal workplace.
Which vendors are most important in the long term to social business? CBA’s success story is really a tale of two vendors – Salesforce and SAP. Salesforce is young company, which at the core is a Customer Relationship Management (CRM) system with its feet firmly in the cloud. SAP is a long established vendor, with a focus on enterprise software to manage business operations but even they offer an alternative to Chatter now, with SuccessFactors and SteamWork. Could one vendor provide all of the solution?
Could these local banks be threaten by global technology companies that one day decide to move into banking and aren’t constrained by legacy approaches? While its unlikely that companies like Google, Apple or Facebook will become banks, the use of social networks and mobile by consumers means they are important intermediaries. But these companies probably know more about the everyday lives of their users and manage more daily interactions than the banks for the customers they share in common. Electronics giant, Sony, is already considering expanding its low-cost, branchless bank to Australia.
I imagine similar patterns are and will play out in other industries. The key point is that becoming a social business/enterprise is more than simply adding a social layer.
The acquisition is unlikely to have much impact in the short term, although it may give Yammer an advantage when negotiating with some enterprise buyers through their new link to Microsoft. Certainly the acquisition won’t impact the immediate next release of SharePoint.
There is of course massive potential to integrate activity streams and other social computing concepts across the Microsoft suite of products. What remains to be seen is if this is in fact Microsoft’s strategy and are they able execute the idea quicker than companies like Jive or Salesforce. This strategy would also need to fit into Microsoft’s broader partner strategy – directly this includes vendors like Newsgator and Neudesic Pulse, but indirectly this also includes other system integrators and resellers. I actually think that’s a bold play, as it would require them to become the de-facto activity stream provider in the enterprise. There is also the small detail of Yammer being a cloud-based solution too.
Despite all the speculation, I don’t think this will become much clearer until we hear and see more details about what will actually happen at Yammer next. When I met with Yammer in San Francisco a few weeks prior to the news breaking about the acquisition I got the impression that they had their own ideas about taking Yammer beyond being a simple “virtual water cooler” app – in this respect, maybe the best thinkg that might happen is that Microsoft treats them as an important partner so we get to see what evolves there, much as I see other companies like TIBCO and SAP doing with their own Yammer alternatives (tibbr and StreamWork respectively).
I finally got sucked into making a comment about the Yammer acquisition by Microsoft…
Cross posted from the Headshift Asia Pacific blog, this is one in a series of diagrams I’m sharing from my forthcoming report on mobile apps for business. This diagram is an example of what I call a situational map, intended to help designers explore possible scenarios where mobile apps could be used. See the original post for further explanation.