Benchmarking
Benchmarking often is performed within this phase of the BPR to help set high-level goals, targets, and metrics for the organization. The term benchmarking, however, is ambiguous and appears to require a great subtlety of understanding. It clearly means different thing to different people. Company practices vary dramatically in terms of their implementation or tentative inquires in relation to benchmarking. Some companies look for consortia of partners to get together and exchange information. Other look for rather broad, perhaps superficial, visit to world-leading or comparable companies to get a soft feel for their way of doing things. Other employ consultants, who interpret benchmarking as the collection and comparison of global, primarily financial, measures of a company performance.
The role of benchmarking must be seen in the context of the organization that is continuously examining itself, analyzing its performance and internal processes, and continuously implementing improvement. Such an organization is looking continuously to improve and is planning these improvements. In so doing, the organization will set targets, and for most organizations early in the improvement process, it is most likely that these targets will be improvements relative to current performance. In many cases, benchmarking takes the form of "best practices" research rather than collecting metrics to be used as "baseline data."
A crucial first step is to identify how well the organization currently is doing in terms of the key measures. Once this assessment is accomplished, time-base targets can be established for improvements and an action plan can be formulated to achieve these targets. However, if the improvement targets are established in isolation of any knowledge of what others are doing/achieving, the targets may not be challenging enough to help the organization achieve the desired improvements in performance
Key measures are fundamental to an evaluation of output performance--they show how much or how little is being achieved by the organization in comparison to competitors and to world's best practices. However, these measures do not show the weaknesses or strengths in the internal business processes. They do not show how competitors and world leaders are securing their respective levels of achievement. They do not show what, if anything, is transferable to the organization's particular circumstances and how to make the transfer. They do not, in themselves, provide the degree of certainty that management needs in order to make the appropriate steps necessary in their behavior or style. They do not provide the understanding of the why that can only be achieved by the process of personal discovery.
This view of benchmarking is not just about the comparison of measures, as it has often been mistaken to be. It is, instead, a natural development of the desire to improve and the process of improvement. As well as looking internally, one looks for ideas to borrow from those that are doing better, even perhaps in one very specific aspects. In this sense, it is very much an integral part of the improvement process. The benchmarking process does not stop when comparisons have been made and you have been found to be doing well or found wanting. This is merely the first step: the how and why need to be established, and methods of achievement evaluated for potential transfer, improvement upon, and implementation.
Implementation itself is part of the process. The crucial internal processes of the organization need to be identified, and measures and measurement point have to be established. Comparisons in processes and process performance have to be made externally, as well as internally, and process improvements or redesign need to put in place.
Benchmarking focuses on two things: (1) using objective, external standards to set targets and (2) learning from others--learning how much and perhaps more important, learning how. Learning from others involves identify them; study them and improving based upon what has been learned.
Benchmarking is not a numbers-only exercise. Setting quantitative targets, often called metrics, through benchmarking is arguably the best way to identify strategic objectives.However, setting objectives comparable to or beyond those of the best-in-class without understanding the underlying processes that enable the best-in-class to achieve their results can be useless or worse. Understanding how the organizations under study achieve their results--the how and why--is usually more important and valuable than obtaining "hard data" during the study. This understanding will reduce the risk of losing sight of what an organization hopes to get from a benchmarking study--valuable learning. The primary benefits of benchmarking for an organization are:
o It is a more efficient way to make improvements.
o It helps organizations make improvement faster
Three Common Types of Benchmarking
Competitive benchmarking is the most difficult form of benchmarking because it targets other organizations that not necessarily interested in helping the benchmarking team. Competitive benchmarking means measuring current functions, process, activities, products, or services against those of competitors and improving elements so that they are the "best in class," but at minimum better than those of those of the competition.
Cooperative benchmarking seem to be one of the most talked-about approaches today because it is relatively easy to practice and makes interesting news copy. In cooperative benchmarking, an organization that desires to improve a particular activity contacts best-in-class organizations and asks them if they will be willing to share knowledge with the benchmarking team. In cooperative benchmarking, the knowledge usually flows in one direction--from the target companies to benchmarking team.
Collaborative benchmarking involves a group of similar organizations sharing knowledge about a particular activity--all hoping to improve based upon what they learn. Often, a third party often serves as a coordinator, collector, and distributor of data.
The primary value of benchmarking to Business Process Re-engineering is its role in helping BPR teams identify/develop business process innovations. Benchmarking is particularly valuable to teams involved in reverse engineering projects, that is, projects challenged to develop innovative processes and then to reverse engineer them into an existing environment. Benchmarking can also prove useful in forward engineering process innovations. And, it can be used to assist in either incremental change or quantum change. How benchmarking is done and how it is used depend largely on what problem the BPR team is committed to solve.
The essential purpose of benchmarking is to resolve a psychological predicament called "functional fixedness." This situation occurs when we are so embedded in a problem that we cannot find a novel solution. Our thinking is "fixed" by the problem. Benchmarking is intended to help teams work through their functional fixedness by finding and using appropriate analogies
Benchmarking is not, in itself, a solution to a process improvement problem. Actually, once benchmarking helps a team find a good analogy, the team must determine a goal state (i.e., define the "TO-BE" paradigm or process), and then, and only then, can the team address the challenge of moving from the current state (the "AS-IS") to the goal state.
Dr. Joe Bass talks about searching our analogical paradigms before examining their underlying processes. As Bass points out, processes are always hostage to paradigms. If you try to implement someone else's processes, you must also take their paradigm, otherwise you will not get the benefits you expected from implementing their process in the first place. Bill Holden addresses the concept of using activity models to look inside an organization for good process analogies. Holden identifies activity models as a good means for structuring, comparing, and analyzing process analogies. And, Mark Smith talks about getting outside the organization for "out of the box" analogies.
While Total Quality Management (TQM) and benchmarking area as applicable to public administration as to private sector manufacturing and service industries, their application in public institutions is more problematical. There are many reason for this, including:
o Staff culture and the lack of individual ownership, responsibility, client-care, and staff empowerment
o Bureaucratic and non-responsive systems
o Lack of clarity about the multiple customers and stakeholders involved, even in single transactions
o Political, as opposed to market-determined, levels and extent of service, especially for subsidized and zero-priced services
o Problems of scale and complexity associated with the large, centralized organizations, and sometimes, with a large-scale technological basis.
The identification of stakeholders is a key aspect to the development of benchmarks in the public sector. The stakeholder identification can be developed by multiple processes:
1. Deciding What to Benchmark · Is the topic important to the customer? · Is the topic consistent with the organization's mission , values and milestones? · Does the topic reflect an important business need? · Is the topic significant in terms of costs or key nonfinancial indicators? · Is the topic an area where additional information could influence plans and actions?
2. Planning the Benchmarking process · Who are the customers for the study? · What is the scope of the study ? · What characteristics will be measured? · What information about the topic is readily available?
3. Understanding your own performance · This is a step that is devoted to self-study. The team examines the factors that influence the performance to learn which characteristics are most important and least important
4. Studying others · Identifies benchmarking candidates · Narrows the list to a few candidates · Prepares general and specific questions · Decides the best way to get those questions answered · Performs the study
5. Learning from the data · The team analyzes the data collected, quantifies performance gaps and identifies which pieces of information might be particularly useful for improving performance.
6. Using the Findings · The team works with the project sponsor to determine how benchmarking findings can be best used and what other organizations in the company benefit from this work.
Developing an Operational Vision
The final step in this phase of a BPR is the formulation of an operational vision which should be designed to translate the broader, more generic aspects of the strategic vision into specific applications within component processes/units of the organization. The good intentions of a strategic vision are likely to go unrealized unless the process is further extended to include the development of an operational vision to organized and deployed resources effectively and efficiently in the accomplishment of organization's strategic objectives. It involves: (1) the programming of approved goals and objectives into specific projects, programs, and activities; (2) the identification and budgeting of necessary resources to implement these programs over some specific time period, and (3) the design and staffing of organizational units to carry out approved programs. Ideally, the operational vision forms the link between strategic objectives and the actual performance of organizational activities--a mechanism for coordinating the sequence in which activities must be performed to complete a given program or achieve an agreed-upon objective.
An operational vision focuses on setting standards for the use of specific resources and on performance tactics to achieve overall goals and objectives of the strategic and management plans. It is concerned with the development of work plans and the scheduling of detailed program activities--determining the calendar dates or times that resources will be utilized according to the total resource capacity assigned to the organization. Resource availability, task or job sequence, resource requirements, and possible starting times for the project or program activities must then be taken into account in order to produce a schedule.
Adopting a comprehensive strategic vision may mean the difference between success and failure in the delivery of vital services. An effective and efficient operational vision can mean the difference between "on time" and "late" in the achievement of a specific program objectives and utilimately, the difference between the effective utilization of scarce resources and waste.
The forces which equally control a work plan are: time, budget, and resources. If the work plan is not appropriate, one of these three forces has to "give."
Endnotes