“Competition is the keen cutting edge of business, always shaving away at costs”
~ Henry Ford
Being better than the next guy is a driving force for many businesses especially in highly comwho-s-the-best-benchmarking-to-keep-aheadpetitive industries. Everyone wants to be at the top of the heap and set the standard for excellence. And for those who aren’t the best, they want to know how the best got there and how they can improve to surpass the current leader. This is the essence of benchmarking. Benchmarking is the act of comparing yourself against others to determine where you stand relative to the competition. It may seem like an easy thing to accomplish on the surface but there are a few issues that need to be considered.
First, you need to determine who is your competition. For industries with a few big players this is not difficult but when you are in an industry with lots of small players, sorting out the winners against which to compare yourself can be challenging. You might want to consider focusing on companies that match your demographic profile like geographic reach or number of employees to make the comparisons of more value. You can also benchmark against companies that might be national if this is the eventual strategic path your business wants to take.
Second, you need to determine what measures you want to use to compare yourself to the competition. Do you want to measure market share, employee productivity (like sales dollars per employee), product quality, or other measures? The selection of measures will be dependent upon your industry and what your motivation is behind benchmarking.
Third, you need to figure out how to get the information you want to complete your benchmarking study. This may be the most daunting task of all. Again, when dealing with public companies much information is available because of the reporting requirements they have to their shareholders and the public. But getting information on private companies and industries can require more creativity and a strong penchant for research. When seeking out information about other companies or industries, try some of these sources:
Industry associations & groups
Internet searches
Libraries (public library or universities & colleges especially ones that have a business school)
Dun & Bradstreet
Hoover’s
You can also try to create a mutually advantageous relationship with your competitors to share information. This may seem like a bit of a pipe dream but if the information being shared is not proprietary, it might behoove everyone to engage in friendly competition. Competition spurs on creativity, innovation, and a desire to win. And depending on the industry, this can serve both businesses and customers well.