Contents:
Where can
you find numbers to compare your processes against?
Who should you
benchmark with?
What should you
benchmark?
When should you
benchmark?
Where can you
benchmark?
Why would you
want to benchmark your processes against other companies?
How does
benchmarking work?
Why will companies
share process information?
There are a number of places to look for general information
about the productivity, customer demographics, company
demographics, and financial background for your industry. Two
good sources are the federal government, and trade associations.
Much of this information is there for the asking; you just need
to know where to look.
Of course, once you have the numbers there may be some
difficulty comparing your own numbers to them. Government
agencies and trade associations collect information that
describes the over-all industry; determining what those numbers
mean to your individual business is difficult.
Generally, there are two directions you can look to for
benchmarking partners:
Within your industry, you may need to know how your
competitors are doing things. This kind of benchmarking may be
comforting: you can find out whether you are doing things in line
with the industry average, or better, or worse. Although industry
benchmarking leads to new ideas and real, significant
improvements, it seldom brings you the kind of new idea that will
let you surpass the best in your industry. Some industry
benchmarking is necessary; however, there may be legal
considerations to keep in mind for this kind of benchmarking.
Anti-trust issues, or competitive trade secret issues may be
important when you’re benchmarking with your competitors.
Consultant support plays a role here. The consultant serves as
the middleman for the information, ensuring that any confidential
data provided by partners remains protected.
Another place to look for partners is outside your industry,
at companies who do things that are like your processes, but who
have developed their approach in a whole different way.
There’s where you find those breakthrough ideas that other
companies will be trying to understand and copy for years to
come. For example, looking at the process of commercial software
distribution, we might want to look at the petrochemical
industry, or at the telecommunications industry for partners to
learn from, to find fresh, unorthodox ideas that will make a
difference to our company and our customers.
Benchmark those things that are most important to your
organization’s success. The 80/20 rule applies here. Eighty
percent of improvement opportunities come from within the
organization and can be successfully implemented using your
normal process improvement practices. The other twenty percent,
the real benchmarking opportunities, should be those things that
will make a large difference, either because they represent a
serious problem for you, or because that’s where
improvements will bring a competitive advantage to your company.
All of the things that lead to creating an effect for the
customer are candidates for benchmarking. The "system"
looks like this:
We usually benchmark processes; however, we can and have
benchmarked any of the other parts of the system. The best
"rule of thumb" is, benchmark what will make the
biggest difference to the customers.
You may decide to begin a benchmark project when you see an
opportunity, something that will make a difference that your
customers will notice and appreciate. Or benchmarking may be a
project that is done regularly, to identify an opportunity for
radical change, then to make it happen.
A benchmarking project may take from a few weeks to several
months to complete. Usually, projects last a few months, 3 to six
months is normal, and require part time commitment from the team
members, perhaps 25% to 75% of their time, depending on how they
choose to divide the work and whether they have consultant
support.
Benchmarking is done all over the world. Many of the best
ideas come from outside of your industry, and from outside of
your culture. For the same reason, sometimes you will find the
perfect benchmarking partner is located close to your
organization, possibly within your own company. While sometimes
you will need to travel to perform a benchmarking study, often
much of the long-distance interviewing can be done using the
telephone, on-line, with video conferencing, or through the
careful use of other technologies. With experience, it is fairly
easy to match the opportunity cost with the resources that the
team can afford to invest in a project.
Either because you have serious problems that your customer
cares about and you need to rebuild some capability, and
don’t want to start from scratch. Or because there’s
something that is very important to your customers and if you
master it you can gain competitive advantage in your industry.
The process follows these steps:
Assessment: What level and scope of study will
provide the most leverage for improvement?
Problem Identification: What do we expect to realize
from this project?
Process Description: How does our present process
work?
Secondary Research: What is know/published about this
opportunity area?
Question Set Development and Testing: What should we
ask, to get the richest most useful information?
Partner Company Identification: Who has a process
that is best-in-class?
Partner Company Recruiting: Will the companies we
need to talk with talk with us?
Primary Research: What is the data we'll collect from
partner companies?
Data Collection and Management: How do we need to
organize the data to manage it as it is collected?
Data Analysis and Display: How do we analyze and
display the information to make it meaningful?
Opportunity Identification: What is the best
possibility for improving the process being studied?
Change Design and Implementation: How do we introduce
the changes so that we get maximum benefit?
Learning Implementation: How do we capture the
experience of this project so that the organization can
make further improvements more easily.
It’s a little more complicated than that; however, a
team can choose how much of the process they wish to perform
themselves, and how much they’d like a support consultant to
do.
There is a larger question in "How does benchmarking
work?": the question of "Why use benchmarking to get
ideas for change and improvement?" Continuous process
improvement calls for incremental improvements proposed by the
people on the job who know the process best, know the customers
and know how to guide the one to support the other.
Re-engineering demands that you clear the slate and start fresh
with no baggage from the existing processes.
Benchmarking works because of the capacity the human mind has
for making connections between dissimilar ideas. Edward DeBono,
among others, makes the case that creativity is the result of
making new connections between two ideas that seemed very
different. Successful benchmarking puts a team into a situation
where they are forced to observe their own process against the
processes used by their benchmarking partners. Making this
comparison leads to learning, to creativity, and to very much
better ideas. Sometimes the team may just copy something they
learn in benchmarking. Usually they will get a whole new idea
from what they see, when looking outside their domain at very
different paradigms. That’s what benchmarking can do:
establish the ground for true creative breakthroughs.
The motivation is simple: quid pro quo. If you share
information you get to see your partner's information. If you
accept an invitation to provide information in some area of
interest to another company, the other company is obligated to
reciprocate by providing you with information about a process in
which you are particularly interested. Companies who are
reluctant to reciprocate find it difficult to recruit
benchmarking partners.
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