I’ve been running a series of continuous improvement workshops where one of the topics is Benchmarking. It’s been fascinating to see the participants’ reactions when I challenge them to step out of their functional boxes and think more creatively about benchmarking opportunities.
Most organisations today are aware of the need to have an approach to sustainable performance improvement, but often what sets the leaders apart from the rest is the rate at which they actually improve. These leading organisations are also typically not content to think they are the best, they want to know quantitatively that they are and are keen to improve further by learning from other leading organisations.
Tom Peters (the management “guru”) is quoted as saying “Success creates arrogance, arrogance creates complacency – complacency leads to failure“. Benchmarking can be a useful part of an improvement strategy to help avoid complacency.
To be of any value, benchmarking has to be done in a structured way, with adequate resources, and for a clearly defined purpose. It’s far too easy to see it as “an easy way to find out how to improve” and fail to understand what is needed to ensure success. Of course, it’s particularly attractive to senior managers because they think it provides the opportunity to visit other organisations (some have called this “Industrial Tourism”).
The working definition in Robert Camp’s seminal book “Benchmarking” is “the search for industry best practices that lead to superior performance”.
There are three areas in which information is required in order to benchmark successfully:
- Metrics – understanding the measured performance being achieved by others – it answers the question “WHAT do other achieve?”
- Processes – understanding the processes used by others to achieve those levels of performance – it answers the question “HOW do other achieve?”
- Organisation and culture – the structures, skills, capabilities and ways of working that others use to operate their processes and achieve the measured levels of performance – it answers the question “WHY do other achieve?”
Benchmarking metrics is easy, but tells you very little about how to improve. Benchmarking processes tells you how others do what they do, but only if you understand process thinking and process management. Adding in an understanding of the “soft stuff” helps explain why they get the performance that they do and is probably the most difficult area to adopt/adapt for your own use. If you’re watching the current ITV series on Virgin Atlantic you’ll understand the impact of culture on performance and also realise how difficult it would be to try to recreate that culture in your own organisation.
Benchmarking is not always appropriate. If you don’t have a good understanding of your own metrics, process and organisation, don’t try to benchmark; it’ll be virtually impossible to work out what data to gather, where to go for “desk research” and who to approach for comparator discussions. And, you’re not likely to be taken seriously by those leading edge organisations that you might want to approach. [Download my article Why Benchmarking Might Not Work]
If you want to achieve step-changes in the performance of a key process and are prepared to invest the resources into a benchmarking team to do it properly, the returns are potentially significant.
Of course, you could get some “safe practice” by starting some internal benchmarking, particularly if you have a number of offices/locations who are supposedly operating the same processes. I know a Financial Services business that identified over £1M in cost savings in less than 6 months and a Retailer that increased sales by over 5% in one year, just through internal benchmarking. They didn’t need a huge investment in resources to do this, just some simple skills for staff and some focussed facilitation support.
In my recent workshops some people get it; others don’t. Those that don’t are typically locked into “we’re different“, “it’s not relevant in our sector” and a few “we’re already world class“. I am reminded that Dr. Deming said “you don’t have to do any of these things, survival isn’t compulsory”.