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 October 1997 Article

Selecting a Benchmarking Partner:

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Five

Tips

for

Success

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by Vicki J. Powers

 

Successful benchmarking entails looking  for partners that meet your criteria. Here are five steps that should help the process go smoothly.

What could a university possibly learn from a hotel or a communications company? Although these organizations are quite diverse, the transfer of knowledge in a recent American Productivity & Quality Center benchmarking study crossed all industrial lines.

The Electronic Student and Customer Services study shows the importance of selecting solid benchmarking partners by developing specific criteria upfront and effectively using secondary research. Successful benchmarking goes beyond finding a partner that mirrors your own organization.

"The value and outcome from a benchmarking study are really derived from which organizations are selected as benchmarking partners," says David Yeh, associate vice president for student academic services at Cornell University. "I was clearly impressed with the corporate partners in our benchmarking study at APQC -- Hilton Hotels and NBTel. They had implemented the vision that higher education only has been discussing. We saw a completed product of what we were studying."

This outside-industry example reinforces the value of looking for bench-marking partners unlike your own organization that meet your detailed  criteria. The following five tips will help organizations follow a structured process for partner selection that returns   remarkable results.

1. Start the selection process with a clean slate.

Organizations should keep an open mind before they begin thinking about potential benchmarking partners. Preconceived ideas about which companies are good limit benchmarking effectiveness. Many times organizations will spout out company names they want to visit once they have defined the benchmarking process. For example, in the order fulfillment area, they might automatically think of L.L. Bean or Victoria's Secret as an outstanding partner. But what about the other organizations that aren't as well-known for their processes?

"One of the biggest mistakes organizations make is going after the same     companies as partners over and over and over," says Lisa Higgins, director of benchmarking services at APQC's International Benchmarking Clearinghouse. "There's a whole group of less-than Fortune 500 companies out there that, because of the sheer nature of their budgets and who they are, have to be more efficient. For smaller companies, it's their livelihood."

Benchmarking Resources

Electronic Information Sources

  Knight-Ridder Information Inc. (DIALOG SERVICE) -- a vast online database utility that provides access to hundreds of separate databases.

  LEXIS-NEXIS -- provides full-text access to hundreds of newspapers, newsletters and specialty publications.

  Dow Jones -- databases that contain financial news and information on developments in business and industry, both domestic and international.

Internet/World Wide Web

* American Productivity & Quality Center

International Benchmarking Clearinghouse
www.apqc.org

ASTD Benchmarking Forum
www.astd.org

Benchmarking Club de Paris
www.bench-club-paris.asso.fr/

Industrial Technology Institute -- Performance Benchmarking Service
www.iti.org:80/pbs/

Information Center Benchmarking Germany
www.izb.ipk.fhg.de/english.htm

Management Roundtable (new product development)
www.trainingforum.com/MRT

SPI Council on Benchmarking
www.spinet.org/

The Benchmarking Exchange
www.benchnet.com

U.S. Inter-Agency Benchmarking & Best Practices Council
www.va.gov/fedsbest/index.htm

U.S. Navy Best Manufacturing Practices
www.bmpcoe.org/

 


A perfect example involves a consortium of hospitals that benchmarked their in-patient admitting processes against an airline, a hotel and a rental car agency. In true out-of-the-box benchmarking terms, the hospitals' admittance processes crossed many industries and terminologies (such as registration and check-in), but the principles could be transferred from one industry to another. Without staying open-minded, the consortium would not have had such a successful learning opportunity.

"In the education area, the tendency is much stronger to judge an organization by name," observes Karen Kaplan, director of APQC's Institute for Education Best Practices. "Blinding the data during the partner-selection process is critical to our benchmarking methodology. The participants are making decisions based on not knowing who the organizations are and looking at companies that anecdotally they haven't heard about."

 

2.  Establish well-defined criteria upfront for benchmarking partners.

Before your organization begins a global search for a benchmarking partner, understand and define exactly what you are interested in learning. Without first establishing specific criteria,           the search could become a mission impossible.

Higgins suggests creating two different tiers of criteria to help manage this enormous -- and essential -- task. The first tier defines specific company characteristics such as number of employees or sales revenue. The second tier includes more loosely defined characteristics such as, "I'd like to have " With this kind of structure, organizations that select three to four high-level criteria will find potential partners from a variety of sources.

But remember the open-minded rule. "For every characteristic you add to your list of criteria, you lessen your chances of ever finding the right match," notes Higgins. "The criteria shouldn't be so rigid that only five companies in the country will fit into them."

The criteria also shouldn't be so broad that they pull in organizations way out of your financial league. Take, for example, a company that is benchmarking a process related to marketing. One potential partner may be outstanding in its technological innovations but may not match up with specific criteria such as company size or total revenue.

If the average marketing expense falls between 11 percent and 16 percent of total revenue, and your budget is about 5 percent, then it wouldn't make sense to benchmark an organization that has a 20-percent marketing budget -- except to examine its processes, not its technology. Because of its higher budget, that organization would be able to throw more money toward creative ideas.

"If you go see a company with unlimited access to technology, and that isn't part of your criteria, then the learning will be decreased substantially because you can't make the same kind of changes to achieve the improvements they have," explains Higgins.

 

3.  Define what "best practice" means at your organization, then woo partners accordingly.

No standard definition exists for "best practice." "Best" at General Motors, for example, is defined as "information we can use." At Pennsylvania-based AMP, Benchmarking Manager John Davis says his company bases "best" on other companies that are objectively better than AMP at a given practice. If organizations look for "truly best practices," they will never find a match, he adds.

At APQC, 80 percent to 90 percent of its information services requests concern best processes or practices. APQC prefers to uncover companies that show "significant improvements" and tries to minimize the term "best."

"Many innovations and success stories out there offer valuable information but may not be 'best,' " says Anne Marsden, information specialist at APQC. "And not everything is tagged 'best in class' in the research we pull from."

Higgins agrees that this terminology has created unrealistic expectations in the benchmarking community. "There's a misnomer that a list of best-in-class companies exists," she reports. "What truly exists is a lot of companies that have really good processes. The criteria you determine for what is 'best' are the determining factors in your success. I would love to change the term 'best practices' to 'successfully demonstrated practices.' 'Best' connotes that there is one company or a set of five companies out there that are really good."

Davis discounts the thought that only large, global companies are best-practice organizations. This is not always the case, he notes.

"There can be a lot to learn from small, high-growth companies that are obviously doing something right," says Davis. "And they are much more willing to share. There seems to be some arrogance at some large companies that if you are not big, you can't be good."

Eastman Kodak employees, after much experience in benchmarking, know which companies are best and only engage those organizations. "If we determine that an organization is best, we must do everything we can to pursue that challenge," explains Turk Enustun, Eastman Kodak's director of corporate benchmarking. "We need to create a two-way stream of communication that allows both of us satisfaction in the relationship."

As a result, Enustun teaches Kodak employees a method to help win potential partners they've identified as best. In the letter or phone call to the potential partner, Enustun reveals two of Kodak's world-class processes if the potential partner would like to work with Kodak in the future.

"I turn the conversation around to address their needs and offer myself as a conduit to Kodak when they're ready to make improvements," says Enustun.

Raytheon TI Systems is just as aware of the necessity for creating a partnership with potential benchmarking partners. When RTIS pursues an organization as a benchmarking partner, it sends a completed screening survey with the request. In this way, the potential partner possesses RTIS' information even before saying   yes or no.

 

4. Use secondary research to identify potential benchmarking partners.

Analyzing secondary research for potential partners is like trying to meet the man or woman of your dreams: You never know where that perfect match might be.

In this phase, which Enustun refers to as "shallow and broad," organizations target potential partners based on numerous databases and publications. The goal is to create a laundry list of organizations that show some evidence of best practice. This can be done in corporate or public libraries, or through services such as APQC's Information Services Department, which can access numerous business databases such as ABI/Inform and Dialog's 400-plus files. IBC members also can access its Best Practice Database.

"Although it's not a universal collection, it's an excellent source for process information," says Nancy Fleshman, APQC manager of information services.

The Internet has opened up a new research area for benchmarking. But the Internet must be used with caution because so much of the information has been written by the companies' own marketing departments. Research material such as white papers and study results often can be found on the Internet. Valuable databases include the Department of Naval Research's Best Manufacturing Practices and the National Performance Review's KnowledgeBase.

 

5. Weed out the best from the rest.

The next step in the selection process funnels this universe of potential partner companies down to a select few that meet the criteria -- going narrow and deep. This involves information-gathering, both internal and external. Some companies use a data-collection tool in the screening survey -- to solicit more information from potential partner companies. Sent to a broad list of companies, this survey identifies the best based on the detailed responses. The goal is that the right (and best) companies will respond.

Trade and professional organizations also can offer insight to supplement a search, and so can university professors who are well-versed in certain processes. Also, suppliers and employees may offer insight when asked a simple question: Are there certain organizations we should look at that excel in this process?

"We have found employees to be valuable sources of information to narrow our potential list," emphasizes Enustun. "In a very short time, four potential companies were reduced to two just from brief phone calls to 50 employees."

 Davis says his organization wants to see some sort of proof that a potential partner is a better or best-in-class organization. "We want to make sure there is a truly recognized practice -- not just from word of mouth," remarks Davis. "And that is the greatest challenge of partner selection: basing the selection decision on facts and data vs. someone's opinion or whim."

AMP looks for several distinctions to garner this credibility, such as receiving a world-renowned award from an objective organization. Other potential "bonus" points include recognition from an expert in the field through press or speeches, measurable improvements in place or company presentations at a well-known event. AMP uses many forms of secondary research and best-practice databases as well as visits with experts for third-party opinions.

Davis sees the secondary research process moving in a different direction. Because we live in a world of information overload, organizations need to look for useful information by networking with other sources, he advises.

"Where I see benchmarking evolving is in matching our employees who are benchmarking with process owners," notes Davis. "It's all about getting to the right people, especially peers at other companies. They may not have the answer, but they can lead us to the answer. The bulk of our significant answers comes from leads like this.

"With the major emphasis on quicker benchmarking, it's so important to get quick information about a company. You must use resources in the most effective and smartest means possible. What would have taken three months to do five years ago, you can now do in three hours just by knowing someone at another organization."

 

About the author

Vicki J. Powers is a communications specialist at Houston-based American Productivity & Quality Center. During her five years at this nonprofit organization, she has written numerous best-practice case studies focusing on benchmarking and customer satisfaction.

For more information about the International Benchmarking Clearinghouse, contact the APQC at 123 N. Post Oak Lane, Third Floor, Houston, TX  77024-7797. Telephone (713) 681-4020 or fax (713) 681-8578. Visit the APQC's Web site at www.apqc.org.

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