From Knowledge to Action: the

Impact of Benchmarking on
Organizational Performance
Stephen A. W. Drew

B ENCHMARKING HAS BEEN DEFINED AS “the art of find-

ing out, in a perfectly legal and aboveboard way, how
others do something better than you do-so you can
imitate-and perhaps improve upon-their tech-
niques”.’ More formally, Camp’ calls it “the search

Box 1

Benchmarking in History

Many interesting examples of benchmarking can be

found in economic history. Bolton3describes how indus-
trialization in the USA benefited from imitating and
exploiting Britain’s knowledge of technologies such as
metallurgy and the steam engine. In the mid-1880s
American engineers visited Britain, and copied and
made major changes to British engines to adapt them
to different fuel prices and the characteristics of North
American rivers. Hurst4 also describes how, in the 18th
century, Quaker entrepreneurs in Coalbrookdale in the
UK formed an archetypical cluster of innovative small
and mid-size firms, similar to present day silicon valley.
Innovations in coal, iron and steam transportation tech-
nologies advanced rapidly, leading to the railroad boom
and the industrial revolution. The Quaker network pro- for industry best practices that lead to superior per-
vided a supportive environment for firms which traded formance”.
and exchanged information with one another, learning Gathering intelligence about competitors is hardly
and ‘benchmarking’ in the process. Quaker entre-
a new idea. Historically, industrial growth and devel-
preneurs subsequently made enormous contributions
to the growth of industry in North America, especially opment has been advanced by imitation of tech-
in cities such as Philadelphia. In the 19th century Meiji nology, business practices and organization in other
restoration, the Japanese based their police, postal sys- countries, as described in Box 1. However, the for-
tem and newspapers on chosen Western models from malization of benchmarking as an instrument of
France, Britain and the USA.3 Many instances of bor-
managerial practice, and its widespread use within
rowing from British and French institutions can still be
found in banks, civil services and educational insti- change efforts such as business process redesign or
tutions around the world. total quality management, is relatively recent.
Impetus has come from increased global competition,

Long Range Planning, Vol. 30, No. 3, pp. 427 to 441, 1997
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 Informal Semi-formal Formal

Frequency Irregular Frequent Continual

Organization Individuals or work-groups Cross-functional teams Teams and central
sources of expertise
Linkage with systems such Few Some Extensive
as strategic planning,
human resources and
compensation
Financial No special budget Practice depends upon Formal budgeting and
project scope and size project control
Methodology Informal Partly-developed Well-developed
Data sources Ad-hoc, opportunistic, e.g. Ad-hoc with some regular Regular environmental
company visits, informal data gathering and scanning, data
interviews, literature competitive intelligence gathering and
searches gathering analysis
Integration Sporadically linked to Partly integrated Integrated with daily
other activities work

development of information technology, databases ture is reviewed to identify ways in which bench-
and networks. marking may lead to competitive advantage and
Systematic study of competitors and other firms is superior performance. The benefits and drawbacks of
a recommended first step for new ventures, change relying on benchmarking for competitive intelligence
projects or strategic planning.z~5-7 Benchmarking is and strategy development are examined within frame-
now one of the most popular tools for strategic man- works such as first mover advantage, the resource-
agement.* It can lead to faster organizational learning based view of the firm, organizational learning and
and change,g as exemplified by turnarounds and suc- knowledge management.
cess of new products at corporations such as Xerox,
Ford and Compaq. Winners of the Baldrige award for
quality score highly on use of benchmarking. Empiri- Types of Benchmarking
cal research shows that benchmarking is closely
associated with the success of business process rede- Benchmarking practice varies according to 2. the nat-
sign, total quality management, new product devel- ure of the object being benchmarked and 2. the part-
opment and other important change initiatives.*’ ners with whom comparisons are being made.
Almost every type of organization is now engaged
Process benchmarking is used to compare oper-
in some form of benchmarking study, not all,
ations, work practices and business processes.
however, with the same degree of rigour and for-
malism (see Table 1). Managers seeking bench- Product/service benchmarking is used to compare
marking partners, practical guidance and information product and/or service offerings.
now have many sources of assistance. In the USA
Strategic benchmarking is used to compare organ-
the International Benchmarking Clearing House of the
izational structures, management practices and
American Productivity and Quality Center can help
business strategies.’
identify partners, commission studies and has estab-
lished a benchmarking code of conduct. Similar Some examples are shown in Table 2. These cat-
organizations have developed in other countries. egories are not exclusive. Product benchmarking, for
Business associations such as the Society of Com- instance, may require some examination of the pro-
petitive Intelligence Professionals (SCIP), the Stra- cess supporting delivery of that product. Or man-
tegic Planning Society and the Strategic Leadership agement practice may be studied alongside operations
Forum offer educational programmes and networking and business processes.
opportunities. Numerous databases are available, Potential benchmark partners may include other
notably the PIMS [Profit Impact of Marketing Studies) units of the same organization, competitors in the
database for strategic studies. same or different geographical markets, firms in
This article presents and analyses results of empiri- related or unrelated industries and firms in other
cal research into benchmarking practices in a cross- countries. More than one type of partner may be used.
section of North American firms. The strategy litera- For example, in reengineering its retail operations,

From Knowledge to Action: the Impact of Benchmarking on Organizational Performance

 requires an examination of related notions in the stra-
tegic management literature. However before pro-
Firms often benchmarked Typical object(s) of study
ceeding, three observations should be made:
Benchmarking is not, in itself, a strategy for
Procter &Gamble Marketing management
achieving competitive advantage in product or
3M Teamwork, innovation, new resource markets. However, it is a related set of
product development
activities which support and enhance strategies
Disney Entertainment, crowd
of imitation and/or collaboration leading to such
management
advantage.
Toyota Just-in-time manufacturing
Motorola Quality management, Although the maxim ‘adopt, adapt and improve’
continuous improvement is often advocated, benchmarking is not, per se, a
Hewlett Packard Continual innovation technique of organizational creativity. Where
Wal-Mart Logistics, use of information breakthrough innovations occur, usually bench-
technology marking is but one tool used by management. For
General Electric Business process redesign, example, although Xerox has benchmarked
leadership development, widely, the company’s advances in photocopying
strategic planning and digital imaging have also been underpinned
Bane One Acquisitions strategy, by large resources committed to research and
superior ROA performance, development. Benchmarking is primarily an
cost control
instrument for developing and implementing stra-
L. L. Bean Mail order operations,
tegies which are either imitative or incremental
logistics
innovations, although it can also be a very useful
McDonalds Franchising, service
consistency
adjunct to the process of discovering more radical
innovations.
0 Advocates of benchmarking clearly regard it as
more than a means of gathering competitive intel-
Chemical Bank chose as benchmark partners com-
ligence. Most authors discuss benchmarking as a
peting banks, USAA insurance, American Express
process of change management. Without some
and Ritz Carlton Hotels. Some potential advantages
form of implementation-transfer and integration
and drawbacks of benchmarking with different types
of best practices from elsewhere-a benchmarking
of partners are summarized in Table 3. In each case
project would only be viewed as a partial success.
an added benefit is the professional development and
Several models for such project management have
learning of the individuals involved.
been suggested,2,7,” including the Xerox lo-step
process. These may be summarized in the frame-
Strategic Issues in Benchmarking work shown in Figure 1,comprising five phases:”
1. determining what to benchmark, 2. forming a
It is generally accepted that benchmarking can be a benchmarking team, 3. identifying benchmarking
valuable tool for organizational learning, but as with partners, 4. information collection and analysis
any technique it is important to be aware of its poten- and 5. action-transfer and integration of best-
tial limitations, effective uses and outcomes. This practice.

Type of partner Benefits Drawbacks

Internal Breaking down internal barriers; improved Does not identify global ‘best
communication and information sharing; ease of practices’; internal
access to partner, cost politics/‘turfguarding’
Competitor As part of consortium can share costs and effort; ease of Legal, proprietary issues
identifying partners; opening up to ideas from outside
Related Industry Study of ‘best practices’ in generic functional or business Legal, proprietary issues; harder to
process management; as with competitors (above) identify partners
Unrelated Industry As for a related industry, but you may have a greater Harder to identify appropriate
chance of discovering new ideas and breakthroughs partners
International Identifies global ‘best practices’; as with unrelated Cost, time, effort; difficulty of
industry (above) identifying partners

Long Range Planning Vol. 30 June 1997

 Form a Identify Collect and Take
benchmarking benchmark analyse action
partners benchmark 1
information ,

A search of the academic literature on strategic man- Montgomeryl” certain conditions support such first-
agement revealed significant references to bench- mover advantage: technological leadership, patents,
marking in works on imitative strategy, first-mover learning-curve effects, the ability to preempt key
advantage, joint ventures, resource-based theory, assets and high buyer switching costs. Many of these
innovation, knowledge development and technology would seem to be precluded under any intrinsically
transfer. However empirical studies in these areas imitative approach. A first-mover position is at risk if
revealed little systematic examination of bench- late entrants are able to get a ‘free ride’ on the pion-
marking practice. eering firm’s investments or to exploit existing capa-
In the following sections we will analyse and inte- bilities such as brand, marketing and distribution.
grate these perspectives from the strategy area and IBM and Matsushita have often adopted strategies of
formulate some questions for research. delayed entry to computer and electronic markets.
Schnaars” suggests several factors associated with
Strategies for Imitation and Pioneering are success as a late entrant, including rapid copying,
Different superior resources, vertical integration and tech-
In an era when many organizations are struggling to nological leap-frogging. Where the costs of imitation
catch up with rapid technological advance and rap- are lower than those of innovation, approaches such
idly-changing customer needs, there should be no as benchmarking may have a significant payoff. How-
need to justify learning and strategy-making by ever, the challenge is to know where and when such
imitation. As Bolton has noted, managers in the west conditions prevail, to be able to move quickly and
are often guilty of a cultural bias against imitative exploit ‘windows of opportunity’.
strategies and we idealize the merits of innovation Any firm considering extensive reliance on bench-
by the firm within its own boundaries rather than marking for strategy-making, whether striving to
‘learning by watching’. Schnaars” gives many exam- survive, catch up or be a pioneer, should consider that
ples of outstanding successes by late-entrants into a the benefits of imitative strategies are not necessarily
new industry or segment. clear-cut and the conditions for success may be
On the other hand, the benefits of being a pioneer complex. However, it seems axiomatic that firms
and first-mover have been widely touted, with which benchmark cannot attain the benefits of first-
reference to firms such as Xerox, Coca Cola and mover advantage and would be unlikely to succeed
Pilkington Glass. According to Lieberman and as market pioneers.

From Knowledge to Action: the Impact of Benchmarking on Organizational Performance

The Source of a Firm’s Competitive ket-based approach prevails in a given market situ-
Advantage-Resources or Market Position- ation, and the relative importance of product versus
Should be Considered before Benchmarking process innovation.
The resource-based view of the firm14-16 emphasizes
the importance of resources for sustained competitive Studies of Innovation and Industry Change
advantage. According to BarneyI resource-based Suggest that Competitive Benchmarking
advantage arises when resources are 1. valuable, 2. Can be a Useful Adjunct to Collaborative
rare, 3. hard to imitate and 4. hard to substitute. This Strategy-making and Implementation in Certain
suggests that it would not be in the interest of any firm Circumstances
which knows that it has a resource-based advantage to Firms which innovate may be capable of reinventing
share information in benchmarking exercises where their business systems and proactively shaping their
1. the object of study is a key contributor to advantage industry environment to advantage, rather than pass-
of that firm and 2. there is any possibility that such a ively accepting a given set of competitive forces.
core competence could be copied. Examples include Nucor’s exploitation of minimill
Therefore, in situations where knowledge-based technology in the steel industry and WalMart’s use of
resources are important for sustained competitive sophisticated information technology and logistics in
advantage, attempts to benchmark anything other retailing. Innovation is typically distinguished from
than non-core capabilities from competitors are likely other types of change by the creation of new products,
doomed-if such competitors are assumed to under- processes and management practices.
stand the reasons for their own success and to be Von Hippel’s studiesI of innovation in the min-
behaving rationally. Extending this analysis, the imill segment of the US steel industry showed that
resource-based view would suggest that bench- both formal and informal trading of know-how
marking with potential entrants or providers of sub- amongst competitors was commonplace and a source
stitute products (often in related industries) would of innovation. Typically this occurred through meet-
fail for similar reasons. However, benchmarking ings at conferences and through personal contacts.
with suppliers, customers and providers of comp- Competing firms might even help one another through
lementary products or services could be beneficial. training and set-up of new equipment. Von Hippel
Advocates of competitive advantage through choice also discovered differing practices in other manu-
of market position, notably PorterI suggest choice of facturing industries, e.g. information-sharing was
distinctive value chain and generic strategy to protect also common in aerospace, but almost absent in met-
the firm against the five forces of industry compe- als fabricators and enzyme producers.
tition. The value chain consists of all important activi- At the time of Von Hippel’s studies the steel indus-
ties required to provide products and/or services to try was undergoing much change and the minimills
customers, and draws on resources of the firm. represented a distinctive and new strategic group
However, Porter17 emphasizes that the value chain within the industry-competing with the major inte-
must be regarded as an integrated system, from which grated firms and foreign suppliers. The minimills may
unique core competencies may be hard to disentangle. have had a strong interest in collaboration with other
A given value chain may depend upon many closely- firms in the same strategic group because this enabled
linked activities, resources and competencies. them to improve the chances of success for the group
Porter’s views on the roots of competitive advantage as a whole. The interviews conducted in the course
suggest similar, but slightly differing, perspectives on of the research for this article revealed similar situ-
benchmarking when compared to the resource-based ations in the aerospace industry. Other authors (e.g.
\iew espoused by Hamel and Prahalad.” Followers Hamel et (11.“) have researched the practice and mer-
of Porter’s logic would be likely to have a stronger its of collaboration with competitors through joint-
resistance to information-sharing which could ventures and international alliances.
endanger a unique product-market position and, con- These studies of innovation suggest that temporary
versely, students of Hamel and Prahalad would have and selective benchmarking with direct competitors
(Treater
0 resistance to information-sharing around core may make sense in certain conditions-e.g. industry
competencies. However, both camps would acknowl- restructuring-despite the prescriptions from the
edge the importance of protecting information about resource-based view of the firm alluded to earlier.
key activities in the value chain and their integration. However, as Hamel et al.‘” advise, careful man-
At the risk of some over-simplification, followers of agement is required to avoid loss of critical infor-
Porter might make quite differing use of product/ mation.
service and process benchmarking than followers of The choice of competitors with whom bench-
Hamel and Prahalad. marking may be considered could be influenced by
This analysis suggests different benefits to be mutual membership of a strategic group, and/or an
achieved from alternative types of benchmarking, implicit and tacit desire to collude in reducing com-
depending upon whether a resource-based or a mar- petition.

Long Range Planning Vol. 30 June 1997

The Likely Success of Benchmarking, and the are their resource-based advantages, such as core
Difficulties Encountered in the Process, Will competencies, to their overall competitive success
Depend Upon the Nature of the Knowledge before deciding from whom to seek or trade infor-
Which is Sought mation; 3. the merits of trading information with com-
In their book The Knowledge-creating Company,” petitors and others may depend upon the nature of
Nonaka and Takeuchi elaborate several charac- innovation and structural change in the industry; 4.
teristics of knowledge in organizations. Tacit knowl- the likelihood of success at benchmarking depends
edge differs from explicit knowledge in that it may upon the nature of the knowledge sought and the ease
not be codified or written down. This form of knowl- of its transfer; 5. the benefits of benchmarking may
edge is also referred to as ‘implicit’, ‘hidden’ or ‘auto- not be limited to the import of information and knowl-
matic’, to reflect a less accessible nature than explicit edge from elsewhere but might also include improved
knowledge, which is easier to teach and transfer. Tacit strategic thinking within the firm.
knowledge is typically acquired in a process of learn- Consequently, the following hypotheses were for-
ing by experience rather than in a classroom. Certain mulated for the research:
types of production and service delivery processes,
The frequency of use and success of different types
especially craft-based, rely heavily on tacit knowl-
of benchmarking is related to the degree and type
edge.
of change in the firm’s industry and business
Process and strategic benchmarking may be par-
environment.
ticularly affected by the presence of a strong tacit
element in the practices being studied. A particularly The frequency of use and success of different types
difficult situation is encountered where operators are of benchmarking is related to the industry, market
themselves not consciously aware of what they do, or position, strategy and capabilities of the firm.
how it contributes to success. Large elements of tacit The degree and type of improvements in firm per-
knowledge in a business process add significantly to formance as a result of benchmarking will depend
the difficulties of benchmarking-but may be upon the benchmarking approach adopted and
addressed, for example, by having a diversity of com- choice of partner.
petencies and backgrounds on a benchmarking team
and by spending lengthy periods of time in ‘appren- Different types of organizational learning and
ticeship’ type roles with expert practitioners. change can be achieved as a result of bench-
marking projects.
Strategic Thinking in Organizations May be Firms will experience differing barriers to success
Improved by Benchmarking in benchmarking projects.
Direct benefits to benchmarking accrue through the
import and absorption of knowledge across organ- The survey was intended to throw further light on
izational boundaries. Indirect benefits may also these hypotheses, and to explore whether any new
accrue when this process stimulates a higher level of guidelines could be discovered to help managers
thinking within the organization, irrespective of any improve benchmarking practice. The framework for
specific lessons learned or knowledge discovered. the investigation, in which organizational learning,
Bogan and English’ suggest that benchmarking can change and benchmarking are related, is shown in
lead to improved strategy-making processes, better Figure 2. Since the author was unable to identify any
problem-solving, continuous improvement and idea similar surveys of benchmarking which investigated
enrichment. Firms like Texas Instruments aspire to a firm strategies and performance improvement
culture of learning and proactive change by encour- outcomes, this work was regarded as exploratory. The
aging benchmarking throughout the organization and research method is discussed in the Appendix.
making it a part of job evaluation and rewards.
McGill and Slocumg view benchmarking as a prac-
tical means of operationalizing the learning organ- Organizational Performance and
ization model. Cognitive capabilities may be
enhanced in individuals, groups and the organization
Success
as a whole. Benchmarking may result in a richer net- A number of questionnaire items provided self-
work of connections amongst individuals within and reported measures of organizational performance, as
outside the firm. It may increase organizational mem- shown in Figure 3. It was assumed that the purpose
ory and trigger ‘unlearning’, questioning of assump- of benchmarking was to improve performance on a
tions and revision of mental models. number of dimensions, the relative importance of
In summary, the foregoing analyses would suggest: which depend upon the industry and firm situation.
1. questions of potential ‘first-mover’ advantage Although the specific items shown do not present a
should be considered before adopting an imitative full ‘balanced scorecard”’ they do represent broad
strategy; 2. managers should evaluate how important measures of performance which are commonly

From Knowledge to Action: the Impact of Benchmarking on Organizational Performance

 :orces for chanae in the Organizational capabilities for I
learning and coping with change

Benchmarking project
success:knowledge
transfer and change

The Organizational Environment

The survey revealed strong evidence of the rapid
changes many industries and institutions are facing
(Figure 4). A majority of respondents were experi-
encing changes which were accelerating in pace and
revolutionary in nature. The few firms indicating a
more relaxed perception were in a monopoly or quasi-
monopoly environment. New customer demands,
increased competition and new technology were all
rated very highly as driving forces, with deregulation
of lesser importance. Public and not-for-profit organ-
izations in healthcare and other sectors reported a
degree of overall change not significantly different
from commercial sectors.
A historian with a long view, recalling the econ-
omic turmoil associated with the depression of the
1930s and the oil crises and inflation of the 197Os,
might question whether radical change is such a
novelty. However the scores support the views of wor-
kers such as D’Aveni,24 who believe many industries
have entered an era of ‘hypercompetition’ and are also
consistent with the results of other surveys of strategic
change showing that change has increased in pace.
tracked and used to compare business units and Respondents were divided into two groups accord-
industries. ing to responses to the questionnaire item “my indus-
The average scores reveal some slight evidence of a try is experiencing revolutionary change” (l-7,
bias commonly encountered with self-reported items disagree-agree scale). Twenty-two responses scored
in such surveysz3-the majority of respondents 5 or less and 67 scored 7. The second group made
seemed to consider themselves slightly above average notably more use of process and strategic bench-
when compared to competitors. marking than the first. The groups were also compared

Long Range Planning Vol. 30 June 1997

to identify whether there was any significant relation- The scores suggest that organizational learning,
ship between performance measures shown on Figure intellectual leadership and knowledge management
5 and use of product/service, process and strategic are key concerns for strategic management.18.2*~z5
benchmarking in each case. The group experiencing a Accelerating organizational learning and change
relatively slower pace of change displayed significant scored highly as a priority. However, respondents
correlations between benchmarking and perform- gave lower scores to the learning capabilities of their
ance, whereas the other group did not. organization, corporate culture, flexibility and ability
These findings suggest that, despite making less to cope with change in the future.
use of benchmarking, firms which are adapting to These findings highlight the importance of achiev-
evolutionary rather than revolutionary change gain ing benefits from benchmarking beyond discovery of
more benefits from benchmarking. This is consistent best-practices, and confirm that different types of
with the hypothesis that the frequency and success of learning and change result from benchmarking
benchmarking practice is linked to the degree and projects.
type of industry and environmental change.

Benchmarking Practice
Capabilities and Readiness for
Comparisons of benchmarking in two sectors-manu-
Change facturing and financial services-revealed differences
Figure 5 shows average scores on a number of ques- in the effectiveness of different types of bench-
tions relating to organizational capabilities, com- marking. There was no statistically significant
petencies and perceived needs for change. The scale relationship between product/service, process or stra-
covered all the key resources of the firm as well as tegic benchmarking and overall improved per-
attributes such as leadership, culture and flexibility. formance in financial services, but there was a

From Knowledge to Action: the Impact of Benchmarking on Organizational Performance

significant relationship between improved per-
formance and product/service benchmarking, and
between improved performance and strategic bench-
marking, in manufacturing. This suggests that bench-
marking meets with differing degrees of success
depending upon approach, industry and market.
Figure 6 shows the relative frequency and per-
ceived success of process, product/service and stra-
tegic benchmarking. Product/service benchmarking
probably scores most highly because it is usually eas-
ier to conduct studies of products or services in the
marketplace than to gain access to information about
internal business processes or business strategies.
Similarly strategic benchmarking is likely to be used
least frequently because the results take much longer
to appeare7 These findings are consistent with the dis-
cussion in earlier sections concerning knowledge
transfer” and the difficulty of process and strategic
benchmarking because there is more tacit component
to knowledge in these areas.
The scores on Figure 6 do not necessarily suggest
that product/service benchmarking is more closely

Long Range Planning Vol. 30 June 1997

linked to superior organizational performance than els of innovation, confirming the observations of Von
other types of benchmarking. Statistical analysis Hippellg and others that innovation typically arises
revealed a higher correlation between performance outside a given industry-through suppliers and lead
improvement and strategic benchmarking than with users-rather than from within.
product/service or process benchmarking. These findings lend support to our hypothesis that
Figure 7 shows the relative frequency and success the degree and type of improvements from bench-
of benchmarking with different partners. Bench- marking depend upon the approach adopted and
marking against competitors seems to be most choice of partner.
widely used and is perceived as being the most
successful.
The frequency of competitive benchmarking is sur-
prising given the earlier comments about competitive Benchmarking Outcomes:
benchmarking, first mover advantage and the
Organizational Improvement
resource-based view of the firm. However, com-
petitive benchmarking may make sense in periods of Seven potential areas of internal organizational
turbulent industry change and as a means of improv- improvement were investigated and scores are shown
ing strategic thinking. in Figure 8. These were areas found to be frequently
Internal benchmarking, i.e. benchmarking between cited in the strategy literature as contributors to suc-
units of the same firm, was the only approach sig- cessful organizational learning, change and superior
nificantly linked with overall performance improve- performance. For example, Hamel and Prahaladl’
ment. However benchmarking with firms outside the mention the importance of stretch goals and of con-
industry was significantly correlated with higher lev- vincing people of the need for change.

From Knowledge to Action: the Impact of Benchmarking on Organizational Performance

 The scores shown suggest that benchmarking is and Bogan and English7 also discuss the problems
more than just copying and imitative strategy. Many experienced in locating information, establishing
firms perceived benefits in improving their innovative relationships with partners and transferring best-
and creative capabilities, even if these are not directly practice.
the targets of benchmarking studies. In an attempt to measure the barriers to successful
Figure 8 provides evidence that benchmarking can benchmarking, 13 frequently-cited concerns were
lead to broad improvements in strategic thinking and itemized on the questionnaire and scores are shown
the capacity for change. in Figure 9.
The results support our hypothesis that a range of
barriers are important. Time is viewed as a very sig-
nificant barrier, as well as difficulties of resourcing
Barriers to Success
and finding partners. The importance of resources
Each of the stages of a benchmarking project shown was confirmed by the finding that the average cost of
may encounter difficulties or barriers to success. Szul- conducting a benchmarking study was over $100,000,
anskiz6 describes how ‘stickiness’ may arise in knowl- with a range between $3000 and $3 million. The aver-
edge transfer due to factors such as the inability of age project length was 23 weeks, involving 30 per-
the recipients to absorb new knowledge, ‘causal ambi- son weeks of effort. These figures indicate that few
guity’ (i.e. the difficulty of understanding existing people are involved in a typical benchmarking team,
cause and effect relationships) and poor relationships or that team members usually only contribute a frac-
between organizational units. Camp,’ Spendolini’ tion of their time to the project.

Long Range Planning Vol. 30 June 1997

 5.24

We also collected information on the use of teams However, the issues are complex and bench-
and technology in benchmarking projects. This marking is not equally desirable or effective for all
revealed a high importance attached to teamwork, but types of firms in all situations. Industries differ in the
little sophisticated use of new information tech- rate at which innovations and knowledge develop
nology such as databases or groupware. and diffuse over time. They also differ in the sources
of competitive advantage that can be sustained and
the nature of knowledge applied in strategy-making
and the management of the business. Public and not-
for-profit sectors experience competition less in
Conclusions and Implications for ‘product’ markets than in resource markets. Conse-
quently the barriers to transferring knowledge across
Managers organizational boundaries vary. Benchmarking is not
This article confirms that the practice of bench- always a fast or low-cost solution to knowledge-acqui-
marking is widespread and used in different ways. sition and organizational change. However organ-
It is used extensively in service and manufacturing izations appear to acquire greater skill at bench-
industries as well as many public sector and not-for- marking through experience, facilitated in future
profit organizations. There is a general feeling that by systems for collaborative work, databases, the
the pace of change in the business environment has World Wide Web and other networks.
accelerated, that organizational learning and change The survey confirmed that benchmarking can be
are priorities and that benchmarking is one of the best more than a tool supporting imitative or collaborative
tools for promoting them. strategies; many managers believed that it helped to

From Knowledge to Action: the Impact of Benchmarking on Organizational Performance

generate new ideas. Benchmarking was also found to petencies and market objectives and aligned their
be central to the strategic management process as a approach to these.
catalyst for change and means of developing strategy
as ‘stretch and leverage’. The research described in the article was sponsored by the Arts
Research Board, McMaster University, Canada.
This investigation also raised a number of questions
for further research:

Appendix-The Research Method

0 What is the relationship between improvements
in profitability and the benchmarking process? Interviews and a mail survey were conducted to investigate
the practice and success of benchmarking in a rep-
0 In which industries and markets is benchmarking resentative sample of sectors and firms. The questionnaire
required respondents to provide information about changes
a significant source of sustainable competitive
in their business environment, organizational capabilities,
advantage? Research by Powellz7 has shown that benchmarking projects undertaken and benefits gained.
the process of strategic planning can be either a It contained 97 items, most of which required answers
‘hygiene factor’ or source of resource-based advan- on a 1-7 Likert scale. Firm and respondent information
tage in different settings. This may also be true of was requested, but optional. A covering letter from the
researcher’s university was included with fax number indi-
benchmarking.
cated and a postage-paid envelope for mailing. Respondents
were promised a summary of the survey results and offered
cl Benchmarking can be both expensive and time-
the opportunity to discuss these with the researcher.
consuming. Ways must be found for doing it faster, The questionnaire was mailed to 825 managers in fin-
more effectively and economically, without sac-
rificing rigour or integrity of approach. New sour-
ces of information and methods for analysis must
be investigated. This challenge can only grow as
the ‘information overload’ experienced by many
executives and knowledge-workers increases.

0 Knowledge, skills and the management of bench-

marking projects through teams are important to
the success of benchmarking. Organizations need
to find ways of accelerating the process of acquir-
ing, deepening and renewing team-based com-
petencies for benchmarking in many diverse areas
of business activity.

Finally, some prescriptions for managers and bench-

marking professionals flowing from the survey
research or raised in interviews are:

Benchmarking can be most effective when it is

integrated with other systems such as strategic
planning, budgeting and human resource man-
agement.

It is dangerous to rely on general impressions or

anecdotes about competitors: there is usually
more objective information available than is made
use of.

People require education in benchmarking best-

practices.

Careful attention should to paid to the compo-

sition, structuring and development of bench-
marking teams.

Benchmarking requires commitment and support

from the top of the organization.

The greatest benefits accrue to firms which have

thought through their strategic position, com-

Long Range Planning Vol. 30 June 1997

 ancial services, manufacturing, high technology, service
industries, government, health-care and other sectors.
Many firms were multidivisional with several lines of busi-
ness. The survey was not restricted to firms operating in a
single sector or with a single line of business because we
wished to assess the effects of internal benchmarking
between business units and benchmarking across industry
boundaries. The sample was obtained from the membership
lists of two well-known national professional associations
in North America and represents a broad cross-section of
the economy.
Completed questionnaires were obtained from 140
people, representing a 17% primary response. A pro-
gramme of 66 follow-up phone contacts was conducted to
investigate the reasons for non-response. The results sug-
gest a true response rate of over ZS%, after adjusting for
invalid addresses and job turnover. This response is typical
for mail surveys. Unfortunately resource and time con-
straints precluded multiple mailings and extensive follow-
up. There was no significant difference between the per-
centage of respondents and non-respondents who reported
that they were engaged in benchmarking projects.
The responsibility level of respondents is shown in Fig-
ure Al, with 13% at CEO or president level and 44% from
senior executive or executive ranks; 66% of respondents
reported their organization busy with a benchmarking pro-
ject at the time of the survey, and 89% that they would be
involved in such a project in the future; 81% of managers
reported some previous involvement in benchmarking.
Only 13% reported no benchmarking activities whatsoever
by their current firms, but nevertheless reported having
gained experience in benchmarking elsewhere. Functional
responsibilities varied from IT specialists to marketing
managers and strategic planners.
As shown in Figure AZ, respondents were from a broad
cross-section of manufacturing, services, government and
not-for-profit organizations (note the ‘other’ category
includes a number of hospitals and healthcare organ-
izations). Size ranged from multibillion-dollar corporations
and banks to small businesses.
Results were analysed using SPSS and commonly
accepted statistical tests and measures of significance.

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Long Range Planning Vol. 30 June 1997