Benchmarking builds differentiated advantages

At present, benchmarking has become an important means of realizing the company's strategy and is adopted by 90% of the top 500 companies. However, when most companies conduct benchmarking management, they often select one or more companies in the industry that are similar to their own business as the object of benchmarking learning, and compare the company's own key performance indicators (mostly financial and operational indicators) with the benchmark. Comparing enterprises, find out the existing gaps, and improve the performance of enterprises by formulating corresponding measures. This is a common benchmarking practice.

This approach will indeed have a certain effect on improving corporate performance, but it also faces two problems. On the one hand, have you selected the right benchmarking learning object? What kind of benchmarking company you choose will have what kind of learning results. When you choose one or more excellent companies in the same industry as a benchmark, especially when you choose a competitor, your company has actually become a follower of the market unintentionally. Because benchmarking takes 10-14 months from learning to program application, which means that after 10-14 months of hard work, what you have achieved is only the level of benchmarking companies a year ago, although your performance has improved , but you are still a follower in the market rather than a challenger or leader, and you still cannot surpass your competitors.

On the other hand, it is difficult to obtain key data on benchmarking companies in the same industry. In particular, the possibility of obtaining key data of competitors in the same industry is lower, and companies often spend more time collecting key data of benchmarking companies. This behavior of collecting competitor information also faces many legal risks and business ethics. problem, and benchmarking really takes time in the application of the program, not the data collection.

Innovation is the true meaning of benchmarking

Since benchmarking is not simply imitation and learning, what is its true meaning?

Just as the purpose of strategy is to innovate, the true meaning of benchmarking is innovation. Benchmarking within the industry is unlikely to find breakthrough ideas. To be innovative, you have to break the traditional mindset, which means looking outside your industry for benchmarking companies. In fact, the farther away you are from your industry and company, the more likely you are to make breakthroughs. This method of stepping out of the circle for benchmarking not only enables you to meet the competition, but also improves your competitiveness by leaps and bounds, enabling your enterprise to form a differentiated competitive advantage and become a challenger or leader in the industry By. The following case suffices to illustrate this point.

In a 1992 market survey, Mobil Oil North America Distribution & Refining (NAM&R) asked 4,000 customers at gas stations "what's important to them" and got a startling The stats: Only 20% of respondents think price is the most important thing, and the remaining 80% unanimously want three things: helpful and friendly staff, fast service, and recognition for their loyalty.

Based on this discovery, Mobil began to consider how to retrofit its 8,000 gas stations across the United States, and the outcome of the discussion was benchmarking. The company has set up 3 teams from different departments, named after speed (operation), smile (customer service), and comfort (customer loyalty). The speed team found Penske, known in Indy 500 racing for quick and easy gas service. The speed team took a close look at how Penske cheered the cars through the fast lane: the team was dressed in a uniform, with a meticulous division of labor and a tacit understanding of cooperation. The Speed team also learned that Penske's success was partly due to the use of electronic headsets, which allowed each team member to connect with colleagues in a timely manner.

The Smile Team looked at the services at the Ritz-Carlton, USA to find out how the hotel achieved unusual levels of customer satisfaction. It turns out that Carlton employees are deeply in mind: their mission is to take care of guests and make them comfortable. The Smile Group believes that Mobil can also achieve its goals through various trainings to establish employee-oriented values.

The reassurance team goes to Home Depot, a well-known furniture store in the United States, to find out why the store has so many repeat customers. Here they learn that the most important people in a company are those who deal directly with customers. It is impossible to get lifelong customers without dedicated employees. This means that businesses invest time and energy into how they recruit and train their employees. At Mobil, front-line employees who sell the company's products and deal with customers have traditionally been considered the most insignificant people in the company. The reassurance team's research has changed the perception of the company, leading leaders to think that their role is to support front-line workers and get them to pass on great service and smiles to customers and beyond.

Mobil refined their findings and formed a new gas station concept - Friendly service. Mobil conducted the trial at 80 service stations in Florida. "Friendly service" is very different from its traditional service model. Customers who wish to receive full-service services will be greeted by the sincere smiles and greetings of the waiters when they arrive at the gas station. All waiters are dressed in neat uniforms, ties, and electronic headsets so that they can communicate customer needs to the convenience store clerks in a timely manner. Customers who want to get fast service can drive into the special fast lane outside the station, and it only takes a few minutes to complete the whole process of car washing and charging. Mobil, an implementation team of headquarters and front-line personnel, spent nine months building and testing the system to maintain friendly service. The initial returns on "friendly service" have been encouraging, with average annual revenue at gas stations increasing by 10 percent. In 1997, "Friendly Service" was extended to all 8,000 service stations in the company.

Basic experience of Mobil Benchmarking

The success of Mobil Benchmarking is because they can break through traditional thinking patterns, learn from industries completely different from their own, and quickly learn from the best practices of benchmarking companies. This not only reduces the cost of benchmarking, but also achieves innovation through benchmarking. This classic case is worth learning from the following two points:

Benchmarking should be consistent with the company's competitive strategy , in terms of profitability, it is the lowest among several large companies in the industry. In order to change this status quo, the company established a new management team, who emphasized customer-centricity, adopted low-cost and differentiated competitive strategies, and introduced a balanced scorecard to communicate and manage new strategies.

From the customer level of the division's Balanced Scorecard strategy map (see figure below), we can see that at the customer level, Mobil has two strategic themes: "Enjoy the customer consumer experience" and "win-win relationship with dealers". In order to realize the strategic theme, Mobil decided to innovate through benchmarking in customer service to form a differentiated competitive advantage. Therefore, we see that Mobil's benchmarking is based on the company's competitive strategy, always maintaining the principles of cost reduction and differentiation, and selecting companies that have no competitive relationship outside the industry. This not only makes it easier to establish partnerships and reduces the difficulty of obtaining critical data, but also saves time and costs. At the same time, Mobil also lays the foundation for the formation of differentiated innovative services by introducing the best practices of these benchmarking companies outside the industry.

Benchmarking itself is a time-consuming and cost-intensive project. If you don't serve the strategy, don't work hard on the key points of the company's strategy realization, and just blindly learn from advanced companies, it will not only affect the company's strategic resource allocation, but also Affect the realization of the company's strategy.

Benchmarking must start from the customer. Only when we focus on customer needs and consider how to meet customer needs through innovation in customer service can benchmarking be truly effective. In the early 1990s, Mobil tried to provide as complete and diverse products as possible to all customers, and also competed fiercely with rivals on price. At first they were very divided on whether any customers would be willing to pay an extra $0.06-$0.10 per gallon for Mobil's products. Later, from the market research report, they learned that the price-sensitive customer group accounted for only 20%, and the customer group without brand loyalty accounted for only 21%. After a difficult decision, they positioned their target customer groups as: "Road Warriors", "Loyalists" and "F3 Generations".

After detailed market research, they also discovered three key factors for target customer service success: speed (operations), smiles (customer service), and comfort (customer loyalty). Based on these three key factors, they looked beyond the industry and chose the companies that did the best in all three: Penske Racing Team, The Ritz-Carlton, and The Home Depot.

By learning from benchmarking companies outside the industry, Mobil has launched a new gas station service model, "Friendly Service", to provide customers with a "pleasant consumption experience". Mobil's approach has not only achieved success in customer service, but also achieved the goal of innovation, making Mobil's gas stations more differentiated in customer service and more prominent in brand image compared with those of other companies.

Basic Problems of Innovative Benchmarking

If we understand that the connotation of benchmarking is innovation, it is not difficult for us to put the perspective of benchmarking outside the company and industry. When we conduct benchmarking, we first focus on five questions (4W+1H):

1. What is our strategy? (what)

2. Who are our target customers? (who)

3. What are the key elements of customer service success? (what)

4. Which companies outside the industry are doing the best on these key elements? (which)

5. How are we going to meet the needs of our target customers? (how)

Starting from these five questions, benchmarking can create value for the enterprise through innovation on the basis of aligning with the company's strategy and meeting customer needs. Extend your horizons beyond your industry, no business is the best at everything, and no business is bad at everything, as long as the business is the best at one point, and that’s exactly what It is the key to the realization of the company's strategy, and it is the benchmark for your learning.

Benchmarking requires innovation, jumping out of the industry circle and learning from benchmarking companies that are completely different from the industry, which itself requires courage and skills. But only in this way, enterprises can innovate and form a differentiated competitive advantage, and the real purpose of benchmarking is also here.

This article is a contribution from the author. The author works in the training center of the personnel department of China Resources Group in Hong Kong.