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Benchmarking is simply the practice of finding someone who does something well and using it as a reference to gather set the bar for improvement. This can be done within the same industry (i.e. comparisons to competitors), or in other industries to spur revolutionary thinking.

One frequently overlooked opportunity for benchmarking is within the same company. This may be under the same roof (accounting has found a great way to tag files on their hard disks), or in a separate division. With the rampant acquisitions going on today, many companies now have numerous organizations in their own ranks that they can benchmark.

Benchmarking tends to focus on matching the results obtained by others, not necessarily mimicking their specific processes. Benchmarking is simply the act of finding a yardstick against which to measure performance. The follow-up activity, though, is to try to capture the best practices of the benchmark organization and incorporate those processes into one’s own.

The benchmarked organization should be a best-in-class, but often, you may encounter a problem with access. You may not be able to gather the information that you would need to be able to emulate them. In these cases, the benchmark may simply be a target on a specific metric in order to remain competitive. For example, if a competitor advertises next day delivery, and that is important to your customers, you had better benchmark that metric, or your customers may not be yours for long!

Let’s reinforce an important distinction here. Benchmarking and best practices are related, but are not the same. Benchmarking is really about using the success of another organization to spur yourself on to greater heights. The term ‘best practices’ is related to finding the best current method of doing a specific process. In many cases, the benchmarked company is chock full of best practices. This may not always be the case, however. The may simply do a lot of things well, and have very few poor processes, which lets them outperform without any real standout processes.


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