The Curse of Industry Norms

Within your company right now, there are bound to be managers who are comparing the performance of their divisions or departments to industry norms. While they are meant to be helpful, norms are deadly if you intend to grow a highly profitable, thriving business. There are several reasons why this is so:

1. Norms pull you down to the average. A norm is, by definition, the average of whatever is being measured. They should only be used in a few circumstances. For instance, investors and bankers can use them to determine the quality of your management compared to the competition. Companies not up to the average can use them as proof that it is possible to improve. For everyone else, though, judging your performance by comparing it to norms will limit your performance. People will generally be satisfied once they've reached or slightly surpassed the average and will lose their "edge".

2. They say nothing of your capabilities. Even if you are #1, so what? What more are you capable of achieving? With your organization's experience, resources and team, you have unique opportunities that could take you well beyond anything an industry norm might suggest. Norms are based on the status quo. Living by the norms, you will never push yourself as hard as you would by striving to be your best. Why accept someone else's limitations?

3. Norms are backward-looking and will not lead to breakthroughs. They are based on history and, in a world of constant change, are inappropriate. If 20% growth was the industry norm last year, how is that relevant to the opportunities that exist today or tomorrow? A focus on norms is a focus on the past. Norms are like blinders on a horse; they narrow your field of vision and you miss opportunity. Norms lead to incremental growth at best. Breakthroughs come from a fresh perspective.

Comparing your performance to industry norms results in the curse of mediocrity, which is any performance below your best. Mediocrity is like thinking "poor" in the midst of abundance. It is like using a Ferrari to deliver goods door-to-door. It is squandering the vast potential for which it was built.

Here's what you could do. Throw away the industry norms and assess your own performance. However good it is, why is it not better? Look closely at the constraints and your assumptions. They are the keys to improved performance.

Many constraints are merely consequences of choices you've made. If your equipment is old and outdated, why have you allowed it to become so? If you don't understand e-commerce, why haven't you studied it? You may view some constraints, such as the weather, as uncontrollable. Yet even then, the risk is often controllable over the longer term. It could mean product or geographical diversification. Are you prepared to make some choices?

Assumptions are often unstated and overlooked. You may have some "sacred cows" in your company. You can be sure that your competitors don't respect your "sacred cows" and they'll be only too pleased to overtu
them. You should beat them to it! Test all assumptions and be sure they are valid. Ask, why not? Why couldn't we? How else can we do it? Often assumptions are made based upon the best information available and then somehow they become rigid rules. What has changed since the assumption was first made? Question everything.

If you want to thrive and prosper, focus on being the best you can be. Challenge your staff to find ways to break through old barriers. They will become leaders - people of vision who want to be out front. Managers look at norms; leaders look at possibilities! nnn