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December 27, 2008

Benchmarking - advantage through copying?

I wrote a post recently on why Benchmarking  is a poor means for any company to achieve truly outstanding results. One of my readers, Brendan Dunphy took exception to this, and left the following comment:
Why do you equate benchmarking with being average? I think you have a logic failure somewhere! Benchmarking is a step in a process to understand where you are, others are and why. If you decide to use these valuable insights to be average that is a failure of imagination, leadership, strategy or something else and has nothing to do with benchmarking per se.
I appreciate his comment, the post was pretty short so I didn't really get a chance to make my points clearly. But have no doubt, I think benchmarking has earned far more for the consulting industry than it ever did for any of the companies where we implement it.

So whats the problem with Benchmarking?

benchmarking is primarily about determining the high water mark among a group of similar companies, or similar functions within companies, and highlighting the practices that they used to get them there.

I know there is a lot of management speak out there on what benchmarking actually is, and sentences four lines deep, but in essence - thats it.

So the problem is that at that moment in time it describes what the best are doing, and what they have achieved.

Then everyone else tries to do it, or a large proportion of everyone else. And then it becomes what a lot of people are doing.

You will never achieve competitive advantage from copying somebody else. Never. Particularly not if the information is available widely.

What I use benchmark reports for, and I do use them, is to work out how my clients can far surpass whatever the best are doing.

I look at the leading practices and cut them down to their essence, then look at how they could be done better. More to the point, I try to look at whether (based on my experience) this practice even matters!

Often unrelated practices are quoted as "leading practices: of leading performers. Very often in fact.

Create, find and spread leading practices - that's our job. Not just copy and duplicate.

In general, benchmarking is a tool that is useful for separating clients and their money - but it falls short of delivering competitive advantage, or uniqueness, or anything else but a cadre of copiers.