Impact of the New Economy on Benchmarking
American Productivity & Quality Center
As businesses, markets, and business processes change, benchmarking continues to be a valuable and beneficial tool for organizations to ensure success. A few of benefits benchmarking can afford an organization include more efficient and effective processes, better and faster decision making, better products, more efficient and effective marketing, and smarter people.
The new economy provides new challenges for organizations, and benchmarking can provide fruitful opportunities for today's organizations. Successful benchmarking in the new economy requires a delicate balance between change and information management. Benchmarking allows organizations a tool for gathering information and understanding the best practices external to their organization, as well as internally. Among other things important in today's global economy, this information can allow organizations to improve profits/effectiveness, accelerate and manage change, achieve breakthroughs/innovations, and understand world-class performance. While benchmarking provides a tool for gathering best-practice information, even more so in today's marketplace, the true benefits of benchmarking are still tied to decisions and changes made using this information.
The Internet is a major driver of the new economy. It has helped bring new issues, such as globalization, greater access to information (for both customers and employees), greater pressure on margins, smarter customers, competition, commoditization of products, and increased flexibility to change, into the business environment.
These changes have had a major impact on the benchmarking process, as well. As we assist our members in benchmarking projects, we observe many of the same pressures. The main issues we face from customers are, "make it faster!" "I don't have a major budget available!," and "I need actionable information now!"
The American Productivity & Quality Center, (APQC) has modified its benchmarking methodology to address the pressing requirements of our member organizations as they face these new pressures. Each issue and specific reactions are outlined next.
Make it faster!
To speed up the benchmarking process, you must make sure that the project is truly supported. The things that contribute to slow benchmarking projects are the size of the scope, waiting on meetings or events to occur, and waiting for decisions to be made. Get buy-in and hold people accountable and you can affect the waiting time significantly.
Ensuring that the scope is very targeted to only the few key issues facing your organization or group will ensure that you can move through the project quickly, as well as ensuring you will have actionable information once the project is complete.
Another opportunity for speed requires relying more heavily on public sources of information. This is not without pitfall, though. Make sure it is a credible source. While the Internet provides increased access to many great sources of information, there is no guarantee that the information is good. Make sure to verify all of the information. There have been many Internet "benchmarking" groups emerge from a garage. A generally sound rule to follow is: if you used and trusted the source of information before the Internet, use and trust their information now.
I don't have a major budget available!
Getting buy-in, gaining consensus, getting input, and setting direction are all time-consuming parts of benchmarking. These used to be done via face-to-face meetings, a very costly form of communication. The use of the Internet, e-mail, and other tools, as opposed to face-to-face meetings can save a lot of time and decrease overall costs of benchmarking.
You can also use other media and technology to conduct the various aspects of the benchmarking projects, such as gathering quantitative and qualitative information. The Web, conference calls, and automated analysis can replace on-site visits, data entry, and cumbersome 30-page faxes.
Many times, face-to-face meetings are a critical part of a benchmarking project. There are many things you learn by seeing and talking with someone that you can't get over the phone or through their metric survey responses. If you do use face-to-face meetings, when possible, host them in central locations or major airline hubs, such as Houston, Chicago, or Atlanta .
I need actionable information now!
The "actionable" part is easy. There are many things you can do to create action from your benchmarking efforts. The first is ensuring the scope focuses on actionable issues, not more strategic issues or trends ( e.g., how do I better serve my highest-value customers as opposed to what are the latest trends in e-business).
Don't forget to examine your internal processes before starting a benchmarking project. There are usually many things you can change based on a better understanding of your own processes without ever examining another organization. Go through a true process mapping exercise with your internal peers, and you will be amazed what you learn.
Some of the things you can do to impact the "now" part of this statement are related to the scope of the project, the sources of information you use, and the definition of best practice you use. We have discussed the scope. Keep it targeted and actionable.
You can also rely more heavily on public sources of information from publications, the Internet, and conference presentations to name a few. Again, verify, verify, verify.
When defining "best practice," realize that there are very few true best practices out there. With the world and business processes changing at a rapid rate, few organizations have the luxury of ensuring every aspect of any process has been refined to a state of best practice. These processes are very successful and produce stellar results, but may have a few opportunities for improvement that may not pass a rigorous definition of best practice.
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