Why Benchmarking Often Fails to Deliver Results

Like many things in life, benchmarking often fails just when you need it most.  In order to motivate organizations to improve, external yardsticks are often used to motivate action.  In many cases, this is framed by a point example.  For example, “…if HP can move from a computer company to a higher margin services company why can’t we?” might be a battle cry from one GM of a company’s professional services organization. Well, these battle cries may be desperately needed by the organization, but they fall on deaf ears.  Why?  Because they are deemed as not relevant.  They are written off because the management team claims your comparisons are not relevant because the benchmark targets are smaller, larger, older, younger, higher margin, lower margin, manufacturing vs., software, goods vs., services - you fill in the blank. {Company X} is not like you because they are {blank}.

So then the backlash is to only measure your competitors.  But if you constrain your field of benchmarks to your competitors, how are you going to move ahead?  In most cases you can’t.  You need data from outside your direct competitors so you can implement ideas that have never been considered.

And finally, if that is not enough, why even bother to benchmark if you don’t plan on implementing?  The benchmarking is the easy part – but it does not improve your competitive position alone.  You have to do something with it.

On one hand, the benchmarks are rejected because they are not relevant, but on the other if you benchmark your competitors you may get a conciliation prize at best.  So what can be done to be successful?  There are three ingredients:  Compare with smarts, Borrow with creativity, and Implement with Passion.

Benchmarks [compare with smarts]:  Usually quantitative measurements of an important competitive parameter such as gross margin, time to market, net promoter score.  To get good benchmarks, you need “Data + Experience”.  You need experienced experts (internal or external) to interpret the data.  The best example is time to market.  Does the clock start when the concept is defined, or when you have a firm schedule?  If you measure it one way, and your benchmark partner measures it another way, how do you normalize or compare?  Hint:  it is not by averaging!

Best Practices [borrow with creativity]:  Usually qualitative, narrative descriptions of processes that explain why the benchmarks are, in fact, targets to shoot for.  These best practices are the heart of benchmarking in that the numerical benchmarks set the target and motivate the organization, it is the best practices that separate the winners from losers.

Implementation Initiatives [implement with passion]:  All the best benchmarking and best practices lead nowhere if they are not implemented.  The secret here is that you will need motivation, a path, and resources.  Really it is no secret, but many organizations would have you believe so.  After they benchmark, they send out the emails and wait for the shift in behavior that never comes.

Benchmarks and Best Practices are only 5% of the work.  The real heavy lifting is the 95% of the effort which is in adapting the best practices, changing behavior, and then ensuring that the desired result is achieved.  We believe that you can manage change by measuring behavior and with benchmarking and best practices you have the very best tools to deliver valuable and lasting change to the organization because you have the methods and predictive metrics in hand.

The next time you think about benchmarking – think first… are you ready to invest in the resources to get the job done?  If not, save your energy for other projects and wait for the time when you can step up to the challenge.  If so, Compare with smarts, Borrow with creativity, and Implement with Passion.