Quick Tips - December 12, 2007

Tips from the practice masters...

Benchmarking requires time, effort, and discipline.  So when it is appropriate to make that investment?  And how do you go about doing it?  According to Paul Adams and Eden Fisher, whose Product Strategy Network Member Roundtable focused on benchmarking strategies, you do it when you really need to find a way to improve your product or business operation.  In this, the second of several quick tip articles taken from their presentation, Adam of ThermoFisher Scientific and Fisher, of Carnegie Mellon University, discuss the practice of how strategy managers can profitably apply benchmarking.

Do it when you're stuck.  If you can look at your own processes and improve them within the framework of your current organization, you don't need benchmarking.  But if your organization has attempted to make improvements in the past and found that its success was limited by the paradigm it operates in, benchmarking can help point the way out by studying other, more successful business processes.  You use benchmarking when you need to break the mold and find a new template for practice.  

Identify what to benchmark.  Look at the whole value chain because factors throughout it can affect performance.  Ask your customers what is most important to them and work backwards from there.  Ask the people downstream what they need.  And find out from the people who will be implementing your solution what they want to know about.  Secure their buy-in to your benchmarking strategy.

Target your benchmarking.  Start with your own goals and strategies. Look at your current performance.  What dimensions do you compete on? Identify which areas to improve.  Decide what key elements of doing business with your customers such as cost, delivery, and quality, will give you a competitive advantage if they're done well.  What processes will lead to this improvement? What are the factors that influence those processes?

Get focused.  Find other organizations that you'd want to compare yourself to.  But don't try to benchmark entire companies.  Instead, benchmark individual sections or specific processes.  Otherwise your effort will become overwhelmed.  Select non-competitive companies that offer meaningful and useful comparisons. 

Measure the right elements.  Set a goal of what you need or expect to achieve.  Focus your fact-finding on those factors which have enabled others to attain better results than yours.  Determine what the key elements are that differentiate performance.  Use measurable criteria to compare your processes against others.  Determine your data collection methods and then collect the data. 

Know what to ask.  Ask them what they think has enabled them to get to that level of performance?  What was important?  Why was it important?  What have they done that hasn't worked?  And why?  Try to collect this data using a manageable number of questions.

Use what you've found.  Determine gap between your current and potential performance.  Communicate those findings throughout your organization and cultivate their acceptance for the potential of higher performance.  Establish functional goals accordingly and develop specific action plans.  Then implement those actions, monitor progress, and then recalibrate your benchmarks.

Learn more about benchmarking in this series of Quick Tips:

Why Benchmark? To get better at what you do.

Finding companies to benchmark against

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