Why Best Practices Are Killing Your Business B R E A K I N G H A B I T S Freek Vermeulen Breaking Bad Habits Breaking Bad Habits Why Best Practices Are Killing Your Business Freek Vermeulen Harvard Business Review Press Boston, Massachusetts HBR Press Quantity Sales Discounts Harvard Business Review Press titles are available at signifi cant quan- tity discounts when purchased in bulk for client gifts, sales promotions, and premiums. Special editions, including books with corporate logos, customized covers, and letters from the company or CEO printed in the front matter, as well as e xcerpts of existing books, can also be cre- ated in large quantities for special needs. For details and discount information for both print and ebook f ormats, c ontact b [email protected], tel. 800-988-0886, or www.hbr.org/bulksales. C opyright 2018 F reek Vermeulen A ll rights reserved Printed in the United States of America 10 9 8 7 6 5 4 3 2 1 No part of this publication may be reproduced, stored in or intro- duced into a retrieval system, or transmitted, in any form, or by any means (electronic, mechanical, photocopying, recording, or other- wise), without the prior permission of the publisher. Requests for permission should be directed to [email protected], or mailed to Permissions, Harvard Business School Publishing, 60 Har- vard Way, Boston, Massachusetts 02163. The web addresses referenced in this book were live and correct at the time of the book’s publication but may be subject to change. Library of Congress Cataloging-in-Publication Data Names: Vermeulen, Freek, author. Title: Breaking bad habits : why best practices are killing your business / by Freek Vermeulen. Description: Boston, Massachusetts : Harvard Business Review Press, [2018] Identifi ers: LCCN 2018029345 | ISBN 9781633696822 (pbk. : alk. paper) Subjects: LCSH: Organizational behavior. | Industrial management. Classifi cation: LCC HD58.7 .V46 2018 | DDC 658.4/094—dc23 LC record available at https://lccn.loc.gov/2018029345 eISBN: 978-1-63369-683-9 CONTENTS Preface vii Introduction: Fertile Ground 1 PART ONE How Bad Practices Prevail 1. We’re Suckers for Success 21 2. Causal Ambiguity 43 3. They Spread Quicker Than They Kill 53 PART TWO Eliminating Bad Practices 4. The Tale of the Giant Newspapers 63 5. More Than Painting a Gray Wall Green 71 6. Innovation in the Market for Employees 83 7. Ten Commandments for Identifying and Eliminating Bad Habits 97 Contents PART THREE Reinvigorating Your Organization 8. Embrace Change for Change’s Sake 129 9. Make Your Life Difficult 163 10. Balance Exploration with Exploitation 179 11. Be Varied and Selective 209 Epilogue 233 Notes 237 Index 243 About the Author 251 vi PREFACE Organizations are great; I love them. Not just because I make a living studying them, but because they are the true building blocks of human life. Organizations have pro- duced or affected pretty much everything we touch, eat, wear, and see. They achieve and construct things that no individual could make, or sometimes even imagine. However, organizations are also filled with practices— habitual ways of doing things—that are sometimes ineffi- cient and bureaucratic, and that make our blood boil. Sometimes these inefficient practices and strategies spread and persist for decades, or even longer. They per- sist just like viruses persist in nature. They take on lives of their own and continue operating despite leading to suboptimal results in the companies that embody them. The good news is that smart managers can purposefully identify and eradicate them, and then turn them into a profitable source of renewal and innovation. That is what this book is about. vii INTRODUCTION Fertile Ground Some years ago in London, I met a doctor who worked at an in vitro fertilization (IVF) clinic. After telling me about his field and the shape of the industry in the United King- dom, he immediately—and vigorously—started discuss- ing what he and others in the industry referred to as the “League Table,” a government-mandated and publically accessible website with information on all the IVF clinics in the UK that the Human Fertilisation and Embryol- ogy Authority compiles and publishes annually. Since the website included information on each clinic’s success rate, people had started treating it as a ranking. The website was an admirable attempt to increase transparency and influence consumer behavior. Since 1