What is the difference between benchmarking and competitive analysis?
Benchmarking gives you an external perspective. You need to be able to measure yourself against companies or agencies you respect. And, unlike competitive analysis, benchmarking requires change; you take the information you find on better practices and implement change in your practice. Benchmarking does not just involve reading about best practices or mentally comparing yourself against them, but actually implementing changes to the way you work.
If an organisation performs the early stages of what you would consider formal benchmarking study, but nothing changes as result, would you still consider it benchmarking?
That’s comparative analysis. Benchmarking does require you to change your practice, whether that means you copy another company’s innovation or you use the information to facilitate another type of change in your own organisation. Many times benchmarking gives you ideas by showing you things you simply never thought of doing in certain way. When you see that, you bring it back home and improve on it. Often it’s matter of opening your eyes to new way of looking at something.
What are some of the critical pieces essential to successful benchmarking methodology?
The key is to know yourself before you try to meet with another company. If you don’t know how you work, and you don’t know how to measure it, you don’t have anything to share with anybody else.
Benchmarking is two-way street. Whatever you ask of others you must be willing to share. Whether it’s great pro-cess or really poor one, your partners will learn something from it. Sixty percent of all benchmarking work is done up front in this first step.
The next most important thing is to analyse who’s doing this process significantly better than you are. Once you’re through those two points, benchmarking is pro-cess of data gathering, analysis and process improvement.
What are some of the things companies should be doing during this initial phase?
Map out your current practice, process or whatever you’re trying to improve. You will quickly identify many non-value-added tasks in the way work is done. At this point, you can make decision. You can improve your process before you benchmark or you can leave it as it is.
Non-value-added tasks usually include getting approvals that aren’t really needed: requiring levels of signatures and actions that represent non-substantive work steps. We typically find that for every one of the processes you look at prior to going out to benchmark, you can yield 30 to 35 percent improvement in both cycle time and productivity just by eliminating the non-value-added tasks.
Once you’ve got the new process in place, and if you still want to make breakthrough improvements, that’s when you identify potential partners, define new set of tools and implement change.
How many organisations engage in benchmarking knowing in advance the nature of the change they want to make, as opposed to those that go into it completely open to best practices?
It’s close to half and half. Often companies have an idea of how they want to do process such as materials handling or distribution, and they know they want to transfer to an automated system. In these cases, companies will benchmark companies that already have these systems, learn lessons from them, eliminate implementation problems and validate what they want to do.
Other times you’re going to benchmark process because you really want to change it but you don’t know how. Or you might not even have that process within your organisation, so you’ll benchmark somebody that’s already doing it.
What are some of the myths regarding benchmarking?
Let’s talk about the one that says only formal benchmarking yields results. lot of people think you have to do formal benchmarking based on 10-step methodology that involves elaborate flowcharts to yield truly creative changes. The fact is, there’s lot of value in informal benchmarking, where you hear or see things you know are significantly better than the way things are being done in your organisation. In this scenario, you bring these ideas back into the company, implement them immediately and yield instant results. You didn’t do formal documentation of study but the results are at work in your company.
Such examples usually occur in the areas of human resources. It’s not always easy to arrive at formal metric indicating that system x is an effective method of reward or recognition. But you know it’s better than what you’ve got.
Then there’s the myth that says well-conducted benchmarking study automatically yields results.
Management will often deny that something can be done so much better than it is already being done. I’ve been involved in studies where we have all the documentation, have created process flowcharts, performed gap analyses, drawn up z-charts and everything else. Then when we are ready to implement, management denies the findings and so nothing happens.
What can we learn from that?
Always involve the people who are doing the work. Otherwise, you will never really understand how the work is already being done, and when you are ready to implement your recommendations, they’ll be perceived as just one more management diktat. That disempowers people.
Secondly, arrange for the people who own the budget to sponsor the study up front. That way you are more likely to get their buy in if the project later requires additional resources.
Another myth is the belief, often held by executives, that benchmarking is quick fix. They think you can benchmark process, implement change and show results in two weeks. good benchmarking study will take team of five to seven people, working third of their time, six to nine months before it’s completed and implemented.
A further myth is all that’s required to do benchmarking is to make trip or conduct visit. That’s what we call “industrial tourism” or “trip fever”. You’re going to see things, but you’re probably not the right person to make change. Furthermore, you’ll make the visit without having anything to share with your partner.
A lot can be accomplished through secondary research and you can often make process improvements from information you can find through library research.
What is it about the partnering process in benchmarking that makes openness and sharing acceptable?
People often think that if another company excels at certain process they will be unwilling to share information. When I call company, they know I’ve done my homework and, in way, I’m appealing to their ego. What I’m really telling them is they have demonstrated world-class best practice.
If I am good partner, I’m going to share with you how I do work as well. Even if the process I want to benchmark isn’t one of my best, I wouldn’t be in business if I wasn’t doing some things right. I will say to potential partner, “There might be one or two steps within my process you haven’t thought about doing and you could use to improve your process and maintain your leadership position.”
It sounds as if people coordinating benchmarking processes within an organisation need to become internal ambassadors.
Right. Also, when you do benchmarking study with, say, 10 other companies you promise to share key findings with them. Companies typically get blinded matrix of participants’ process results. One or more of them may come back to you and say, “Company is doing something significantly better than us. Would you tell me who that is and can we benchmark with them?”
Then you become third -party ambassador. You can open up doors to other companies. When you do that, you become valuable to all those companies. You get opportunities all over again because they’ll come back and say, “You helped us, is there anything else we can do for you in the future?” Benchmarking is an ideal networking opportunity.
