by Warren Hayford
You spent many hours pouring over reports to analyse your business and have a good understanding of your performance. Why would you spend any more time comparing your organisation to your competitors? There are 3 reasons you should invest the time in comparisons.
First, competition motivates people. When you compare your organisation to another organisation and show your team how you’re doing against that organisation, you create an environment of competitive performance.
Top level athletes look at the scores or measures or statistics of their closest competitors to drive themselves to get better. You can do the same thing to help your team step up their efforts.
It doesn’t matter whether the competition is an internal or external organisation. Knowing how they rank versus another organisation will help drive your organization to better performance.
Second, comparing your performance also provides context. Performance doesn’t happen in a vacuum. When your sales drop or are flat, you need to know how much effect your actions had on the result. You need to know if some external event drove the change.
Events which could impact your sales include a recession, an increase in raw materials costs which makes you less competitive, a competitor releasing a new product, or a competitor trying to buy market share by lowering prices dramatically.
Any of these could impact your sales performance. Understanding the external factors that affect your performance will help you take the right actions to counteract it.
Third, comparing your organisation to others will show you where you can improve. Look at the organisations that perform the best for specific Key Performance Indicator KPI in your industry or in your business function. Their performance will show you what type of performance is possible in your industry. You can use the industry’s best performance ratios as targets for your organisation’s improvement.
You should invest the time to compare your organisation’s performance to that of your competitors. You can use these comparisons to motivate your team, to understand when external events are impacting your performance and to define performance targets based on what one or more of your competitors have achieved. A little more time will deliver benefits which will help you lead your organisation to greater heights.
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