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Benchmarking – The acceptable face of cheating

What is the ultimate route to business success? There are those who assert that hard work and dedication are the answer to this question.  Business gurus though, might, deride such a simplistic view. It is almost unheard of, for a newly launched product to be immediately profitable. Instead, every aspect of the product from design, through manufacture to marketing, customer service and supply must be experimented with until a formula is reached which moves the balance sheet from the red to the black. The problem with this time consuming process is that, somewhere along the line the company is highly likely to run out of money and go bust, before that magic formula is determined. The irony is that in any case the product may never have proved profitable anyway.

So what is the answer? It may be relevant to ponder on the business model that consistently outperforms all others following launch, that is the franchise. Franchises are so many times more likely to be successful than other businesses because their purchasers have cheated the system. In attaining the rights to a business model that has already been tested rigorously and optimized for maximum profitability, they have side stepped the risk factors normally associated with new business.

In the conventional business world, “cheating,” too has its use.  Why re-invent the wheel? If we seek to emulate the processes of the most successful companies in our industry, surely, we, too, will become successful? This very concept is now routinely practised by businesses in a procedure known as benchmarking. The aim of benchmarking is to close performance gaps that exist between organisations.

Benchmarking is a technique used for comparing processes carried out by other, “best in the class,” companies. Efforts can then be made to align in house processes more closely to those practised by better performing companies. The process allows companies to gauge their position in relation to others in the field and to plan for performance improvements which aspire to best practice. Suitable processes to ear mark for benchmarking are those procedures which are perceived to be underperforming within the organization.

Companies chosen to take part in a benchmarking exercise are known as benchmarking partners. It is advisable for a company to be clear on what their company is seeking to learn and to perform full data analysis on their own process before seeking out benchmarking partners. The choice of partner is critical. A suitable partner may be a company that operates in a different field but uses identical equipment to perform a process. However, a company operating in the same field that uses different equipment may not be such a good match. Benchmarking alongside a company operating in the same field is known as performance or competitive benchmarking and is often enabled via third parties so that confidentiality is protected. In process benchmarking process maps are made used to enable comparison.

Data is gathered during the benchmarking process via carefully worded questionnaires which aim to extract information relevant to the process in question. It is highly likely that direct competitors will be unwilling to participate as benchmarking partners because of the sensitivity of the information gathered. However, closely related or even unrelated industries may provide just as valuable information and multinational are often willing to participate since they don’t perceive the little guys as a threat and to some degree because they like to blow their own trumpet.

So there we have it. Benchmarking is not only hot but it is also seen as a perfectly legitimate way for your company to cheat its way to the top. Can we ask any more of the system?

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