In the 2000s, Nokia ranked first in mobile phone market share (around 30% according to the BBC) and held its ground for ten years. The company was known only at home - in Finland. In 1979, Steve Jobs visited the Xerox Research Center. At that time, in addition to copying equipment, the company was also engaged in the production of PCs. And Xerox inspired Jobs to create a computer with a mouse. In the same 1979, Xerox began to lose ground in the copier market due to its inability to compete with Japanese companies. But they managed to become competitive again and strengthen their positions.
Each of the listed companies has applied the successful experience of other players. This allowed us to make the business more efficient and flexible. If you do not pay any attention to others, you can seriously fall behind and even get lost. Open sources of information (and now there are more than enough of them) will help you learn about the successful technologies of other companies.
It happens that the efficiency falls and the reasons for the fall are not always clear, and it happens that it is impossible to achieve the desired result, no matter how hard you try. Benchmarking can come to the rescue. This, in fact, will be our article.
In simple words, benchmarking is borrowing technologies from leading companies and introducing these technologies into your company in order to increase its efficiency.
In business, the main thing is making a profit, but without high-quality interaction with customers, there can be no talk of profit. And profit is influenced not only by communication with customers, but also by the quality of the product itself, services, service, internal communication between employees and much more. Therefore, it is important to identify the area in need of the most attention.
Benchmarking can be applied to products and services. It is important to identify the desired result, set goals and conduct research. But first things first.
The renowned company Xerox was one of the first to apply the benchmarking method in 1979, when its performance indicators began to fall. Japanese companies have significantly moved Xerox from the leading position (you will learn more about this a little later).
It is not known whether Xerox would have regained its former position in the market if it had not applied benchmarking. Thanks to the subsidiary in Japan, the company was able to reduce research costs.
Xerox's research began with questions:
We are talking about open sources, not to be confused with industrial espionage. In our time, the openness of information is relatively higher than twenty, thirty and even fifty years ago, and there are simply no problems with searching now. But due to its constantly increasing volumes, it may be difficult to select.
Many conferences where the exchange of experience takes place are broadcast online, and useful and necessary information is often posted on the websites of the companies themselves. You just need to search. Fairs, hackathons, open tables, etc. allow you to get a lot of useful information: production technologies, methods of motivating and training personnel, methods of conducting social networks, advertising campaigns and much more. All obtained data can be used for the needs of your own business, adapted and applied. This will be called benchmarking.
You can also give an example from life: let's say we want to learn a skill, for example, drawing or photographing. In other words, we need a certain result. What are we most likely to do in this case? Let's turn to a person who already owns the required skill. And first, we will collect information and filter it according to the necessary parameters, for example, by territory, cost, skill level, teaching methodology, etc. After that, we will select the desired candidate, contact and go to her to study. We need to learn and master the technique of the master so that we can draw or photograph in a certain way. This will be called “process benchmarking” with a real-world example.
As you probably already understood, there are other types of benchmarking that we will now look at.
Benchmarking allows you to research and select effective business tools and it can be called universal, but you should remember about the specifics of the enterprise. Let's consider 5 types of benchmarking:
Undoubtedly, benchmarking is a very useful tool, just copying completely and trying to adapt to other companies as much as possible is definitely not worth it. They have their own specifics in the target audience, territorial location, production processes, etc.
It is also worth noting that in order to compare your company with others, you need to be well versed in the processes and know the desired result. After all, if you do not know the processes and do not see the end point, then with what indicators then work and what to strive for?
You can also highlight the stage of control. When the decision to optimize the processes has been made positive and the change process has already begun, the process and the results should be analyzed. This helps to make more accurate forecasts and respond in time to negative changes if they appear. Benchmarking is a very effective tool and can be used in different fields and at different scales.
This was far from the last Xerox experience with benchmarking. A couple of years later, research was carried out in the field of logistics in conjunction with the American enterprise LL Bean (outdoor clothing). As a result of the exchange of experience, both companies were able to adjust their sales processes, and this also led to positive results, as in the first case with Fuji. Thereafter, benchmarking became part of Xerox's strategy.
The HP corporation was also pushed aside by its Japanese competitors. To remedy the situation, HP organized market research, during which it was found that the quality of the manufactured goods plays a significant role in the success of the company and can be a priority of the price level when choosing a product. The direction of further development was determined. The corporation has developed two approaches to achieve this goal:
Nokia took HP as a basis for its research and also focused on the quality of its products. As a result of the benchmarking carried out, the Nokia brand has become recognizable not only in Finland, but all over the world, and also a synonym for the word “quality”. The company held the leading position in the cell phone market for about ten years.
Russian companies also use the benchmarking method. For example, the pharmaceutical company Nizhpharm has chosen Wimm-Bill-Dann, a benchmark soft drink and dairy company. The study of the display of the goods helped Nizhpharm understand that not the best places in pharmacies were allocated for their products and this had a negative effect on sales. The approach to merchandising has been changed.
City Clinical Hospital No. 1 in Novosibirsk studied the quality of medical services provided by its departments. And based on the data obtained, the 3 best departments were selected. In the future, their experience was an example for other departments.
Benchmarking is the exchange of experience or the application of an already known technique. Industrial espionage is not such research. For a successful application, it is important to remember the differences and the specifics of the reference object, because someone else's experience may not be suitable. Therefore, blindly copying someone else's technology is not worth it.
Before starting benchmarking, you should determine the desired result, then identify strengths and weaknesses, find benchmark players, collect information on the required indicators, then analyze the information found, work out hypotheses and decide on changes to your business process. And don't forget about control, because the results of changes must be assessed before drawing conclusions.
Benchmarking is a useful tool for improving efficiency and competitiveness. It is important to use it regularly because the first pancake may turn out to be lumpy and not bring the desired results, besides, market conditions are constantly changing. This means that you should be aware of new technologies, study trends and share your experience.
There are more and more open companies willing to share some of their internal processes. Exchange of experience is useful. It contributes to the development of business, economy, helps generate new ideas and build trust between market participants. So shake it off, friends!
Each of the listed companies has applied the successful experience of other players. This allowed us to make the business more efficient and flexible. If you do not pay any attention to others, you can seriously fall behind and even get lost. Open sources of information (and now there are more than enough of them) will help you learn about the successful technologies of other companies.
It happens that the efficiency falls and the reasons for the fall are not always clear, and it happens that it is impossible to achieve the desired result, no matter how hard you try. Benchmarking can come to the rescue. This, in fact, will be our article.
What is benchmarking?
Benchmarking is the process of measuring the effectiveness of a company's products, services or mechanisms in comparison with market leaders. Literally translated from English as "benchmark analysis, testing or comparative analysis".In simple words, benchmarking is borrowing technologies from leading companies and introducing these technologies into your company in order to increase its efficiency.
In business, the main thing is making a profit, but without high-quality interaction with customers, there can be no talk of profit. And profit is influenced not only by communication with customers, but also by the quality of the product itself, services, service, internal communication between employees and much more. Therefore, it is important to identify the area in need of the most attention.
Benchmarking can be applied to products and services. It is important to identify the desired result, set goals and conduct research. But first things first.
The renowned company Xerox was one of the first to apply the benchmarking method in 1979, when its performance indicators began to fall. Japanese companies have significantly moved Xerox from the leading position (you will learn more about this a little later).
It is not known whether Xerox would have regained its former position in the market if it had not applied benchmarking. Thanks to the subsidiary in Japan, the company was able to reduce research costs.
Xerox's research began with questions:
- What are we doing wrong?
- What are others doing?
- Why do they succeed, but we do not?
- What can we apply from their experience?
- How can this be improved at the lowest cost?
We are talking about open sources, not to be confused with industrial espionage. In our time, the openness of information is relatively higher than twenty, thirty and even fifty years ago, and there are simply no problems with searching now. But due to its constantly increasing volumes, it may be difficult to select.
Many conferences where the exchange of experience takes place are broadcast online, and useful and necessary information is often posted on the websites of the companies themselves. You just need to search. Fairs, hackathons, open tables, etc. allow you to get a lot of useful information: production technologies, methods of motivating and training personnel, methods of conducting social networks, advertising campaigns and much more. All obtained data can be used for the needs of your own business, adapted and applied. This will be called benchmarking.
You can also give an example from life: let's say we want to learn a skill, for example, drawing or photographing. In other words, we need a certain result. What are we most likely to do in this case? Let's turn to a person who already owns the required skill. And first, we will collect information and filter it according to the necessary parameters, for example, by territory, cost, skill level, teaching methodology, etc. After that, we will select the desired candidate, contact and go to her to study. We need to learn and master the technique of the master so that we can draw or photograph in a certain way. This will be called “process benchmarking” with a real-world example.
As you probably already understood, there are other types of benchmarking that we will now look at.
Types of benchmarking
The main goal of benchmarking is to improve business results, and for this it is necessary to identify weaknesses and, possibly, missing elements. The benchmarking method helps to be, as they say, in a "trend", to respond in a timely manner to market changes and make the company competitive. Nobody forbids the use of successful experience from different business areas, and these can be:- methods of collecting the target audience;
- ways of placing ads (aka advertising campaigns);
- delivery methods;
- loyalty programs;
- approaches to pricing policy.
Benchmarking allows you to research and select effective business tools and it can be called universal, but you should remember about the specifics of the enterprise. Let's consider 5 types of benchmarking:
- General. "Everything about everything" or "everything with everything." The seasonality of goods / services, pricing policy, methods of automating internal processes, equipment used, etc. can be compared. As you probably already understood, this type is better to use in comparison with its closest competitors.
- Benchmarking is competitive. Direct competitors are analyzed, and the stronger they are, the better. Even if the competitors turn out to be much larger, they still have a lot to learn from.
- Interior. When research is carried out within an organization between departments or structural units. In this way, you can identify areas in need of change. The identified technologies will be from their own organization, and questionnaires, independent examination, updating or replacing software, updating equipment can help.
- Functional. When comparing companies from different niches. For example, the production of paint and the production of metal tiles. Methods of maintaining social networks, content and structure of the site, methods of training new employees, etc. can be compared.
- Process benchmarking. Concentrates only on a specific process, for example, the delivery or processing of support tickets.
Undoubtedly, benchmarking is a very useful tool, just copying completely and trying to adapt to other companies as much as possible is definitely not worth it. They have their own specifics in the target audience, territorial location, production processes, etc.
It is also worth noting that in order to compare your company with others, you need to be well versed in the processes and know the desired result. After all, if you do not know the processes and do not see the end point, then with what indicators then work and what to strive for?
Benchmarking steps
Every process, be it hand washing or launching a new product line, has its own steps. For example, before washing our hands, we feel this need, we know how to do it and where. And if we are in an unfamiliar place and do not know where to wash our hands, then we try to find this information, for example, ask someone or go to search on our own. Benchmarking is also a process, and it has its main stages:- Identify weak processes. What needs improvement? What are we going to investigate? With what indicators of the market leaders will we compare? It is this step that helps to understand which areas of the company need to change. If there are several such processes, then you can select the most significant of them and first give priority to them, and after the first results are available, make a decision on further optimization of the processes.
- Find Leaderboards. Who is the benchmark for our purposes? Who already has the result we need? As we said above, in order to apply the benchmarking method, it is not necessary to take companies from only one market. You can turn to different.
- Collection of information. What do you need to know? What are we going to compare? You can select data on the internal and external processes of the company, data on the market. Inside information can be found on the organization's official website. This can be: data on marketing research, price lists, activity reports, recordings from conferences and seminars, etc. Information about the external environment can be obtained from open sources: books, media, business communications, etc. Market information (reports, market research, databases, etc.) can also be found on the Internet, or consult consulting companies or experts.
- Data analysis. What can you say? What's the conclusion? The information obtained is filtered and distributed by segments, and hypotheses also appear and conclusions are drawn. And all this is based on the received data and calculations.
- Solution. What should be done? Will this be helpful? Will it be beneficial? At this stage, possible solutions are developed to improve the efficiency of problem areas and a decision is made to introduce them or, conversely, to reject them. And it happens that the goal is adjusted, the tasks are changed or supplemented, and the research continues.
You can also highlight the stage of control. When the decision to optimize the processes has been made positive and the change process has already begun, the process and the results should be analyzed. This helps to make more accurate forecasts and respond in time to negative changes if they appear. Benchmarking is a very effective tool and can be used in different fields and at different scales.
Benchmarking examples
As mentioned above, Xerox is one of the first to try out the benchmarking process. The Japanese company Fuji mercilessly cut the prices of its copier products in the 1980s, thereby taking a portion of Xerox's market share. Xerox could not afford to bring prices down to a competitive level, so the company turned to Fuji product analysis. Studying features (design, manufacturing costs, management methods, etc.) helped identify Xerox new technologies that helped reduce costs and regain a leading position in the copier market.This was far from the last Xerox experience with benchmarking. A couple of years later, research was carried out in the field of logistics in conjunction with the American enterprise LL Bean (outdoor clothing). As a result of the exchange of experience, both companies were able to adjust their sales processes, and this also led to positive results, as in the first case with Fuji. Thereafter, benchmarking became part of Xerox's strategy.
The HP corporation was also pushed aside by its Japanese competitors. To remedy the situation, HP organized market research, during which it was found that the quality of the manufactured goods plays a significant role in the success of the company and can be a priority of the price level when choosing a product. The direction of further development was determined. The corporation has developed two approaches to achieve this goal:
- The quality of the product should be monitored at the stage of the project.
- For mass production, it is necessary to change the manufacturing process itself in order to ensure a high quality product.
Nokia took HP as a basis for its research and also focused on the quality of its products. As a result of the benchmarking carried out, the Nokia brand has become recognizable not only in Finland, but all over the world, and also a synonym for the word “quality”. The company held the leading position in the cell phone market for about ten years.
Russian companies also use the benchmarking method. For example, the pharmaceutical company Nizhpharm has chosen Wimm-Bill-Dann, a benchmark soft drink and dairy company. The study of the display of the goods helped Nizhpharm understand that not the best places in pharmacies were allocated for their products and this had a negative effect on sales. The approach to merchandising has been changed.
City Clinical Hospital No. 1 in Novosibirsk studied the quality of medical services provided by its departments. And based on the data obtained, the 3 best departments were selected. In the future, their experience was an example for other departments.
Summarizing
In human terms, benchmarking is the application of good practices to improve results. It can be used not only in big business. Benchmarking is also suitable for small businesses. And if transferred to life, then it can be used in personal growth, development of talents, generation of ideas, etc.Benchmarking is the exchange of experience or the application of an already known technique. Industrial espionage is not such research. For a successful application, it is important to remember the differences and the specifics of the reference object, because someone else's experience may not be suitable. Therefore, blindly copying someone else's technology is not worth it.
Before starting benchmarking, you should determine the desired result, then identify strengths and weaknesses, find benchmark players, collect information on the required indicators, then analyze the information found, work out hypotheses and decide on changes to your business process. And don't forget about control, because the results of changes must be assessed before drawing conclusions.
Benchmarking is a useful tool for improving efficiency and competitiveness. It is important to use it regularly because the first pancake may turn out to be lumpy and not bring the desired results, besides, market conditions are constantly changing. This means that you should be aware of new technologies, study trends and share your experience.
There are more and more open companies willing to share some of their internal processes. Exchange of experience is useful. It contributes to the development of business, economy, helps generate new ideas and build trust between market participants. So shake it off, friends!
