The purpose of benchmarking is to measure and compare an organization's performance against competitors or industry best practices to identify areas for improvement and drive continuous improvement.
Confession time, I have an unhealthy relationship with a healthy activity. I am a runner, and as a runner, I run with a watch. The watches that runners use today provide all types and kinds of measures and metrics to help aid in performance. We have moved on from the historical measures of distance, time, and pace. We can now get more scientific metrics like VO2 Max, Heartrate Variation (HRV), and training load.
There are so many metrics on all the activity watches, you find yourself asking, which ones do I focus on? Are the measures and metrics I focus on the same as my running friends? What do the leading runners use to improve performance?
Believe it or not, we have the same questions asked of us when client and members learn that APQC has over 6 million data points and 4,300 metrics. But this time, instead of them being running related, they are business performance related.
A simple internet search for “what metrics should be used to measure success” results in pages and pages of results. Some of the results are from the last week, some are from Harvard Business Review from 2012 that discusses The True Measures of Success. I really like this article, but 13 years later, the principles still apply. Ironically, these principles are similar to how our APQC team members respond when they are asked the questions I mentioned earlier.
Keys to Determine What Should be Measured:
- Determine what is important to the business. Read the mission statement, the vision statement, and the forward leading announcements from the leadership team. If the focus is on sustainable financial growth, then your group/business unit/department should be focusing on financial measures. If the focus in those reports is on customer experience, then you should be focusing on how your can impact the customer experiences. Use the statements from the leadership team to align your measures with their measures
- Identify the right number of measures/KPIs that are aligned to item 1 above. There isn’t a magic number here, but don’t make it so few that you risk not being able to see the whole picture, but don’t make it so many that you end up spending so much time collecting and analyzing data that you don’t have the opportunity to make improvements or changes
- Finally, be flexible with your measurements. Allow yourself to change your measures as you make improvements,(if the measure has been green for the last 6 months, find a new one) or if the focus on the business changes, see step 1 above, and realign your measurements support the business.
To learn more about benchmarking, please visit APQC’s Benchmarking Basics Collection.