Benchmarking: The 5 Steps

When you use benchmarking to simply see how you stand side by side with your competitors, you are just doing a research project. Nothing more. When you use benchmarking to improve your business continually… now that’s Benchmarking!

Benchmarking is a continuous process of measuring yourself against the best in order to improve. Author, Larry Kahaner best describes Benchmarking in 5 steps:

• Step 1: Identify what needs improvement in your company.
• Step 2: Identify best-in-class companies.
• Step 3: Measure your Company’s performance.
• Step 4: Measure the performance of other companies.
• Step 5: Use the information you learn to improve yourself.

Step 1: Identify what needs improvement in your company.

If you base it from a book, you would go out and get a picture of how things work within the company. Then get the thoughts of all the people involved on ways to maybe improve the operation.

From experience however, Competitive Intelligence should take into account that humbleness is an uncommon characteristic on most managers. Thoughts of, “I taught him everything he knows.” are human nature. While it is true that a manager trained or continuous to train the people under him, the manager and the trainee are two very different people so the insights they can arrive at are going to be different. While most insights maybe covered by the manager on account of his experience. It never hurts to get the insights of everyone under the manager as well.

The insights you collect from this step can either be complaints or suggestions for improvement.

This early, a way to improve operations may already be available from the company’s own personnel. A faster way of doing things maybe lurking in the minds of some of the trainees. This is application of Competitive Intelligence procedures within the company. After evaluating the suggestions for self-improvement, the complaints are analyzed to identify what needs improving in your company.

Here’s a tip from experience: If you find that you can get neither suggestions or complaints, you maybe facing a stagnant system or an unhappy, uncaring or unsupportive workforce. If it is the latter, then you have already identified a problem. If it is the stagnant system, then this is a red flag in Competitive Intelligence. Being stagnant is a symptom of decline or complacency.

Step 2: Identify best-in-class companies.

You now apply Competitive Intelligence to find out what the best-in-class companies are. A good Competitive Intelligence practitioner doesn’t just box himself with the company’s competition. He looks at it from all angles. An example works best: Motorola wanted to improve how fast they can get to delivery from the time a customer makes an order. Who do they turn to? A Pizza company: Domino’s.

Step 3: Measure your Company’s performance.

Here, Competitive Intelligence quantifies company-specific metrics so that you can measure yourself up against similar metrics of the best-in-class companies you identified in Step 2.

Step 4: Measure the performance of other companies.

From experience, the greatest danger in this step is that it becomes a pleasure trip to those in the company who are asked to join or help out in this step. A great deal of preparation must be made for this step to ensure that the information you collect will be focused. The mindset must be etched in stone that this trip was made with the purpose to work and not to go on a holiday.

Step 5: Use the information you learn to improve yourself.

The point to emphasize at this step is that Benchmarking is not being a copy-cat of the other company’s way of doing things. Think Star Trek Borg. Assimilate and make it your own by combining it with systems that you feel are still better than the other company’s.

Conclusion:

What happens now? Competitive Benchmarking is a continuous process. The next step is to establish these 5 steps into an ongoing program within your company. Keep using Competitive Intelligence on the best-in-class companies until all of the systems in your business become best-in-class themselves.

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