Defining "Best"
Most businesses today are routinely seeking "better" ways of doing things that can improve performance — profitability, product quality, sales productivity, and customer satisfaction among many others. In deciding which of these better ways to implement, they compare current performance with performance available (in theory) from the new practice.
The most common working definition of "best" is "better". Because we often have no idea what "best" might be, we have to settle for an upward direction.
Even the recent interest in benchmarking does not really establish "best" except in the context of participants' performance. A non-participant may be doing much better than the benchmarked "best" but that performance and its practices are not visible.
Benchmarking in Practice
Reality has forced most benchmarking away from seeking truly "best" practices to peer group standards. This results in benchmarks that are relative to others in the group but not best in any absolute sense.
One source defines benchmarking as "Benchmarking is the process of determining who is the very best, who sets the standard, and what that standard is." This helpful definition seems to equate "best" and "standard".
ASQ does a little better: "Benchmarking is the search for best practices, the ones that will lead to superior performance."
Process contexts are important but hard to rationalize in any large business group. It is often unclear exactly what leads to a high performance benchmark rating. Practice contexts, as we have tried to point out here, are even more important and less quantifiable.
Reality here leads to limited and often naive metrics being used to rank performance. Metrics are commonly dictated by publicly available data. Contexts are assumed to be roughly equivalent in groupings but are rarely so in actuality. Groupings are often geographical or industry (SIC codes).
So is there any real value in such benchmarking? We suggest that it is useful mainly as background and a single point of reference.
Defining "Best" in Practice
Because of the difficulties in aligning and quantifying contexts, we suggest ignoring benchmarking except as just noted. Instead, you should compare practices within your own organization using a set of performance metrics that are important to you.
This gives you the data to identify "best" within your own context and performance definitions. Best here may actually be as good as anyone can do, and thus truly best in a real sense. If you have top people and you have strong processes, then it seems reasonable to believe that your best may be as good as anyone in similar contexts can do.
But, what is best today does not imply no room for improvement. This is where innovation comes in. We see innovation as adding new aspects to your current practices, including your current best practices.
Benchmarking Industry
Do a web search on "benchmarking" and you will quickly see how extensive an industry has grown up around this great-sounding concept.
Benchmarking is clearly a winner for suppliers of consulting, software, and tools of every kind. Not so clear is the value received by businesses, despite glowing testimonials in supplier ads.
Our take on all of this is that benchmarking belongs with other business bromides, which we have referred to as platitudes. In a specific context, it means something; without a clear context, it is meaningless.