How can you use benchmarking to identify and implement best practices in your client's organization?

Perhaps a counter-intuitive view: Benchmarks often focus on numbers and fall short on practices and talent required. They are easy to obtain and hard to meet. Use them to determine sources of competitive advantage and areas you can improve. Then understand the capabilities required to get there (role of automation, technology, scale, other IP, etc). Translate this into a business case to get comfortable with the investments you need to make to get there.

Benchmarking, with its many benefits, is a fantastic tool for improvement. An organization can identify gaps and opportunities to implement by comparing its current practices against the best practices of similar processes/functions, both internally and with external competitors/leaders.

As many of the Consultants have expressed below, benchmarking requires data. Not only do you need data from your own company, but the Comparable data from peers / competitors is required to understand where potentially your company is outperforming or underperforming. Besides the obvious point that this data needs to be available, it is key is that you are indeed looking at comparable data, which often may not be the case. Something which is not yet highlighted is the linkage between Financial metrics, Operational KPIs and Capabilities. This link is important as ultimately to understand why there is underperformance, and how you can improve the KPIs and Financial metrics, you have find the source, which are the underlying Capabilities.

In my experience I learned that benchmarking is always supporting improvement and achievement of objectives, KPI's and in the end a strategy. It is also important, besides all the steps which were already listed here, to adapt the identified best practices to fit to what it means local culture, needs and business context where a client can be at a certain time. Besides this, monitoring and evaluating the implementation of such practices are ensuring quality of delivery process and also are opening the perspective of continuous improvement. Copy, paste will not function even on the same industry or similar organizational contexts or processes. People are those making always the difference in the way they involve and contribute.

Benchmarking involves comparing your client's processes, performance, and practices against industry leaders or competitors. Through analysis, you can identify areas for improvement and adopt best practices, leading to enhanced efficiency and effectiveness within their organization.

It is all about measuring performance in relation with Industry Benchmark requires certain defined approach. 1.Determine the scope in terms of business unit, Product / Services, KPI to benchmark 2. Comparing KPI performance with Industry Benchmark of similar size of a company / tier would be ideal 3. The variation of KPI performance with reference to Industry benchmark is not favorable then the following analysis should help - Defined Lead and Lag Indicators, Value Stream mapping (VSM), Application of standards / best practices, skill, competency, tools sub-process level & lead indicator level process performance. For example - Lack in implementation of standards could result in higher re-work/wastage in the process.

Important topics to be sensitive with the positioning of a company processes vis-a-vis other peers as sometimes it may be taken in a negative manner if there is not that level of organisational openness

Benchmarking clients can be best done by considering the level of improvement or transformation it wants to achieve or what the end goal is. To move to immediate next level, key metrics must be identified and compared to industry standards. It could be available from secondary sources or internal repository. Most of the clients face trust issues with the benchmarking data, even with the most reliable sources. The selection of industry, key metrics, performance data and rationale of comparison is the key to a successful benchmarking practice.

To select a benchmarking group, it is of utmost importance to draw a few parameters, check the alignment of benchmarking partners on those parameters then go ahead For eg. size of the company, the nature of business, profitability figures, etc must somewhere align with those of your clients. These partners will be a good case study to understand their growth and what were the best practices they indulged in Then you may go for the market leaders as well but the willingness to cooperate maybe less in this case

Selecting a partner for benchmarking is tightly connected to "who will be using the data collected" and "what kind of analysis is expected". For example, if the consumer of that data is a lean six sigma expert, then you need data point that are not just high level but go 10 levels deep into each interaction / each minute measurement. Once you have this clarity, then you can select the right partner. People : you may choose to deploy your consultants to conduct a benchmarking Technology : May choose between analyzing logs from applications manually, or select a process mining / task mining tool. Process : select a tool that will give you fast and accurate results. Do not compromise on your key requirements.

5 data collection best practices in process benchmarking project: 1. Standardize data collection: Develop clear protocols and templates to ensure consistency in gathering relevant data 2. Utilize multiple sources: Gather data from various sources, including internal records, industry databases, and direct surveys, to ensure comprehensive insights 3. Ensure data accuracy: Implement validation checks and verification processes to maintain data integrity 4. Capture context: Document contextual information such as process variations, environmental factors, operational nuances to provide a complete picture 5. Secure data confidentiality: Establish protocols to protect sensitive information and ensure compliance with data privacy regulations

After benchmarking, assessing the appropriate data is of utmost importance 1. Assess client data. Their sales and cost statistics, financial statements, any other material. Find trends. 2. Similarly assess benchmarked entities data and understand the trends 3. The above two will help you understand where your client stands and accordingly will help in finding opportunities and gaps

How do you convert data into insights will be crucial for any decision making in this step, ability to identify key words and making sense of unstructured and structured data coming from both internal and external sources will be critical !

Understanding how an organisation reports data and allocates costs internallly helps in assessing whether you are comparing apples to apples. An example - A pharma company had formulations and API (input to the formulations division). The company would allocate a significant proportion of its costs to the API division. API divisions metrics appeared distorted while in reality that was not the case. It was just an allocation issue.

Implementation often makes the difference between success and failure. Very good ideas and strategies might fail when you make mistakes or don't have the right commitment. A great way to identify major risks is a direct involvement of someone who already passed through the same steps. When you enrich the practices you had found, with a direct experience contribution, you can avoid most fatal flows.

The biggest task in implementation is to understand the risk-reward matrix in detail before taking the first step in implementation. Who, what, when, where, and why are the 5 W's that need to be answered for every best practice to be implemented so that you get the mindshare and buy-in from all stakeholders. A change management approach to build trust and confidence in the new way of doing things is critical before we apply and adopt the best practices in our day-to-day lives.

Implementing practices blindly can lead to misaligned efforts. Instead, dissect the "why" behind the best practices. What context birthed them? How do they align with your company's DNA? A cookie-cutter approach might bring temporary results, but lasting success hinges on understanding the root cause of excellence. Invest in fostering a culture of continuous improvement, one that questions, adapts, and innovates. This fosters "intrinsic business value", not just a borrowed veneer of success. Remember, "the chains of habit are too weak to hold a determined person, but too strong to hold a feeble one". Choose deliberate, tailored growth for long-term resilience.

Benchmarking is quite helpful in comparing existing business processes, KPI, and outcomes for a set or mature industry. If you are in the process of innovating and identifying disruptive business models that will redefine the boundaries of products and services for a need customers have not even thought about, benchmarking can be counterproductive. So, it is very essential to be sure that the raison d'être literally means "reason for being" for the whole benchmarking process!

While Benchmarking is a strong data set of best practices across industry but placing it in your client environment is a sensitive discussion which can take turns in different directions . My 2 cents would be while we should take the Best practices as a guide we should route such discussions through our continuous improvement journey road map so that we can relate the ideas with the best practices and then place the benchmarking statistics to improvise our current Goal

Whilst benchmarking against the ‘Best Practices’ is highly marketed and glorified practice by Consultants, it cannot be the cutting edge or game changer for anyone! Each company has it’s own unique approach to do what they do best and distinguish it from the competition! Every company has to identify these characteristics and hone them consistently to be Leaders in these spaces! Yes, it is always useful to be fully aware and mindful of what’s happening in the Industry and even non-competing businesses to know how it affects the environment but being a copycat doesn’t make anyone Great or Stand Out Extraordinary!

5 common pitfalls that affect process benchmarking project: 1. Lack of clear goals: Without defined objectives, benchmarking efforts can become unfocused and fail to deliver meaningful insights 2. Poor metric selection: Choosing inappropriate or irrelevant metrics can lead to inaccurate comparisons 3. Insufficient data analysis: Failure to conduct thorough analysis can result in superficial conclusions and missed opportunities for improvement 4. Overreliance on external benchmarks: Blindly copying others' practices without considering internal context and capabilities may lead to ineffective solutions 5. Inadequate stakeholder engagement: Neglecting to involve key stakeholders can result in resistance and implementation challenges

Here are additional considerations on how you can leverage benchmarking to enhance your client's organization: 1. Identify Metrics: Determine the specific metrics and performance indicators that will be used to evaluate performance and measure success. These may include productivity metrics, customer satisfaction scores, or financial performance indicators. 2. Monitor Progress: Continuously monitor and evaluate the impact of the implemented changes on your client's organization. Track performance metrics over time to assess the effectiveness of the initiatives and make adjustments as needed.