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.
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.
Discuss the following question in class or outside of class with your fellow students:
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:
Sometimes companies might confuse benchmarking with competitor research. However, there are some key differences between the two.
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.