4 Ways to Avoid the Formula Trap
In business, we rely on formulas to guarantee future success. However, formulas have flaws.
In the popular movie Bohemian Rhapsody, Ray Foster, the head of Queen's record label, spoke with Freddie Mercury about their previous record's success and expressed his desire to repeat that success with their next record. Freddie stops him and plays an opera recording, illustrating his desire to do something different. Ray pushes back, stating, "Formulas work. We like formulas." In response, Freddie argues, "Formulas are a complete and utter waste of time." The band goes on to create the song "Bohemian Rhapsody," one of the best-selling rock singles of all time, recorded in the Guinness Book of Records as the number one song of all time.
Like Ray, we like formulas. In business, we rely on formulas to provide a pseudo guarantee of future success. If someone did it and it worked, we try to replicate it to achieve the same results. However, formulas have flaws. Formulas don't work in all contexts and situations. They can create a false sense of security and produce results that may be counterproductive. Business leaders should be cautious when adopting a formula, regardless of its prior success.
Consider this scenario. You are leading your team to create a company strategy to help differentiate you from the competition and catapult growth. You review various best practice approaches and select one the team will adopt. Everyone goes through the process, resulting in a perfect strategic plan. Or is it? Typically, outcomes are less than stellar, with plans either being ineffective, unadopted or simply collecting dust before the next round of meetings. Why?
This is the problem with formulas. If you use a boxed cake mix to bake a cake and follow the directions to the letter, you get a cake. But you get the exact cake everyone who used the same mix gets. It is no different, no better. What makes plans, strategies or approaches stand out is what makes them different. Formulas may provide the framework, but the value comes with unique insight and customization.
Therefore, you can't rely on formulas alone. Too many organizations continue to fall into the trap of relying on formulas to generate success, growth and innovation. However, there are four ways companies can avoid the formula trap.
Formula correlation does not equal causation
A best-selling author once claimed creative companies, such as Pixar Animation Studios, all have centralized restrooms. He argued this was the formula for creativity. By locating the toilets in the middle of a company's offices, it led to more chances of encounters among employees from different departments who might not otherwise interact with one another. While most would agree that Pixar is a successful company, the bathroom correlation does not prove causation. Most experts attribute Pixar's creativity to its nurturing peer culture, which allows employees to get candid feedback on their unfinished work.
Formula context is highly influential
McDonald's is famous for using a formula of granting geographically nonexclusive licenses to franchisees. Because it is perceived as a successful formula, many new franchisers have adopted this same practice. However, research has shown that granting nonexclusive licenses increases the likelihood that a new franchiser will fail.
Prospective franchisees fear their exclusivity will suffer if another unit of the same brand opens nearby. New franchisees need franchisees to grow, and the non-exclusive formula isn't well suited to an up-and-coming brand. McDonald's itself followed an exclusivity policy in its early years while still growing.
Formulas have a limited shelf life
When Bill Walsh became head coach of the San Francisco 49ers in 1979, he implemented a formula known as the "West Coast offense." With that offense, Walsh led the 49ers to Super Bowl championships during the 1981, 1984 and 1988 seasons. While the team went on to win two more Super Bowls, the "West Coast offense" benefits declined after other teams began implementing similar formulas with their teams.
Formulas have hidden risks
Research on technology startups in Silicon Valley found that the commitment management model, which focuses on hiring employees based on cultural fit and developing strong emotional bonds with those employees, has been the most successful. Startups using this formula are less likely to fail and more likely to go public than those who use other approaches. However, the same study found that switching that structure to another after launch triples the likelihood of failure.
As with so many things, the successful use of formulas is found in moderation. Be selective about which formulas you choose as a foundation and take special care in customizing and adapting them to your organization's distinct context. Formulas can help improve performance but cannot generate revolutionary and differentiating outcomes at face value.
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