Benchmarking type best determined by your need

I’ve really enjoyed the conversations around the series focused on benchmarking, and I look forward to more points of view. One thing that has become very apparent is that benchmarking is defined very differently among the general public.

Benchmarking defined based on your experience

Those that have been involved in benchmarking tend to define it in a very robust, metric (usually cost-based) manner. This approach requires a lot of work to ensure comparisons between organizations to the same well-defined measure (the “apples-to-apples” requirement). The results of this type of benchmarking (we’ll call metric benchmarking) show how organizations compare to each other, but provide very little information on how any organizations is able to achieve a certain level of performance. It is about “how much”, instead of “how did you get there.”

Those that haven’t been involved in benchmarking in the past seem tend to define it rather broadly. It can be an Internet search, attending a conference, or it might have a very technical definition (benchmarking processor speed on computers). But, their definition is usually not metric in nature; it is tied to finding an answer.

Picking the right benchmarking approach for the solution

Obviously, both groups are correct to some degree, and every approach has positives and negatives associated with it. My hope for this post is to provide readers a way of thinking about benchmarking based on a conceptual diagram of a xyz-axis model. A benchmarking cube represented by the axis in the attached graphic.

benchmarking, cost, strategic, operational, internal, external

A model to determine the type of benchmarking that is right for you.

Benchmarking conceptual model

The three continuum making up these axes are described below. The main point is thinking through what you are trying to learn and what you need to be able to do with the information you collect. If you need very operational data focused on cost, you won’t get that by executing a high-level, strategic benchmarking effort asking for qualitative information.

  • Internal vs. External – You don’t always have to find external groups to learn from. Finding others to benchmarking with you will be the most time-consuming and costly part of your project.
  • Strategic vs. Tactical/Operational – Some projects are focused on looking to confirm or uncover general direction vs. very tactical information. Don’t use a sledge hammer to open a walnut.
  • Metric vs. Qualitative/Practices – Understand if you are looking for “how much” or “how they did it”. They are very different and require very different benchmarking approaches.

The desired result should define the approach. Starting with that in mind and thinking through your approach (hint: I’m serious, there are probably some excellent groups within your organization) can make benchmarking a lot less painful and your result a lot more useful.

If you’d like to go deeper down this wormhole and learn more about the basics of benchmarking, here is a page on the APQC Website with more information.

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Categories: Benchmarking, Continuous Improvement

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