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‍The Benchmark Trap: Focusing on the Shiny Object‍

Benchmarks are like perfectly staged Instagram accounts - they showcase the best possible outcome, but they don't reveal the struggles, the unique circumstances, or the blood, sweat, and tears that went into achieving those results. People, and even experienced consultants, often get caught up in the visible, shining outcome. They forget to ask the crucial questions:

• What was the context? What were the specific circumstances that allowed the benchmarked company to succeed? Industry, company size, resources, and even company culture all play a role.
• How was it achieved? What unseen processes, strategies, or challenges did they face?

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‍Understanding the "Why" Behind the Benchmark

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Understanding the history of that given market, why that company has been doing something and what made that possible or necessary is what the benchmarking should be all about. The triggers, the underlying processes and market or regulation dynamics will show you what to consider. This is the right way to evaluate properly if the novelty is relevant for you and your market and if you can implement that thing successfully.

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Let's say you see a competitor with a phenomenal customer satisfaction rating. You benchmark their approach and implement similar tactics. But what if their high rating stemmed from a laser focus on a specific customer segment you don't cater to? You'll be copying their strategy blindly, missing the key factors that made it work for them.

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The Key to Effective Benchmarking: Contextual Intelligence

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The true power of a benchmark lies in understanding the "why" behind the "what". Here's how to use benchmarks effectively:

1. Dig Deeper: Don't just admire the numbers, delve into the "how" and "why" behind the success.
2. Context is King: Identify the specific context that enabled their achievement.
3. Adapt, Don't Copy: Learn from their approach, but tailor it to your unique circumstances.

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Beyond the Surface: Unlocking the Power of Benchmarks

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We established that relying solely on benchmarks can be misleading. Now, let's delve deeper into the three crucial steps for using benchmarks effectively:

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1. Dig Deeper: Unveiling the Hidden Workings

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Don't just see the success metric; uncover the processes that drove it. Here's how to dig beneath the surface:

• Research the Company: Look for industry reports, news articles, or even interviews that shed light on their strategies and challenges.
• Identify Specific Initiatives: What specific programs or actions did they take to achieve those results?
• Consider Internal Resources: Did they have a unique advantage in terms of talent, technology, or market access?

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Example: You see a company with a low employee turnover rate. Digging deeper, you might discover they have a robust employee development program or a strong company culture that fosters loyalty.

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2. Context is King: Understanding the Underlying Factors

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The environment in which a strategy thrives matters immensely. Analyse the context of the benchmark:

• Industry Landscape: Are they operating in a high-growth or a mature market? This can significantly impact their success factors.
• Company Size and Stage: A lean startup's strategy might not translate well to a large corporation with established processes.
• Customer Base: Who are their target customers? Understanding their demographics and needs is crucial.

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Example: A competitor boasts high sales figures. However, upon closer inspection, you realise they cater to a premium market segment with higher spending power. This wouldn't be directly applicable if your target audience is budget-conscious.

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3. Adapt, Don't Copy: Tailoring for Your Success

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Don't blindly replicate another company's approach. Instead, adapt it to your unique situation:

• Identify Existing Strengths: Leverage your own company's resources and capabilities to build on the benchmark strategy.
• Address Weaknesses: Identify areas where you might need to adjust the strategy to address your own shortcomings.
• Develop a Customised Plan: Craft a tailored approach that aligns with your company's goals, resources, and target market.

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Example: You learn about a successful customer loyalty program. Instead of copying it verbatim, you can adapt it to your own customer base, incorporating elements that resonate with their needs and preferences.

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By following these steps, you can transform benchmarks from fleeting glimpses of success into actionable insights that propel your business forward. Remember, context is king, and adaptation is the key to unlocking the true potential of benchmarking.

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Benchmarks are valuable guideposts, not blueprints.

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All In.