Here are the top three reasons benchmarking isn’t good for you and your business
Benchmarking has been a buzzword for four to five decades. It came true in the years when TQM (Total Quality Management) was the only gospel truth on how to become the best. The Japanese had taken over the world and America and Western Europe to catch up; they needed to compare the best of what the Japanese were doing. And who proposed and continues to propose these ideas? Guess right, the big guys: BCG, Bain, Accenture, PWC, McKinsey, KPMG, Deloitte, Gemini, and the rest of them.
Benchmarking 101 simply says to get all the metrics of how your best competitor is doing and compare them to their performance. Wherever it performs worst, that’s the gap. Soon you will have cracked the code. Take immediate action to close the gap and you can be as good as them (your competitor) or even surpass them. They backed their presentations with sleek two-by-two graphics – process visuals as Alan Weiss calls them – and CEOs seeking increasingly expensive quick fixes would accept the recommendations and their treasuries would be the poorest for it.
Tell me, if benchmarking really is the cure-all antidote to mediocre performance (the greats would deny that they said it cures everything), how come Kodak didn’t compare their path to survival? How come Nokia couldn’t compare its path to success and beat Apple and Samsung? What about Motorola that invented cell phone technology and Xerox that taught the world to copy? Why couldn’t the bluest of the blue, with all his technological wizardry, be able to do it and have to send John Akers to the job market? Be careful, the elephant cannot dance unless and until it decides to do so by changing its genetic code.
So here are the top three reasons why you should never touch benchmarking with a ten foot pole if you really want to be cool, break new molds, and make the competition irrelevant.
1. Benchmarking ignores the culture of the top performing organization
This is the mother of all reasons why benchmarking is a fatal flaw. Assuming you are Intel and the Japanese are eating your lunch, what do you do? Are you going to a retreat and comparing the Japanese to get them out of the water? Are you calling a public meeting to sensitize everyone to the threat from the Japanese and to quickly form Rapid Action Teams (QATs) to assess the Japanese and pave the way for their glorious return? Are you sending your top executives to Harvard to learn benchmarking at its best to form a wave movement that makes you invincible overnight? Not! Not !! Not !!! You do what Andy Grove, Robert Noyce (and Gordon Moore) did. You shoot up and start over. Remember, only the paranoid survive. You cannot beat the Japanese in hand-to-hand combat because the cultures are different. Period! Haven’t you heard that culture will eat strategy for breakfast?
2. Benchmarking looks to the future in the rearview mirror
Assuming you are IBM and you are the most admired company in the world and you make fun of Big Blue, and you hear that two little boys are playing in their mother’s garage and they say they want to overthrow IBM. Does he postpone the board meeting and send spies to see what the guys are up to or does he do it as a point of reference? Benchmark what? Evaluate Apple I or Apple II or iMac that don’t exist yet? The Big Boys would deny ever saying that benchmarking should be done in such circumstances. But didn’t they say that benchmarking was the alpha and omega of competitive tools? You will never see the future with your rear view mirror, even if you are a wizard. The truth is, when there is a disruption (disrupted air travel, ocean travel, computer typewriter disrupted, weapon interrupted bow and arrow, etc.), everything resets to zero, so no amount of benchmarking can save you. We live in an era of discontinuity, thanks to Peter Drucker, and when discontinuity catches up with you and your industry, benchmarking is foolhardy of the first order.
3. Benchmarking ignores critical thinking and cannot help you invent the future.
The best way to own tomorrow is to invent it. Benchmarking cannot help you do that. Benchmarking is actually the antithesis of reinvention. The most revolutionary inventions of our time were or were never the product of benchmarking but rather of critical thinking. Think of such mundane products (now) as paper, sticky notes, and light bulbs, to name three. These things never existed before until people’s imaginations made them come true. To invent the future, start with a clean slate. You ask simple questions like, “Why is this job important?”, “What is it for?”, “Why this (and not that?”) These types of questions allow you to think critically, dig deeper, and invent tomorrow. while others are busy benchmarking and catching up with the supposedly best companies.
There you have them, the three reasons benchmarking should be avoided like the badge: benchmarking ignores the culture of the top performing organization, benchmarking looks to the future in the rearview mirror, and benchmarking ignores critical thinking. and it cannot help you invent and reinvent the future.
If you look closely, benchmarking is at the heart of supposed international best practices in industries around the world, and who are the proponents of this “best-in-class” concept? The great powers of consulting! At best, let me admit that benchmarking can help you make small incremental (additive) gains, but that’s not what you need. What you need is exponential (geometric) progress. Now that you’ve read the top three reasons why you should never benchmark, don’t waste time with benchmarking. For any new project you want to start, start with a clean slate. Yes, reinvent the wheel. Remember, Apple reinvented the phone with the iPhone, Starbucks reinvented coffee shops, and you can reinvent yours. Go ahead and do it.