The dark side of excellence

Never before has excellence been praised in public economic and entrepreneurial debate as it is today. Experts and influencers from all quarters are voicing the need for excellence and the benefits its brings, pointing to both the country system as well as individual organizations, whether they be public or private. Now, it is undeniable that excellence is an objective and an ambition we should strive for, but I think for the sake of serious discussion, it is worthwhile to call attention to some of the risks we may come up against, risks that we need to avoid.

But first, what does it mean to excel? Who decides whether a product, a company or an institution is excellent? To excel means an organization is recognized as excellent within the market of reference (or the institutional context) both by customers and competitors, or by other players in the same field. So the seal of excellence is not something we can give ourselves, or we can get from some sort of board of certification. Excellence is something to demonstrate by what we do, and excellence is recognized by those who reap the benefits, or those who, for their part, try to imitate our results. For instance, customers acknowledge excellence when they associate an organization with a particular reputation, and when they are willing to pay an extra price for that organization’s products or services. Competitors and other players in the system recognize excellence when they try to imitate the organization or its products, processes or managerial practices. If these two prerequisites are missing, I’m afraid the self-certification of excellence cannot be a valid substitute. In any case, it takes time to earn recognition for being excellent.

To understand where risks can crop up, I think it helps to remember that excellence is the outcome of a three-stage process. The first is “birth,” or the origin of excellence. Depending on the context, there is a beginning, sparked by an innovation or regeneration, or an organizational change that opens up a bold new path. The second stage is “recognition,” which I mentioned before. This happens when, within a market or an institutional context, one player is a benchmark of excellence, as demonstrated by the behavior of the other players (who buy, imitate, or make public statements to this effect). So, this player has earned public recognition for excellence. The third stage is when the recognized excellence is consolidated to the point of becoming a canon, a standard in the context in question. Now excellence has attained the level of “institutionalization.”

At this point, the organization and its management starts to take excellence for granted. Certainly this status is an indicator of consolidated, sweeping success. But it does have a dark side too, and this is where two major risks may emerge.

The first risk has to do with cognitive inertia. This refers to the standardization of certain processes, or the reiteration of models or ideas. In this scenario, the excellence an organization has earned becomes the only vantage point to observe the market environment. But the market evolves, whoever the observer and whatever the point of observation. So the risk is that this vision will become obsolete. This blindness in the face of change, this inability to consider a diversity of opinions, diminishes creativity and our vision of the future. In many industries, excellent made-in-Italy companies haven’t noticed the entrance of new competitors coming from countries that they consider marginal (for example, wine producers from the New World, or Asian producers in mechanical engineering). Or there may be big new domestic players (for instance, e-tailers in fashion and design) who have built consolidated positions in their own markets thanks to the distraction of excellent organizations.

The “distraction of excellence” can be traced back to the old adage of “thinking outside the box.” To explain, excellence, in its distortive parabola, narrows our field of vision inside the box, impeding the perception of stimuli from outside the box. Preconceived notions and our own mental schemas constrict our view, and the box turns into a veritable thought prison. Hic sunt leones: the unexplored lands beyond our own horizons no longer interest us. We become self-satisfied; ‘been there, done that, thought that.’ In this vicious circle, excellence aspires to nothing more than uncritical self-replication.

The second risk, closely linked to the first, relates to the emotional effects of excellence which elicit a certain sense of laxity the organization. We shut ourselves into our comfort zone, a space for self-complacency, where we are shielded from external impulses. In this case too, we risk losing contact with our own world, distancing ourselves from a market in constant transformation.

Ergo, we cannot assume that excellence, once attained, lasts forever. Instead we need to be continually rethinking it, challenging it, questioning it. Organizations have to observe themselves from various viewpoints, constantly questioning what they are doing. How is my market evolving? Who are the new up-and-coming players? What is my image today? How is it changing? These are some of the questions that every organization and every leader should be asking, to start looking beyond choices of convenience, adopting different perspectives, for instance the standpoint of suppliers or customers.

Managers and organizations with a long-term outlook have the strength and the humility to venture beyond the known, to get outside the box, to test out new ideas and come up with new solutions for the future. To do all these things, it may be useful to explore new markets, new demographic targets for products, or new organizational solutions. This would force organizations to actually put their excellence to the test, and possibly even to fortify it.

I believe three cases clearly exemplify this: Brunello Cucinelli, Loccioni and Campari, three excellent companies with very different competencies that do business in very different sectors. Brunello Cucinelli earns the seal of excellence in the quality of its fabrics and the outstanding craftsmanship in its production processes. A few years ago, the firm launched the Contemporary Factory Project, in which digital technologies enhance and revitalize craftsmanship to make it contemporary. Loccioni has achieved excellence in technological skills applied to systems for measurement and monitoring. The company has completely revamped its work models and work spaces to guarantee the creative contribution of its most precious resources: Loccioni employees. Last comes Campari, an organization of excellence in terms of brand management and relationship management with distribution channels. Campari has invested in a substantial participation in Tannico, a hugely successful online wine shop, to learn how to manage this new retail channel, with an eye to renewing and reinforcing the distinctive competences of the company.

To sum up, beyond self-complacency when we achieve excellence, we need to dedicate time to challenge excellence as well.