Escape the tyranny of benchmarking

by .

“If you want to build a ship, don’t drum up people to collect wood and don’t assign them tasks and work, but rather teach them to long for the endless immensity of the sea.”

Antoine de Saint Exupéry

 

The lure of benchmarking

It happened again to me last week. I watch a group of leaders talk about how best to take the next big and imaginative steps forward. One of them says: “XXXX [well-known management consultancy] have said they will do a benchmarking study to see how others are doing, compared to where we are, to kick off our thinking.” This means A) putting off doing their own thinking for months as they all get interviewed by the consultants and wait for their report, B) their starting point in taking a ‘big step forward’ is to look backwards at what competitors are doing, and C) stopping their own pro-active thinking. For thirty years I have seen too many organisations be cajoled into this, nearly always leading (at best) to incremental changes within the same linear-thinking paradigm. There are better approaches.

 

How did thinking get outsourced?

The consulting industry has built itself — in many ways — on persuading clients that their best hope of performing better is to benchmark against the best, and then just adjust what they do to match it. It can seem as if their whole business model is built on selling benchmarking, and the solutions that roll off that. And it is highly profitable for them, since it means selling similar solutions, based on similar data, and in similar ways, to everyone, delivered through well-trained juniors.

The outcome of everyone chasing benchmarks? All businesses become increasingly alike. All businesses are trying to base what they do in the next five years, on what has worked in the past five. It means giving too much weight to the progress of competitors, rather than listening more to customers, employees and society. It means your progress is not about anything that is special and distinctive. And the ultimate logic of any function or business unit who chases benchmarks is to get outsourced — as there will always be a lower-cost provider of standardised services.

With these disadvantages, why do businesses get so hooked by Benchmarking? Firstly, it is finance-driven as the pressure for incrementally bigger margins becomes the primary reason behind every aspect of how the organisation is set up. Instead of financial returns being the right outcome of the right purpose, vision, focus and spirit for an organisation, it becomes the driver. Secondly, it is safer: nobody gets criticised for making plans based on benchmark data.

“The outcome of everyone chasing benchmarks? All businesses become increasingly alike.”

Of course, learning from others, gathering evidence and keeping an eye on the market and wider world is essential. Benchmarking is useful for important transactional issues: how does customer response time via our call centre compare to other banks? How much do Executive PAs get paid in the FMCG sector? These routes to continual improvement are why benchmarking was invented.

 

We have so many stronger sources of ideas

It is time for us time to loosen these shackles and allow our organisations to think — dream — about how far they can go, and in what direction. This is unlikely to happen inspired by benchmarks and instructions to match them.

We must do this because the future will not be like the past — it will be unpredictable and turbulent. In a survey, 79% executives agreed: ‘what got you here won’t get you there’. We will win by being innovative for customers, staying agile and open-minded.

The best source of ideas and vision is from employees and cu- stomers. A new study shows that the degree of innovation in an organisation is closely tied to how many (and how often) employees are fully involved in this process, (and how diverse they are).

The best way to deepen commitment and loyalty among customers and employees is to do something different and with its own meaning. Those leaps forward that can change markets and the wider world for the better. Something that leaders and everyone really believe in. Not just like everyone else. And in the long-run it will be more sustainably successful.

 

Alaric Mostyn is a partner at Jericho Chambers and founder of consultancy Stonecourt, helping leadership teams make changes for the better. 


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