On Benchmarking and Elvis

Unemployment numbers notwithstanding, the US economy has picked up ever so slightly in the past few months based on the anecdotal “evidence” from people I talk to. With that there has come a bit of a resurgence of the concept of benchmarking.  Notice no one benchmarks in a down economy.

The problem as I see it, is that benchmarking promotes what Jonas Ridderstróale and Kjell A. Nordstróm call Karaoke Capitalism – a propensity to imitate rather than innovate. Their message is essentially, “Look, no matter how drunk the audience (prospects and customers) gets, you are still not Elvis (Apple).” Benchmarking kills innovation and this is a death knell for most companies. Do think Apple benchmarks?

In the past, I was a disciple of this kind of thinking and attended dozens of benchmarking sessions at business conferences until I noticed one of two universal reactions in both myself and the other participants.

  1. If my company outperformed the average, I thought, “Well, I guess I am OK there. There is no reason to make any serious adjustments. After all, we are better than average.” The result – inaction on my part.
  2. If my company underachieved when compared to the mean, I thought, “Hmmm, I think there might be something wrong about this data.” I would begin to ask questions, not about how I could improve, but rather about the data set. “How many companies including were under X number of people? How many companies also did software development? How many did not have a training center?” The result – inaction on my part.

Now that I have seen the light (thanks mostly to Ron Baker) I have been a constant bane to the existence of those that attend these session. I share my story and ask the participants as they exit the room, “What specifically are you going to change about your company now that you know this information?” The usual response is stuttering followed by an expression of either or both of my observations noted above.

I want to be clear, I do not think action should be taken based on this data in the first place. Why? Because ultimately we (myself and those attending the sessions) were right about this data – it is not scientific! In many cases the data is not even a valid statistical sample set from the pool of companies that is attempting to be benchmarked. Comparing ourselves with a mean means nothing. On average every person on the planet has one developed set of mammary glands and one testicle. So what! Who cares?

Lastly, also almost all benchmarking data is based on numbers available from the financial system, which by definition are accounting for what happened in the past. None of these numbers is a indicator or predictor of future success.

Instead of filling out forms and attending benchmarking sessions, I suggest thinking about how to innovate and create value for your customers today and in the future!


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