Very early on in my career I completed an MBA at a US business school (Wharton). I then spent many years working in tech businesses, ranging from small start-ups (Teamstudio, Trigenix, Aspective) to a global business (Qualcomm) which acquired one of my startups. These experiences have given me an enduring curiosity about how people build better performing businesses.

I’m sceptical that you can find the answer to this question in business books written by management gurus. I have to admit that I’ve bought a lot of these books over the years, rather too many in hindsight. The solutions advocated by their authors don’t integrate into any coherent whole. Worse still, these books lack sufficient evidence that their concepts work in practice. With a few honourable exceptions (Tom Peters, Clayton Christensen), it’s amazing how little these books add to the sum total of human knowledge.

Finding out what actually does work in practice is the key goal of a new branch of called empirical management. The seeds of this movement lie in a project called The World Management Survey started in 2002 by the Centre for Economic Performance at the London School of Economics. Researchers interviewed 10,000 businesses across 35 countries. Nicolas Bloom and John Van Reenan are the authors of the study manuscript. I find their conclusions very interesting.

The strongest factor that determined the differences in productivity between the firms studied was the level of adoption of structured management practices in a small number of crucial areas. Firms that applied these practices tended to outperform those that didn’t by a significant margin.

Bloom and Van Reenan identified three essential best practices:

  • Performance monitoring coupled with continuous improvement
  • Setting/monitoring of key goals
  • Use of incentives to reward individual & team performance

If they have such a powerful effect, why aren’t these best practices more widely adopted across all firms? I think the answer lies in the natural human tendency of consultants to develop implementation frameworks with more and more “features” to address perceived gaps in the original idea.

Let’s take ISO 9001 as an example. ISO 9001 is the most widely adopted performance monitoring/continuous improvement system in the world, used in more than 1m companies according to the 2017 ISO Survey. The 2008 version of the standard contained 27 pages and included 205 requirements. By 2015 this had escalated to 40 pages and 309 separate requirements. The core principles of ISO 9001 are sound, but do we really need all these new bells and whistles?

Wouldn’t it be great if you could bring Bloom & Van Reenan’s 3 essential best practices into your company in a simpler way, without the unnecessary complexity? What if there was a simple framework – supported by software that was really easy to use – that helped you focus on putting these in place with minimal hassle? In short, a management system designed with simplicity as a guiding principle, supported by streamlined software tools running in the cloud. This is our vision for Plio.

From my own experience, I would add one more essential factor to the Bloom & Van Reenan list: defining a clear business model. Without a clear understanding of how the business will make money – an understanding that is shared across the business – all the operational excellence in the world won’t get you very far.

So here’s my own short list of essential best practices:

  1. Performance monitoring coupled with continuous improvement
  2. Setting/monitoring of key goals
  3. Use of incentives to reward individual & team performance
  4. Defining a clear business model

Follow these in a disciplined way to build a better business. Not only will your business grow faster, you’ll see a less chaotic working environment and happier staff.

In my future blog articles, I’m going to discuss each of these four essential best practices and provide a simple framework for implementing each of them.