Fleet managers should be looking beyond current best practices and toward the steps that they can take to evolve their operations. Technology will play a key role in advancing past current best practices.
by Michael Bieger and Bill Elliott
July 5, 2018Whether you have seen the movie "The Founder," or were around in the 1950s, you probably still do not know that Ray Kroc and McDonald's didn’t invent the fast food industry. White Castle came long before McDonald's and it was A&W who took off with the franchising model.
What the McDonald brothers did was perfect the system for quick service with a smile. Ray Kroc took the systems that the brothers invented and sold them, along with the brand, to franchisees across the country. In a sense, Ray sold the “best practices” of McDonald’s to the franchisees and helped them prosper. He created a new standard by leapfrogging the best practices of others.
More recently the explosion of smartphones hit the global market. The iPhone was introduced about 10 years ago, well after the Blackberry and Palm Treo.
Associations regularly use the sharing of best practices as a major benefit of membership. Conferences and business groups often tout the perks of best practice sharing as their most valuable resources. Truth be told, there is no convention around what constitutes a best practice being labeled as such.
This in turn has resulted in some questionable practices, and arguably some terrible practices, being labeled as best. One that comes to mind in our industry is the initial strong introduction of procurement “best practices.”
Strategic sourcing was born out of a manufacturing paradigm and when it was first introduced to the fleet industry it treated the leasing and service of vehicles as a commodity; as unit items with a number of single cost drivers. Typically these costs were grouped in several buckets: the price of the vehicle and the per month service fees paid to the FMCs, and rebate dollars negotiated. The vehicle was effectively perceived as a standard cost widget.
Smart procurement organizations nowadays (and not all of them are now smart by any stretch of the imagination) realize that the service aspects of the fleet significantly affect the lifecycle costs, as does driver behavior and the efficiency of the service providers’ operations. A more enlightened worldview is emerging within some organizations.
Moving Ahead of Current Best Practices
If you build your entire organization off of the best practices of others, you may be better than the average, better than those who have not incorporated the process into their norm, but you are always going to be an industry follower instead of an industry leader. It will not, in and of itself, push your organization to the fore. Companies try to reach across industries to gain an upper hand by copying what is done by successful companies in adjacent or even competing industries — if following two best practices is good, certainly four or more would be better.
The world is changing at a faster pace than it has at any time in its history and we believe that the same will be said five years and 10 years from now. Technology is driving the pace of change and how we adapt to it will dictate how successful we will be. “Best practices” can no longer be considered best practices; they are now just the price of admission: they are the minimum needed to be successful, to not be left behind.
In effect, best practices are standard operating practices for solvency; they allow you to keep treading water while awaiting the next sea change.
We believe that no longer are best practices enough. With technology driving us faster and faster, what is needed is for us to move from “best practice” to “next practice.”
In the past this might have been called the bleeding edge, a place very few wanted to be. The technology of the past didn’t allow one to just dip their toe in the water of new ideas. One had to jump in feet first and, no matter how carefully analyzed or planned out, that leap in was terrifying because it was usually a one way street; in for a penny in for a pound. Let’s begin to think differently.
In a recent interview with Harvard Business Review, Freek Vermeulen, an associate professor of strategy and entrepreneurship at the London Business School, stressed the need for companies to seek out change before they became forced to change due to difficulties in the business. “Don’t wait for trouble. Be proactive. Because if you’re proactive, then you end up having to do less of it.”
Help Your Organization Stand Out
Now we are not suggesting that we put the brakes on sharing experiences and innovations with peers, as we all have advanced by learning from each other.
What we are saying is that to break away from the pack and bring your organization to the pinnacle you need to implement successful practices (formally best) and dedicate resources and creativity to focusing on your great practices and next practices. Next practices are those that will be bringing significant change, opportunity, savings, efficiencies and/or services to an organization. The leaders who put together these practices tend to be those who shape the future of not only their organization, but also their industries.
We believe the key to safely implementing next practices — indeed the reason why new thoughts, ideas, and ways of doing business can be explored now — is technology.
The rapid growth of supporting technology will allow for a safe move to inspired next practices. An excellent example of technology which allows for the flexibility of testing out new methods and ideas is telematics. For relatively little exposure you can develop and launch a program that, if not successful, can be adapted to what was discovered in a pilot, changed to suit the evolving nature of your fleet or eliminated entirely at the flip of a switch if it doesn’t work as planned.
Advances in technology and the ability of big data to analyze possible scenarios for new ideas will allow organizations to more quickly develop and launch their ideas in a safe (a relative term but certainly more cushioned today than in the past) and low risk manner.
We are not saying to stop sharing “best practices,” unquestionably we need to share our internal best practices and review and evaluate others as well; perhaps you can make a tweak to someone else’s best practices to propel you forward.
Back to McDonald’s. Ray Kroc adopted the vision of Harry Sonneborn, one of his employees, as the next practice for his empire. This vision ended up leading to the McDonald’s brothers’ demise. The growing chain was just barely turning a profit. Kroc went out and bought the land that franchisees would lease back from McDonald’s, turning them into a real estate powerhouse.
As you continue to learn through industry events, conferences and educational programs, think about your organization. Challenge the speakers, your colleagues and yourself to determine what are your next practices — the key differentiators that will drive you into the future. What are you doing that will set the new standard for the industry?
Michael Bieger, MA, is the immediate past president of the Automotive Fleet & Leasing Association (AFLA). Bill Elliott, CAE, serves as the AFLA executive director through his role as vice president of operations at Association Acumen LLC.
