Benchmarking is the exercise of comparing yourself against your competitors, although described in benchmarking parlance, this is industry standards. Best practice measures much the same thing, and again, it’s concerned with your industry, or to be blunt, your competitors.
Benchmarking ranks you under various criteria into quartiles, and you obviously want to be in the top quartile because then you are better than most of your competition in the benchmarked businesses, which inevitably, will not be all the players. They may not even be representative – you simply don’t know. You won’t know what all the criteria are, although you may know how many businesses were in the survey, what geographical areas, and generally what sort of size. At best, it produces a sort of average which it then chops into four quartiles, so the risk of a self-congratulatory pat on the back based on criteria you don’t understand is quite high.
Best practice has similar issues in that someone, which will not be you, would have decided what constitutes best practice. It is unlikely, unless you’re a member of a professional association, that it will be a particularly comprehensive measure – it’s best practice in this area or that area but not an overarching set of rules. Professional associations, which are risk averse, publish ostensibly best practice rules designed to prevent reputational damage to the association as a whole.
One can also say that best practice, although widely adopted, is past practice. So it can’t be leading thinking, which has not been widely adopted. Do you want to be behind leading thinking, or up with it? How best do you think you can succeed?
So in summary, benchmarking and best practice relies upon you comparing yourself to your competitors (people who do not have your best interests at heart) and is not comprehensive and is at best an inward-looking view of where you might be.
There is no customer focus. It’s obviously worthwhile keeping a wary eye on what your competitors are doing, because they may have a good idea which you can exploit, but trying to be a “me too” business in any market means that you will not be maximising your opportunities. There will be some measure in benchmarking or best practice about customer service. These measures can be copied. So if you do do something better than somebody else – let’s say you can get goods to the customer quicker, your competitor can notice this and copy it, and your competitive advantage will disappear.
So I don’t value these measures very highly. I value measures that have a relentless customer focus. It enables you to develop a company which is unique to your market and makes it more resilient, agile, and flexible so that it can respond to your customers and potential customers quicker and better than anybody else.
I had this conversation with a client just last week. They were interested in what their competitors were doing. I wasn’t. If you want to be market leading, and by that I mean leading in your market, however small or niche that may be, then the talk must be about customers, not competitors. You may pick up the odd little thing from a benchmarking or best practice survey, but you will increase your risks if you take too much notice of them. You now have competitors to worry about as well as customers, you will allow your customers to benchmark you against your competitors, and you will not maximise your opportunities.
Please don’t try and follow the herd because you will get lost in it. Get lost in your customers, it pays better.