Best Practices vs. Thought Leadership

One of the questions I had when deciding to start a supply chain visibility blog was whether it would cater more to thought leadership or best practices. In industry, we hear these two terms used together, if not synonymously then at least as partial alternatives. Below I try to define each one within the supply chain context and then discuss how supply chain managers can leverage both in the ongoing quest for innovation and improved performance.

Thought Leadership

I first heard the term thought leadership around the time I was entering management-level roles. Although I was on the practioner’s side of the business, the term is almost always used in conjunction with consulting firms who focus on conceptually-rich solutions. It’s worth noting that thought leadership never came up in my master’s degree or in my earlier jobs doing supply chain analytical tasks. One could define supply chain thought leadership as the designation of a person, group, or process which is at the forefront of developing new approaches to supply chain challenges. To declare someone or something as a “thought leader” is to praise their capacity to unlock value or overcome obstacles with innovation beyond what the general profession or industry has achieved or proven. Thought leaders demonstrate these qualities:

  • .. they show deep understanding but are also creative and unique
  • .. their shared insights are effective and memorable
  • .. they attracts followers and impact those people’s decision making
  • .. they have immediate relevance

But, there are some reasons to be wary of the thought leadership appellation. First, it can be highly conceptual and industry will always need to land on its non-conceptual feet in order to produce supply chain execution excellence. To avoid labeling any-old discussion or idea as thought leadership, I would go so far as to say that a piece of “thought leadership” ought to result in some kind of path dependence for the creator. Consider this example; in 1999 Apple’s launch of a personal computer with a standard USB port was an act of thought leadership. It demonstrated an innovative approach to the problem of balancing personal computer costs against performance. But we could quickly point out that many personal computer producers and analysts were talking about such a move, so the idea of Apple as a leader may seem weakened by the fact it was part of a group discussing the future of its industry. I would propose that it was Apple’s decision to produce and sell hundreds of thousands of PCs with the new plug configuration that made it a thought leader. In other words, the commitment to an irreversible business decision made Apple a leader after all, because it moved Apple out of a cloud of cheap talk which could be reversed with little real cost and into a space which it alone occupied, defined, and temporarily competed in. It’s also important to note that at the time the USB format was clearly not the best option (it was much slower until later versions were released).

The second reason to be wary of the thought leadership designation is that most companies who brand themselves this way are likely to want to sell you their consulting or staffing time. In other words, thought leadership may simply be a fancy name for smart or experienced staff. For the general supply chain management community the question is this: is the term so watered-down that it should be avoided as a means of description and selection? Probably not, in my view.  Rather than abandoning a term like thought leadership, we need to wrestle it away from dilution by defining it for ourselves and deciding, as new information trickles in, who is or is not a thought leader.

For my part, I’m qualifying thought leadership as:

  • Innovative solutions for existing, well defined problems or opportunities in the supply chain
  • New definitions for supply chain aspects, which better frame the reality and offer better tools or frameworks for proposing or comparing solutions
  • Innovations that require commitment from their creator, including financial investment; hiring, releasing, or training of staff; introduction or commitments to technologies; binding partnerships; publicly intractable support or criticism; etc.

Best Practices:

The term best practice is common in supply chain management, and is especially used when distinguishing tiers of performance in industry surveys or reviews. In these contexts, best practice is defined as the best known solution to existing, well defined problems. These problems can be macro or micro in scale. For example, at a macro-scale the best practice for measuring supply chain activities may be the SCOR metrics, whereas the best-practice for a micro-scale problem like DC inventory counting might be double-blind counts executed by scanning carton-unique labels and forcing two 100% matches against the WMS case-label inventory list for each location.

The first aspect to be critical about when discussing best practices is how the original problem was defined. Many supply chain problems are difficult to define and, more importantly, it is the act of setting a definition and a corresponding framework of successful measures against the problem that occupies a majority of our attentions. In other words, brilliant supply chain leaders may spend more time framing the strategic problem then on building a solution.  Even in situations where the problem is well known, it is important to note that the solution-space may never demonstrate a clear “best” approach. To use a well-worn analogy, there probably isn’t a “best” fruit, just various types with various qualities. And just as the search for a best fruit would be a balancing act of taste, cost, fragility, and nutritional factors, the search for best practices within supply chain management may result in a portfolio of techniques rather than a single, noble, elite process, technology, or strategy.

The second aspect of best practices that requires attention is “where” the data comes from. My personal experience is that very, very little information about industry best practices should be taken at face value. Clear, well presented and widely available information about organizational processes is simply not available. There is a game-theory base to why this isn’t going to change: industry practitioners have to take active participation in framing and releasing information about internal business conduct and would never do so unless it is measurably in their interest. When Wal-Mart participates in white papers on its supplier-scorecarding based on environmental impact minimization it is releasing limited and sanitized information about its internal workings to industry participants. Although that may still provide genuine best-practice data, it still demands our guard to be raised as a questionable data source. In truth, most industry participants I know draw best practices mostly from themselves via first hand or second hand experience. They listen to industry peers, whom they have known for many years, soaking up small bits of information regarding how other organizations manage their supply chains. Then, when the situation presents itself, they enact similar changes on small scales and verify if it measurably improves their supply chain. Most of the time this generates feedback to the original contact, along with potential improvements from the second and somewhat different implementation. In this way the senior industry members are creating best practices and handing them back and forth to each other through the course of conferences, business dinners, emails, and the turnover of staff from one company to another.

So here are my personal steps on qualifying best practices:

  • Is the problem being address an existing, well defined problem? Is it widely applicable?
  • As part of defining the problem, have appropriate metrics been identified for comparing solutions? Do the metrics fairly review total desired and undesired impact from the solutions?
  • Is the set of solutions being evaluated complete? Are the solutions each supported using similar quality data about their implementation and results?
  • Is the identified best practice proven in terms of methodology (how to) and results? Is it modular enough to be repeated? Does it rely on undeclared aspects of the supply chain to succeed?

Putting It Together for Monday Morning

It’s fun to talk semantics, but where does this leave the supply chain manager on Monday morning? What have we gained from a ten minute discussion on Thought Leadership vs. Best Practices? Here are five points of value I’d like to close with, all applicable to your Monday morning (I hope):

  1. Innovation is at the core of business value
  2. Supply chain management is interestingly poised between the operational and the strategic, as well as organization coordination both internal and external.  Supply chain management needs innovation, and part of our need for innovation is the need for descriptions, attributes, frameworks, and terminologies to identify and communicate innovations.
  3. For solid game-theory reasons, there isn’t going to be a fair public forum for cataloging supply chain business practices. Our vast networks of professional contacts are great pools of innovative potential, but not safe places for unprepared participants. Those managers commanding budgets and eventually the working lives of staff are advised to bring critical frameworks with them when they go hunting for new ideas.
  4. Junior industry members have weaker integration into the professional networks and a weaker conceptual frame for dealing with innovations. For these professionals, the framework discussed in today’s article can be used (in whole or in part) to great effect.

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