Often times, we get attracted to try-out the trending practices in the market without analysing the relevance to self and organisations – Benchmarking is one among them.
Benchmarking has its own merits but it has to be carried out with adequate thought process of what, where, how and when they will add value to people and organisations. Though we can’t escape from the world of benchmarking (more specifically external benchmarking), it will be interesting to knows its limitations.
Tendency to Imitate
Benchmarking could be as simple as finding who is best in class or find out what is believed to be best practice and simply replicate. Organizations tend to imitate the “so called leading practice” without analysing the relevance to the context which may be waste of time or counter-productive. Imitating consumes a lot of time and effort but may not yield a proportionate value. Copycat business practices can be beneficial as they closely resemble their competitors but can’t sustain with an imitating strategy in a long run as it will erode the competitive resilience whether it is product design or marketing strategies or people practices.
Fades away your DNA
Every company has a unique DNA. Once organizations catch up with the benchmarking syndrome, they are busy comparing whatever they do instead evolving and innovating from within. Benchmarking without a purpose fades away the own DNA which impacts both employee and customer engagement. What works well in company A may not work well in company B as their DNA is different even with in the same industry.
Addiction to data
Today, everything gets measured and we are all addicted to the % symbol but data isn’t everything. There are lot of social/cultural factors and organizational values which will be difficult to study and compare with a mere empirical reference. Benchmarking heavily focuses on data rather than understanding the end-to-end processes and the origin of data. Data is definitely useful to impress meetings but one needs to have a deeper thinking on what this data exactly means and what is the relevance in the context.
Push you to fit-in and not stand-out
It’s all about choices…. whether you want to innovate and stay relevant for future or fit into the umbrella of industry practice. Benchmarking may help to fit-in or blend into to a particular business environment but doesn’t help to stand-out. There is no doubt that benchmarking provides a platform to compare but one should not forget that a leading practice need not be a right practice! Businesses thrive on creating a difference and not resembling others!
Limits innovation
Benchmarking promotes a follower’s strategy where the focus is to compare against the so-called leading practice/standard and limits out-of-box thinking. Innovation essentially starts from thinking beyond obvious and implement new ideas to create value whereas benchmarking helps to determine who/what is perceived as the best in class and compare or follow them. Benchmarking encourages the behaviour of replicating and limits the urge to innovate and make a difference.
Apples & Oranges
One of the popular benchmarking statement in the corporate world is “If they can do, then why can’t we do?” This doesn’t make sense most of the times. Every company is unique and uniqueness comes from the region/geography, nature of business, leadership, culture, people and the list goes on…. Even within the same industry, the sales targets or attrition rate can’t be an apple to apple comparison. Benchmarking at times can lead to setting unrealistic thresholds/targets.
I think benchmarking should be used “to get a taste of the market practices” and analyse what makes sense instead replicating completely. Benchmarking is a wonderful tool if it is sparingly used and only when needed to get the right results and not similar results of competitors.