Recently I helped a client build the case for an initiative they want to pursue. This included benchmarking how well different companies create customer experience. Forester Research and Bruce Temkin provide a wealth of white papers on the state of customer experience, and I recommend them to anyone who wants to get snapshot of this topic.
They are the exception. Most of what I see in practice is bunk, pure bunk.
It’s not the white papers that are bunk; it’s how they are put to use. Here’s why…
Surely one of our national pastimes is keeping up with the Joneses. What we see they have, we want. For some we not only want it, we want it one step better. Or maybe we don’t actually want it; we just don’t want to appear to be too far behind. You would think we are hopelessly doomed to live in state of envy and envy-activated decisions. There are advertising agencies that thrive on this very psychology. Providers of benchmarking studies also feed on this same psychology.
Who cares most about benchmarking? It’s you and me in our type A, achievement oriented corporate roles. After all, what would the executive upstairs think of us if we couldn’t position ourselves against the competition when asked, “Why do others do so well?” And if you are that executive upstairs…do you really want to look at your team and say, “We’re not number one and have no idea why”?
And so the mini-industry of benchmarking thrives on this anxiety to know where we stand and how we can imitate what has made others seem better.
So what’s to complain about?
1. Benchmarking is the preferred practice of companies that haven’t developed their own internal logic of performance improvement. Mindless followership can be expensive and a recipe for disaster.
2. Benchmarking is typically a snapshot measure, yet we want to believe these differences between firms will matter forever. Most management books that benchmark “great” companies are looking at one point in time, which is fine as long as you don’t expect these differences to be sustainable. Sadly most of us bet the farm on such hopes. Jim Collins, author of Good to Great, is a notable exception, in that he began his work with a sample of companies that had sustained performed over time.
3. Benchmarked practices don’t transfer well if we don’t understand the context in which the practices are performed. In the 1980’s America had its fascination with quality circles, seeking to implement these as if they could be lopped off from the broader set of Japanese process improvement approaches and business structures. As you may recall, this led to very mixed results, some short-lived, some non-existent.
4. Benchmarking promotes followership, not leadership. While you may only be thinking about your firm’s activity, as more companies imitate the same ‘leader’, the differentiation of those practices diminish.
So what to do?
I actually like benchmarking when it is used appropriately and thoughtfully:
1. Be distinctive. For every practice you benchmark, ask what could help make your firm distinctive in the way you carry out that practice (instead of asking how quickly can you imitate what others do).
2. Be historical. Look beyond the stated story of the benchmark leaders:
- What conditions drove them to make these practices stand out?
- What were the competing beliefs they had to counter to implement these practices?
As you may correctly infer, I don’t think history is bunk. If you want to change your future, place a little effort in understanding how you got to where you are today.
3. Be elastic. Anticipate the challenges of transferring and stretching best practices into your firm:
- If they are small and you are large, what would be necessary to scale these practices to a firm of your size?
- If they are large and you are small, what extra effort will it take to implement same practices in your business?
So let’s benchmark benchmarking:
Where have you seen companies very thoughtfully integrate the insights of benchmarking studies?
Where have you seen companies pursue benchmarking, only to create new dysfunctions within the firm?
I think Benchmarking is the preferred practice of companies that haven’t developed their own internal logic of performance improvement. anyways thanks for sharing great knowledge…..
Mr. Marc,
Thanks for sharing great article.
Truly companies have to benchmark thinking & thought process instead of copy-pasting (so called benchmarking).
The article crisply explains this.
Great!!
Marc – Thanks for articulating so well a thought that I’ve strugled to express for a long time. I’ve never quite known how to respond when people requested benchmarks. My feeling is that the challenge is not to measure yourself against others, but against how good you really can be.
You nailed it… I especially appreciate #3. Trying to adopt the practices of others without appreciation for the context that made those practices effective? Good luck!