Benchmarking for Dummies

YOMI MAKANJUOLA, PhD

Yomi Makanjuola earned a doctorate in Materials Engineering and Design and worked primarily as an Associate Partner at Accenture in Nigeria. Currently, he is an author and freelance consultant in the UK. He is the author of the book, “Nigeria Like A Rolling Stone”. “His most recent book titled “iProverbs: Wisdom Rebooted” is available on the Amazon platform at https://www.amazon.co.uk/dp/B0D31W2P2W. He can be reached at 9yoma9@gmail.com

“Curiosity killed the cat” conveys the mental image of a chastened or doomed explorer. Paradoxically, incuriosity is not necessarily judicious nor cost-free. Counterbalancing impulsive adventurism or apathy is the concept known as benchmarking, which originated among industrial age surveyors. A modern variant is traceable to the US technology company, Xerox Corporation, circa 1970s, when it institutionalised “compare and improve” to repel stiff market competition. 

Before delving into how benchmarking earned its stripes, it is helpful to recognise that comparative analysis is a natural human instinct. Unfortunately, the story of our fabled ancestors, Cain and Abel, ended in tragedy after the former realised that his sacrificial offering had missed the mark. Instead of raising his game, Cain seethed with rage and resentment towards his guileless brother, which precipitated the first fratricide. 

Conspicuously, the past is littered with dogfights over natural resources; none more contentious than territorial disputes. Mostly, this correlated with the rise and fall of great empires, with altercations over land ownership representing the bulk of military entanglements. Despite lessons learnt from two horrendous global conflicts, and notwithstanding Vladimir Putin’s justifications, the recent Russian invasion of Ukraine proves that the dark and primordial lust for territory has not abated.

Returning to Xerox’s embrace of operational smarts, instead of squashing familial, tribal or business rivals, a more tenable strategy might be to re-assess and re-engage. This reflects a philosophy of not attempting to reinvent the wheel, whenever the opportunity arises to learn from others. Ultimately, the solution cannot take the form of simple window-dressing, but rather a permanent shift in mindset. So, why benchmark?

In a non-monopolistic, free market environment, standing still is not an option. Often, erosion of market share and financial strength is the key motivator for change. Technically, benchmarking is linked to best practices, whereby “the highest standards of excellence for products, services, or processes are identified.” Starting in the 1980s, companies sought to define performance metrics centred on cost, time, and quality across an organisation’s business units, and relative to entities inside and outside their industry. Corporate initiatives, including strategic outsourcing, are then initiated to close performance gaps without degrading performance and quality standards.

Purely from a capitalistic perspective, the most profitable company generating the greatest shareholder return ought to be the sole darling of investors. However, over the long term, world-class organisations that are “built to last” try to exceed the expectations of an array of stakeholders, including business partners, customers, and their workforce. Having a clear vision and business objectives aimed at achieving sustainable growth, cost leadership, and quality assurance represent the sweet spot in a market economy.

Operationally, all business functions are not created equal. Based on Pareto’s 80:20 Rule, a company must leverage its primary high-value processes, and other success factors, in order to excel. After establishing baseline measurements for those processes, a crucial step involves deciding who to benchmark against. Since competitors within the same industry are unlikely to cooperate, companies often collect data for similar operations outside their industry. To those who are leery of technical jargon, now is the time to brace up.

Next up is benchlearning, which entails determining the “best-in-class” so as to adopt and integrate such best practices into an organisation. Typically, corporate learning flows from the introduction of new technology, re-engineered processes and, possibly, a reconstituted mission statement. But, invariably, benchlearning falls on an organisation’s human resources. It is individual employees who must alter their behaviour in relation to specific tasks, both quantitatively and qualitatively.

To boost overall performance, benchaction is the implementation process undertaken to achieve operational excellence. Change management is not a linear process, but a time-consuming portmanteau of coordinated activities, such as knowledge-sharing, skills development, and enterprise transformation. Mind you, benchmarking is not an infallible panacea, especially when an industry changes direction, and mere tinkering will not suffice. An illustration is the accelerated migration from combustion engine to electric vehicles in China, which blindsided foreign carmakers and left them second-guessing their future in that market.

More broadly, the maxim that what you don’t measure (accurately), you cannot improve also applies to individuals. Typically, successful entrepreneurs set personal goals and then harness their determination and productivity to meet set targets. Altogether, productivity growth aggregated over a large population represents the most objective measure of a nation’s economic vitality.

By and large, empirically untutored societies that do not optimise the scarcest resource of all – time – tend to stagnate, and consequently trail their counterparts. Actually, falling behind is not the worst crime of all. Rather, the duplicitous leading the simple down the garden path, while eschewing “compare and improve” is the real crime. Sadly, this portrays the pitiful malaise of the sub-Saharan African region, particularly the world’s largest and best resourced yet grotesquely impoverished black nation, Nigeria.

No matter how much Nigeria’s ruling class tries to deflect its culpability, the country’s dire human capital development benchmarks are extremely damning. Relentlessly, poor governance, bureaucratic incompetence, and endemic malfeasance have characterised Nigeria’s “one step forward, two-and-a-half steps back” goose-steps, which persist more than three score years after liberation from colonial rule.

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