Quick Tips - November 20, 2007

Tips from the practice masters...

The terms ‘benchmarks’ and ‘benchmarking’ are often, if mistakenly, used as synonyms. But they are not the same, according to Paul Adam and Eden Fisher whose November Product Strategy Network Member Roundtable presentation focused on Benchmarking Strategies; one is a metric, the other is a process. Both, however, deal with the effort to discover and apply better practices to a product or business operation. In this, the first of several quick tip articles taken from their presentation, Adam of ThermoFisher Scientific and Fisher, of Carnegie Mellon University, outline the concept of benchmarking and how strategy managers can profitably apply it.  

Distinguish benchmarks from benchmarking.

Benchmarking is a form of learning. It is the process of discovering the gaps between your current performance and the performance you aspire to. It involves determining who is performing better and why. In the end, it involves adapting the causes of improved performance to your own processes. Benchmarks, on the other hand, are about measurement. They have to do with quantifying the gap between where you are and where you hope to be. Benchmarks can be useful to gauge how your organization measures up against specific goals or to targets related to business processes, functions, finances, strategies, or product performance. But simply capturing benchmarks can miss out on the essential learning component – the ‘why’ – of improved performance.

Adapt, don’t adopt

In many organizations, there is an initial tendency for employees to object to benchmarking as a form of copying others at the expense of doing their own innovation. That objection is legitimate. Different organizations have different needs, different circumstances, different cultures. The underlying issues may be different as well. What ought to happen is that in benchmarking another company, any superior practices which may be identified get adapted to the distinctive conditions of the company that is looking for better solutions to its own needs.

Benchmarking ≠ Best Practice

In every kind of endeavor, innovation will constantly raise the bar of good practice. A practice is considered a ‘best practice’ if, at that point in time, it is has been proven as the most efficient and effective procedure for accomplishing a specific task. The process of benchmarking can help you identify proven practices – including ‘best practices,’ – that are better than current practices as measured by specified criteria.

Benchmarking is a reality check

The process of benchmarking requires using a discipline that can establish whether a particular practice actually works in another organization as determined by specific, measurable criteria. This is distinct from identifying practices that you think might work, or that ought to work in principle, but without first examining the ways others do things. Although there is always room for new ideas and innovative practices, proven practices provide greater certainty to any organization which is seeking to improve itself.

Benchmarking spurs new thought patterns

After benchmarking, an organization may find that its practices are already among the best in the industry. But the underlying philosophy of benchmarking is that no practice should go unchallenged, untested, or allowed to become too insulated from comparison with other organizations and alternative processes. Periodic benchmarking is a constant challenge to the status quo requiring employees to think outside the box and, especially if they’re feeling stuck, to reach beyond their organization’s comfort zone.

Benchmarking can lead to product innovation

Benchmarking against competitive products can lead to new products or to upgrades of current ones that include innovative combinations of familiar features. There are always new ways of comingling old ideas. Innovation is typically applying an idea from one endeavor to an entirely different one or combining two or more ideas which have never been put together before. By identifying the elements of better products and practices elsewhere, benchmarking can help an organization spur innovation through grafting those components in novel ways.

Learn more about benchmarking in this series of Quick Tips:

How and when to benchmark.

Finding companies to benchmark against

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