The APQC Blog

Ensuring Return on Investment for Benchmarking

Making sure your benchmarking has real return on investment is not easy. Most of our projects start with someone saying, "My boss told me we had to do benchmarking. Leadership wants to know how we compare to similar organizations."  This request is based on a fear that the organization is missing something that others already know and are using to create better value for customers.  As Chris Gardner pointed out in his last blog, there is a missed opportunity simply due to the fact that this fear is based in reality. That's where benchmarking enters.

In my experience, fear-based benchmarking is rarely successful, as it is often a knee-jerk reaction.  Too often the end result is a PowerPoint deck showing a general comparison of performance. And that's it. The return on investment is low—as the result does not help the organization increase the value created by processes.  Inputs, no matter what they are, are put through a process, which creates an output that is worth more to our customers than the original input—this is value creation.  Good benchmarking must have an impact on our processes and work, thus, helping our organization create more value. If not, benchmarking projects are like a magic stunt where at the end we wonder…where was the magic?             

In all my benchmarking work, there is one small activity at the very beginning of every project that ensures I'm a real magician. It is creating the benchmarking value proposition (BVP), which is a short statement made up of two key components.

  1. An overarching goal or strategy. The probability that benchmarking will create lasting change increases significantly when tied directly to an existing strategic goal.  Much like in our measurement framework, creating this alignment means resources and cultural inertia will be more readily available to promote change.
  2. A measurable outcome.  I want to make this point really clear: I'm talking about an outcome, not an output. An output is something we do, like create a strategic plan, build a dashboard, or organize a community of practice.  A measurable outcome is about what will change.  Here’s an example from one of my projects, "...to improve our two core measures of reliability and warranty costs by 10 percent.”  That is an outcome that tells us that a change will occur and by how much.   

The BVP is often overlooked because it creates accountability for benchmarking, which is naturally uncomfortable. People charged with benchmarking just want to alleviate that competitive fear; they don't want to put their reputation on the line. I say, “Bring it on.”

The purpose of a BVP is to provide a benchmarking direction through alignment with strategy (at any level of the organization) in conjunction with a measureable outcome.  Put together correctly, these two components are like a Reese's Peanut Butter Cup: two simple ingredients that, together, make the most delicious treat created by humanity.


Or in our case, they ensure our benchmarking project is about helping to increase the value of our work. 

So there you have it…a recipe for your own BVP. Don't be Milli Vanilli and go through the motions, challenge yourself, your team, and your organization to create a benchmarking value proposition for your next project.  With that said, grab a Reese's and share your thoughts or an example BVP.