Benchmarking allows firms to compare their performance with best in class results elsewhere. One of the common failings of benchmarking is that too often companies benchmark against their competitors. But trying to compare apples with apples can lead to a culture of blame and as a result – the wrong kind of management behaviour.
To be successful, organisations should have a clear idea of their own critical success factors (for example, reduction in cycle time or excellent customer service). Benchmarking need not be amongst companies in the same industry. When I complain about a poor service experience, I am not only comparing the service to others in same industry, but also comparing it against every other service I’ve had. If I am a supermarket, I am comparing the way they handle a refund, to the way Amazon handles a refund. If I’m in a hotel, I’m comparing how helpful the receptionist is, to how helpful the Disneyland receptionist was. The context doesn’t matter – because my expectations of great service have been set by great experiences. The focus should therefore be on the ability to perform selected activities well, such as billing, distribution or call response time.
Jack Welch believed that most managers think incrementally because they think internally. However, opening up to a quantum change means not asking how fast am I going, or how well am I doing compared to last year, but how well am I doing compared to the very best in my chosen focus.