Can Strategic Benchmarking Turn Around America’s Economy?

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The U.S. economy needs to regain its competitive edge. In a revised and updated version of his successful 1993 book, Strategic Benchmarking, Gregory H. Watson provides a blueprint for a powerful new system that can help us do so . . . one company at a time.

It’s no big secret that America’s global competitiveness is faltering. Sure, we’re far from the bottom, but we’re sinking fast. The World Economic Forum’s 2006-2007 Global Competitiveness Report ranked the U.S. among the top ten most competitive economies in the world. However, among the other top ten economies on the list-a “who’s who” that included Switzerland, Finland, Singapore, and Japan-the United States alone fell from first place to sixth place in little more than two years.

Obviously, this is distressing news, for our nation’s overall economy and for the individual organizations that make it up. What can American companies do to restore their competitive edge in the world? How can we return to world-class levels of quality and productivity? One possible answer: strategic benchmarking . . . with a new twist.

Gregory H. Watson’s new book, Strategic Benchmarking Reloaded with Six Sigma: Improving Your Company’s Performance Using Global Best Practice (Wiley, 2007, ISBN: 0470069082), provides readers with a much-needed “blueprint” for implementing significant quality improvements. As a pioneer in the process of “Best Practice Benchmarking,” Watson brings the same depth of experience he employed guiding major benchmarking programs at worldwide competitors such as Xerox and Hewlett-Packard. Building upon his original book on the subject, Strategic Benchmarking (Wiley, 1993), Watson brings a fresh approach to the subject by incorporating the principles of “Six Sigma” total quality management to the process.

The result is a new system that adds power to the process of benchmarking by enabling managers to better pinpoint significant opportunities for quality improvement. Rather than relying on blind guesses, hunches, or ill-informed decisions, managers can now depend upon strategic benchmarking to find better ways to improve productivity and restore their company’s competitiveness. As Watson expresses it, “Identifying a benchmark practice separates a best practice from a managerial hallucination, wish, hope, or dream.”

“I believe that the lessons learned from Six Sigma will help managers undertake a serious assessment of their business assumptions, technological aptitudes, operational capabilities, and organizational competencies in the context of the skills, knowledge, and attitudes of their people to drive increased performance through a sound use of the scientific method,” he writes.

Since the early 1980s innumerable world-class companies, starting with Xerox, have looked for ways to improve their performance by comparing their operations with competitors in the same sector, or with companies facing similar problems in different industries. Through research, statistical analyses, site visits, and other structured techniques used in benchmarking studies, an organization’s executives can formulate a strategic plan to grow their business through increasing market share or by repositioning in the marketplace.

Strategic Benchmarking Reloaded with Six Sigma takes a very practiced and practical look at how major companies such as Xerox, L.L. Bean, Ford, Compaq Computer, Federal Express, Hewlett-Packard, Toyota, and Nokia Mobile Phones have used strategic benchmarking to improve quality, productivity, and sales.

The Case Study of Nokia Mobile Phones, for example, shows how the Scandinavian maker of wireless telecommunication devices began in the early 1990s to study the best practices of market leaders Motorola and Ericsson. Nokia’s 25-year plan was to become the dominant brand in the European cellular phone industry. But their research yielded such powerful results that by 1999 it had contributed to Nokia Mobile Phones’ achieving over 50 percent growth rates in revenue, profit, and units shipped.

Along with the wave of rapid growth that consumed the cellular industry in the last decade of the twentieth century, Nokia’s global market share also grew from 8 percent in 1994 to 25 percent by the turn of the twenty-first century. In addition, in 2000 Nokia’s European-African business unit earned the European Quality Award, with the highest scores ever achieved in that competition.

If you’re looking for practical tips, procedures, and models for implementing a new benchmarking study, you’ll find much to like in Strategic Benchmarking Reloaded with Six Sigma. Both throughout the book and in several appendixes, the author has included resources, glossaries, plans, advice, guidelines, principles, and “how-tos.”

In addition to providing practical guidelines for gathering and analyzing data for the benchmarking study, Watson also provides an overview of the steps an organization should take to manage the strategic benchmarking project.

With his latest book Gregory H. Watson has again produced a thorough, practical, and invaluable guide for the creation of a program that can help American organizations-and organizations around the world-to regain that competitive edge that is becoming so necessary for economic survival in the twenty-first century.

“Global benchmarking extends the boundaries of benchmarking geographically to encompass the best process that can be found in any location and in any analogous business,” Watson writes. “We should all remember that like Sir Isaac Newton, benchmarking enables us to say, ‘If I have seen further, it is because I have stood on the shoulders of giants.’ We see more clearly and make better decisions because we are not replicating the mistakes of the past, but using the analysis of the past to sharpen our focus on the future.”

Managing a Benchmarking Study:

Five Stages-and Fifteen Steps-to Success

Excerpted from Strategic Benchmarking Reloaded with Six Sigma:

Improving Your Company’s Performance Using Global Best Practice

1. Identify the Topic: The topic will be assigned by the operating committee based on an initial assessment of opportunities for organizational development or improvement.

2. Plan the Study: The study plan will be developed jointly by the benchmarking project sponsor and the benchmarking process owner. A formal study plan will be issued to the benchmarking project team that they assign to conduct the study. The director of quality will assign a benchmarking specialist to facilitate the study.

3. Define Performance Criteria: The performance criteria for the benchmarking study will be established during a preliminary process characterization study that uses the Six Sigma Define-Measure-Analyze (DMA) process to baseline the performance and establish the theoretical base case performance of the business focus area.

4. Establish a Baseline: The baseline performance of the study subject will be defined in the preliminary Six Sigma DMA study. The baseline will include the historical trend of data, process capability calculations, customer specification of tolerance in process variation, and operational definitions of key terms used to describe the measurements.

5. Solicit Study Participants: The benchmarking project sponsor will establish a study advisory team to define the criteria for soliciting study partners and approve the set of organizations that will be contacted for participation. This study advisory team will execute managerial oversight for the benchmarking project team.

6. Prepare Questionnaire for Survey: The benchmarking specialist will facilitate the benchmarking study team in developing a questionnaire for initial screening of the potential study partners. This questionnaire should be reviewed by a specialist to assure the questions are objective and are phrased so their meaning is not ambiguous.

7. Conduct Preliminary Interviews: The benchmarking specialist will conduct all of the preliminary interviews (via e-mail or telephone) and will prepare a summary report for the team. The team will identify those organizations that they wish to pursue for data analysis.

8. Collect Performance Data: The benchmarking specialist will coordinate all external data collection with partner organizations and will evaluate this information to assure it is feasible to make meaningful cross-comparisons among the partner organizations.

9. Analyze Performance Results: The benchmarking specialist will analyze submitted performance results and establish performance envelopes for each organization as well as perform appropriate statistical comparisons to assure that the results have been sustained over time.

10. Identify Benchmark Practice: The team will apply the company’s decision criteria to the analysis of the performance results in order to determine which study partners are benchmark practices. Permission for a site visit will be requested from these partners.

11. Conduct Site Visits: The benchmarking specialist will lead a subgroup of the total benchmarking study team in conducting a site visit at the identified best practice for the purpose of developing an understanding of the practice in operational detail.

12. Document Benchmark Practice: At the completion of each site visit conducted, the team will document the benchmark practice as soon as possible to assure that they capture all the necessary lessons to be learned.

13. Adapt Benchmark Practice: The benchmarking study team will meet with the study advisory team to adapt learning from the study into a recommendation for internal change. This joint team recommendation will be presented to both the benchmarking project sponsor and the operating committee for final approval and implementation.

14. Prepare Final Recommendations and Report: The benchmarking study team will prepare two final reports-a comprehensive report for internal distribution and a final report for sharing with external partners.

15. Share Report with External Partners: The report that is shared with benchmarking partners should include the following items: the performance survey results with participant identity blinded, statistical analysis of best-practice performance, documentation of best practice (performance indexed value stream map), and operational definitions of the critical process enablers.

Judyth Piazza is the host of the American Perspective Radio Program, a cutting edge radio program that is full of inspiration and information. It’s intended to help people succeed in life.

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