These Are The Top Three Reasons Benchmarking Is Not Good For You And Your Company

By Paul Uduk


Benchmarking has been a buzzword for four to five decades now. It came into its own in the years when TQM (Total Quality Management) was the only gospel truth on how to become the best. The Japanese had taken over the world and for America and Western Europe to catch up; they needed to benchmark the best of what the Japanese were doing. And who propounded and continue to propound these ideas? You guess right, the big boys: BCG, Bain, Accenture, PWC, McKinsey, KPMG, Deloitte, Gemini and the rest of them.

Benchmarking 101 simply says get all the metrics how your best competitor is doing and compare to your performance. Wherever you perform worse, that’s the gap. Pronto you’ve cracked the code. Take immediate action to close the gap and you can be as good as them (your competitor) or even leap frog them. They backed up their presentations with elegant two by two graphs (process visuals as Alan Weiss calls them) and CEOs looking for ever more expensive quick fixes would jump at the recommendations and their treasuries would be the poorer for it.

Tell me, if benchmarking is really this cure-it-all antidote to lackluster performance (the big boys would deny they said it was a cure-it-all), how come Kodak did not benchmark its way to survival? How come Nokia could not benchmark its way to success and beat back Apple and Samsung? What of Motorola that invented the cellular phone technology and Xerox that taught the world how to copy? Why couldn’t the bluest of the blue, with all its technological wizardry do it, and had to send John Akers to the labour market? Beware, the elephant cannot dance unless and until it decides to dance by changing its genetic code.

So here are the top three reasons why you should never touch benchmarking with a ten-foot pole if you really want to be great, break new mold and render the competition irrelevant.

1. Benchmarking ignores the culture of the better performing organization
This is the mother of all reasons why benchmarking is a fatal flaw. Assuming you’re Intel and the Japanese are eating your lunch, what do you do? Do you go on a retreat and benchmark the Japanese to blow them out of the water? Do you call a town-hall meeting to sensitize everyone about the Japanese’s threat and quickly form quick action teams (QATs) to benchmark the Japanese to prepare the way for your glorious comeback? Do you send your top executives to Harvard to learn benchmarking at its best in order to form a groundswell movement that would make you invincible overnight? No! No!! No!!! You do what Andy Grove, Robert Noyce (and Gordon Moore) did. You fire yourselves and start all over again. Remember, only the paranoid survive. You cannot beat the Japanese in head-to-head combat because the cultures are different. Period! Have you not heard that culture will eat strategy for breakfast?

2. Benchmarking looks at the future with the rear-view mirror
Assuming you’re IBM and you’re the world’s most admired company and teased as the Big Blue, and you hear two small boys are fiddling in their mother’s garage and they say they want to topple IBM. Do you postpone your board meeting and send spies to see what the boys are up to or do you benchmark? Benchmark what? Benchmark Apple I or Apple II or iMac that don’t yet exist? The Big Boys would deny they ever said that you should benchmark under such circumstances. But didn’t they say benchmarking was the alpha and omega of the competitive tools? You will never see the future with your rear-view mirror even if you’re a magician. The truth is, when there is disruption (air travel disrupted sea travel, computer disrupted typewriter, gun disrupted bow and arrow, etc.), everything is reset to zero so no amount of benchmarking can save you. We live in an age of discontinuity, thanks to Peter Drucker, and when discontinuity catches up with you and your industry, benchmarking is foolhardiness of the highest order.

3. Benchmarking ignores critical thinking and cannot help you invent the future
The best way to own tomorrow is to invent it. Benchmarking cannot help you do that. Benchmarking is actually antithetical to reinvention. The most revolutionary inventions of our time were or are never the products of benchmarking but critical thinking. Think of products as mundane (now) as paper, post-it-note and light bulb, to mention three. These things never existed before until people’s imagination brought them to be. To invent the future, you start with a clean slate. You ask simple questions like, “why does this work matter?”, “what purpose does it serve?”, “why this (and not that?” These sort of questions enable you think critically, go deep and invent tomorrow while others are busy benchmarking and playing catch-up with the supposedly best companies.

There you have them, the three reasons why benchmarking should be avoided as the plaque: benchmarking ignores the culture of the better performing organization, benchmarking looks at the future with the rear-view mirror, and benchmarking ignores critical thinking and cannot help you invent and reinvent the future.

If you look closely, benchmarking is at the heart of the so-called, international best practice(s) in industries across the globe and who are the proponents of these “best-of-class” concept? The big consulting powerhouses! At best, let me concede, benchmarking can help you make small incremental (additive) progress, but that is not what you need. What you need is exponential (geometric) progress. Now that you have read the top three reasons why you should never do benchmarking, don’t waste time with benchmarking. For any new project you want to initiate, start with a clean slate. Yes, reinvent the wheel. Remember, Apple reinvented the phone with the iPhone, Starbucks reinvented coffee houses, and you can reinvent yours. Go and do it.




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