Bad habits are holding businesses back

Freek Vermeulen explains how companies can be more innovative in his new book

Businesses are harming themselves by continually using so-called best practices that are no longer useful, according to a London Business School (LBS) academic. 

Freek Vermeulen, Associate Professor of Strategy and Entrepreneurship at LBS, makes the statement in his new book Breaking Bad Habits: Defy Industry Norms and Reinvigorate Your Business. 

He explains how businesses can identify bad practices, eliminate them from their organisation and then create new sources of innovation and growth by out-thinking competitors.

Dr Vermeulen talks about longstanding processes and strategies that initially make companies more competitive and efficient, but then hinder their innovation over time. 

“These bad habits spread like viruses and persist unchecked because managers don’t question their purpose or measure their effectiveness,” he said. “People become blind to their negative effects, thinking: ‘That’s just the way we do it here.’”

In his book, Dr Vermeulen encourages businesses to embrace change and challenge products, customers and markets to identify areas of improvement. 

Companies should balance exploration with exploitation to find new and develop existing opportunities that enhance their competiveness. They also need to establish an innovative environment in which they cull all but their best ideas. 

Dr Vermeulen provides 10 commandments for business innovation:  

• Cut out benchmarking. The herd mentality creates and perpetuates bad practices

• Reverse benchmark instead. Consider why your competitors are doing things a certain way. If there’s no good reason, try doing it differently

• Experiment if you can, but make sure you do it well

• Monitor entrants and companies in distress. Firms with less to lose may be undertaking bold experiments

• Ask insiders for concerns. Sometimes the best vantage point is from the ground level

• Ask outsiders for their feedback. If they don’t know how you do things, they’ll more likely question your practices

• Create bundles of practices. Together, these can form a new business model and a more sustainable advantage over competitors

• Take aim at a chunk of the market. Target a customer base that has been underserved

• Just stop the practice. Focus on what’s really important

• Watch out for “that’s the way we do things round here”. It’s an instant clue that you’ve found a bad habit that needs to stop.