Because it’s not about you.
Benchmarking helps companies and their leadership keep score on how they’re doing according to what they choose to benchmark against. There are a plethora of KPIs in benchmarking in the areas of: strategy, operational efficiencies, resource management, growth, controlling costs, profitability, talent utilization, pricing structures…
…and the list goes on.
Companies look to benchmarking to measure the quality of policies, products/services, operations, strategies, cost/pricing structures…
…and the list goes on.
Leadership can look at various areas to benchmark against:
- Other companies in the same or a similar sector
- Other companies in the same or a similar industry
- Other companies in the same or a similar business type
- Other companies in the same or a similar business size
- Other companies with the same or similar market size
- Other companies with the same or similar market conditions
- Other companies with the same or similar business models
…and the list goes on and on…with new areas to benchmark popping up every day.
Companies look to benchmarking to help with improvements, set new standards, achieve performance levels or to prove performance levels.
As humans, it is our nature to compare ourselves and things we are involved in with other humans and things they’re involved in. It is unrealistic to reprogram human nature and expect companies and their leadership to stop comparing themselves to others, regardless of the reason.
Benchmarking does have a role to play.
The risk comes in when companies take benchmarking literally or rely too heavily on benchmarking to make decisions at both macro and micro levels.
You may have noticed a recurring theme in the bulleted list above. Other companies. Therein lies the problem and the risk.
When companies work to meet or beat other companies’ metrics or practices, their focus is in the wrong place. They are too focused on what is important to other companies and missing their own advantages.
It’s fun to talk about innovation, agility and chasing opportunities, but if a company doesn’t operate from its own unique position and capabilities it’s just lip service that ultimately minimizes growth potential and scalability.
Companies that miss their own advantages find themselves not being able to keep up with, let alone outpace, the competition. They are unable to see and take advantage of opportunities. These companies that rely too heavily on benchmarking find themselves unable to react and compete when the situation in the industry or the market changes. When markets change or when new competitors come in from seemingly out of nowhere, they feel blindsided and tend to be paralyzed on what to do next while the market passes them by.
When companies rely too heavily on benchmarking, they extinguish their own unique advantages and capabilities. This reduces them to being just one more of many instead of becoming the standout that everyone else is trying to keep up with.
The companies that are innovative, the ones that are able to capture market share and lead, are not the ones that are replicating everyone else. They have figured out how to use their own strengths and build new ones. They are the companies whose leadership are able to pull together their unique capabilities, assets and resources in a specific, reinforcing way to drive their own advantages.
These advantages can be used to: scale capabilities, open up market opportunities, expand into new markets, open opportunities in current strategic relationships, create new strategic relationships, optimize profitability and drive overall growth.
As with anything worthwhile this takes incredible focus and discipline, especially in day-to-day decisions and operations. It is important to understand, however, that this is a very intentional approach. To pull this off, the intention and focus is felt in every decision. It is the, “why” of every decision and the “how” in execution of strategy and in operational processes.
This works much differently from the, “why” and “how” coming from benchmarking. When the, “why” and “how” come from benchmarking an artificial ceiling has been created by default. All the company has to do is get to a point to be as good as or slightly better than said benchmarks. This artificial ceiling restricts and sometimes suffocates growth potential.
When the, “why” and “how” intentionally come from a company’s unique strengths and advantages, the team rallies around its own performance and not someone else’s. The culture of the company benefits because there are less obstacles in the way of buy-in with a purposeful intention. The intention becomes part of the belief system of the culture and is the, “why.” There is no ceiling and the sky is the limit. This is an incredible added value.
The visionary leaders of companies decide who the company is going to be and deploy resources to deliver on that promise.
They structure the business model, the operations, the products/services and how they go to market around that. They are rewarded by the ability to leverage lasting advantages at every turn and by being able to deliver a high level of value in their market(s) that clears the path for opportunities.