Reasons for Motorola investing in benchmarking. Motorola, one of the original Malcolm Baldrige Award winners, has found that even after achieving best-in-class, there is much to be gained through continued benchmarking.
Reasons for Motorola investing in benchmarking
Every new program, every new product, and every new improvement effort at Motorola is preceded by a search for the best-in-class. In this way, Motorola ensures that every new process introduced will be world-class.
Discussion Question
Discuss the following question in class or outside of class with your fellow students:
- What do you think motivates Motorola to invest in benchmarking?
Overview
Simply put, benchmarking is a process to discover what is the best standard of performance seen in a specific company, by a particular competitor, or by a completely different industry.
The process of benchmarking involves four distinct steps:
- Identifying the areas where the organization is keen to identify actionable insights. These could range from the cost of production to a number of critical to quality errors to employee engagement scores.
- Once the areas have been identified, the organization then shortlists the companies/industries to benchmark.
- The third step that follows is to collect data from these identified companies/industries across the areas of interest that were zeroed in earlier.
- Finally, when the data has been collected, the organization studies the gaps between their standard and that of the benchmark.
Sometimes companies might confuse benchmarking with competitor research. However, there are some key differences between the two.
Benchmarking:
- Focuses on best practices to identify next practices
- Strives for continuous improvement
- Partnering to share information
- Needed to maintain a competitive edge
- Adapting based on customer needs after examination of the best
Why are benchmarks important?
It is observed that companies at times might be reluctant to use benchmarks. One of the most popular reasons for this is the belief that they are their own organization, and hence, do not need to emulate any other organization. This is where it is critical to underline the fact that benchmarking does not mean blindly ‘copying’ what competitors do. It simply means to understand what is the acceptable standard in the industry, and where does the organization stand vis-à-vis that standard.
Benchmarking helps organizations to stay in sync with the market and customer needs. For instance, at a bank, the turnaround time for any customer complaint could be 4 hours, hypothetically. The bank might be tempted to believe that they are doing a great job by offering such a short TAT. However, if other leading banks have a TAT of 2 hours, then the scenario changes. Suddenly, the ‘great job’ is 50% below the benchmark. Customers are likely to prefer a bank that resolves their concerns in the fastest possible timeframe.
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