Peer group comparisons are insidious because while they seem so safe and innocent, the effect is to level rather than levitate performance.
Those of you who are long-time, loyal readers of this blog (both of you) are aware of my loathing of peer group pressure and peer-group analysis in business. The problem is that when we capitulate to peer-group pressure, the standards of the group, rather than what we might be able to accomplish, become the measure of achievement. What is so sinister about the coercion of peer-group comparison in business is that it boils down to being pressured to do what everyone else is doing and because they are all doing the same thing, it makes it seem right and safe. My long-held, deep-seated belief is that a company wins not by being on a peer with the competition, but by being the competition.
What set me off this week was a conference call with the management of a company I have been working with and a consulting group hired by the company. The company has been struggling a bit with its performance and was seeking some assistance from the consultants as to what they might do better. The consultants started with a detailed comparison of the performance of other companies in the same industry. They made the point that peer companies were also reporting lackluster performance and in comparison, the client company was competitive with the others. This conclusion allowed the management of the company to feel better about themselves (and more willing to pay the consultant’s fees), but for me, it was just another example of the tomfoolery of relying on peer-group comparisons and pressure.
My belief is that peer-group comparison can be a valuable tool, but only when the peer you are comparing your performance to is you and what you did in the past. Your own past performance should be the peer comparison. My thesis is that so long as you are constantly getting better at what you do then ultimately you will always do better than your peers. When you focus on what you are doing and keep doing it better, there is no need to worry about what the peers are doing. In fact, doing so could actually inhibit your ability to innovate and limit your potential growth.
From my experience, the most pernicious problem affecting business managers is, and always has been, the deleterious effect of peer pressure. Anyone who’s ever managed a business or even a department knows what I’m talking about. Peer pressure is that never-ending force exerted by others that is intended to intimidate a person to change their attitude and behavior to conform to that of the group.
We all experienced generous helpings of this pressure as teenagers when, for better for worse, we’re cajoled into “going along with the crowd.” And while that might be an unavoidable accident of growing up, we should have outgrown that need to cave in to the group when we become adults. Unfortunately that is not the case for many.
Copycat Business Management Seems to be the Rule
The “accepted” rule of business seems to be that the goal is to keep up with the other businesses in our industry. The general attitude is that not only should we try to be on a par with the competition, but it’s also perfectly acceptable (even smart) to copy what the others are doing in hopes of achieving a similar result. The consultants have a name for this: It’s called best practices. I have long argued that chasing or responding to the actions of peer group companies is a disastrous management philosophy. The idea of copying the “best practices” of competitors will always keep us behind, while suppressing the potential for innovation and creativity. Yet, this “lemming-to-the-sea” behavior is rampant in many industries.
How to Avoid Peer Pressure
In my book, Cheat To Win, I devoted an entire chapter to avoiding peer pressure, noting that “when you start moving with the herd, everybody suffers. That kind of stupidity will bring down whole industries.” That prediction became eerily correct in the 2008 banking meltdown and financial crisis. It turns out that everyone was doing the same thing and that turned out to be the wrong thing.
Simply put, my rule is this: Ignore peer pressure and look for a better way. Be aware, but don’t compare your business to others. Don’t try to beat them at their own game. Always find a better, more creative way to best the competition. Create your own game and make them struggle to beat you. In simple terms, in order to combat peer-pressure we must have the confidence to be different. We need to be brave enough to not do what everyone expects us to do, just because they do it. Yes, that’s easier said than done, but it is the right thing to do. And I have a handy bullet list of principles to make that happen:
Thoughts for resisting peer-pressure in business
- Have a clearly defined set of values and beliefs; and stick to them.
- Keep your vision, know the market, concentrate on your company and focus on customer needs and wants.
- Have the self-confidence to believe that what you are doing is the right thing.
- Know what your competitors are doing; not to copy them, but to beat them.
- Be your own peer by comparing how you are performing today with how you performed in the past.
In the end, if you want to achieve your own brand of success, know that the best way to do that is to create, not copy.