The reality of business is that nobody is in an industry of one. Within your company’s industry and even outside of it, there are bountiful opportunities to exchange best practices and learn from the successes of others. As business leaders, it can be all too easy to put on blinders and only focus on what’s happening inside our own companies. While an internal focus can certainly allow leaders to hone in on important problems and set ambitious goals, it can also have the effect of isolating the company from all of the potential learning opportunities in the wider business environment.
So how do we, as business leaders, maintain a strong internal focus while also staying up-to-date with industry standards and expectations? The answer is benchmarking.
Benchmarking is the process of comparing your company’s performance and practices with other organizations in order to highlight best practices and promote their adoption. Every organization is unique in its structure and product/service, so blindly copying what competitors are doing is never the goal. Rather, it is an ongoing exercise in continuous improvement focused on understanding what the top standards and practices are in order to create a clear path for improvement within your own organization.
Many people are quick to confuse benchmarking with competitor research, but there are some important distinctions. For example, competitor research focuses on performance measures while benchmarking is more focused on identifying best practices and striving for continuous improvement. For example, instead of getting caught up in a competitor’s higher sales volume, a successful benchmark will focus on discovering what processes are utilized by teams within the company that allow them to reach a broader market and have high conversion rates. While some people may view competitor research as a sort of corporate spying, benchmarking is, above all, a partnership to share information for the mutual benefit of all involved parties.
How does it work?
In theory, benchmarking is a simple exercise that leaders of any company can carry out. While the process is simple in itself, if you are not careful about following-through with a well-thought-out action plan, then you may not achieve the results you were hoping for. In short, the process can be broken down into four steps:
1. Determine what areas need improvement within your organization, agree on primary metrics (could be anything from cost of production to employee engagement scores), and set clear goals.
2. Collect relevant data from other leaders and organizations.
3. Study the gap between your own organization’s standard and that of the benchmark.
4. Draft a performance improvement plan that allows you to track and monitor progress towards goals and is adjustable based on observed performance.
Why is it important?
Benchmarking is a critical exercise for many reasons, the first of which being that no company operates in a vacuum. Even if your organization is the best-in-class industry leader, there is always something that can be improved, and looking outwards to other organizations is a great way to maintain a competitive advantage. By maintaining an outward focus on industry standards and consumer expectations, business leaders can have a better understanding of their company’s own position in the market.
While benchmarking is a great way to look for solutions to a specific problem your organization is facing, it is also a useful method for identifying potential areas for improvement that perhaps were not even on your radar. By building relationships with other industry leaders and familiarizing yourself with their processes and best practices, you can discover better ways to do things and identify problems that you previously did not even recognize as being problems or inefficiencies.
Tips for successful benchmarking
While benchmarking can be a formal exercise with a clearly defined process (the four steps outlined above), it can also be as straightforward as seeking out opportunities to network with other continuous-improvement-minded leaders in your company’s industry and beyond. Sometimes it may even be easier to access professionals from outside your company’s industry, as they are less likely to view you as a direct competitor. Professional conferences, peer advisory groups, and executive workshops can be great places to expand your network. Additionally, many executive workshops provide participants with the opportunity to partake in site visits, which can be great opportunities to meet other executives, ask questions, and witness successful processes live in practice.
If you’re interested in learning more about opportunities for expanding your professional network and participating in best-practice knowledge exchanges, check out the upcoming FocusIn events here.
FocusIn events are designed to offer leadership learning and best-practice exchanges among senior executives in Operations, Sales, Human Resources, and Learning & Development across varying industries looking to develop and strengthen cultures of continuous people development in their respective organizations.
Our goal is to bring leaders from around the world to experience a unique learning framework, interact with like-minded professionals, and develop and align their employee engagement and development strategies.