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| RealMarket Stock Index |
| RMSI | 61.30 |  | 1.47% |
| Dow Jones | 12,114.10 | | 0.99% |
| Nasdaq | 2,368.00 | | 1.53% |
| S&P 500 | 1,387.17 | | 1.15% |
| Top Gainers |
| Unica | 11.3 |  | 0.28 |
| Sykes | 16.21 | | 0.20 |
| APAC | 5.03 | | 0.12 |
| Top Losers |
| salesforce.com | 42.64 | | -1.72 |
| SAP | 46.22 | | -1.30 |
| Nortel Networks | 28.29 | | -1.14 |
| Complete Stock Index |
| As of close 03/02/07 |
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 "Our Take" - Guest Contribution
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Benchmarking - When is it "Breathing Ether?"
by Dick Lee
More than a few CRMAdvocate readers have generated considerable heat on the topic of whether benchmarking makes eminent good sense—or makes benchmarkers dizzy from “breathing ether.” Many on both sides make strong, seemingly rational supporting arguments advocating their views. That’s the good news. The bad news, from my perspective, is that the two sides are typically talking past each other, the result of trying to compare apples with kumquats.
Here’s what I mean. There’s one common type of benchmarking—outcomes comparisons—that we can scarcely sustain a rational argument against. Too many of us routinely and intuitively do it, although often unconsciously. Let’s consider shopping for cars. In North America, lots of buyers rely on “Consumer Reports” user reliability ratings to compare likely frequency of repair of the different cars we’re considering. And an even wider geo market also relies on J.D. Power’s annual customer experience reports that measure frequency of initial defects and customer satisfaction. Both CR and J.D. Power provide benchmarking data, pure and simple, and we put these data to good purpose.
Also consider how in business we measure against industry outcome standards. The credit union industry provides a good example. Any CUNA (Credit Union National Association) member in the U.S. can compare virtually any financial or operating ratio against ratios from the universe of member CUs to learn which percentile it falls into—and whether management should pat itself on the back or should consider corrective action. Likewise before making an equity or mutual fund investment, most of us compare a stock or fund’s historical performance against one or more industry indexes. And we could go on and on like this, listing example after example of how consumers and companies rely on benchmarking data, albeit sometimes not realizing we’re relying on them.
These are the apples—measurements of final outcomes. Comparing the “what” against the “what.” Which is far cry from the presumptive practice of comparing the “how” against the “how” as we do when benchmarking business process rather than outcomes.
These are the kumquats—benchmarking measurements that pit business process against supposed “best practices.” Whenever I hear the term “best practices” my eyes role, and I grit my teeth. And I’ve heard this term so often I’m almost down to my gums, and one of these days my eyes will finally roll all the way over, giving me the inner insight I’ve long sought.
What’s so wrong with benchmarking business processes?
Where do we start?
Actually, at a macro level there is a logical starting point—workflow. Workflow defines how work (and information) move from function to function; from person to person within a function; and to/from functions and external stakeholders. Whereas the other component of business process, work process, defines how individuals perform their own work. Unfortunately, both the six sigmies and process generalists, most of whom learned business process in manufacturing settings, focus on work process rather than workflow. However, when you benchmark work process you’re comparing sets of processes determined by higher-level workflow and dependent on workflow—a comparison comparable to medical research measuring the strength of symptoms, which depend largely on the overall condition of the patient, rather than measuring the occurrence of diseases. Trivial and irrelevant.
Okay, let’s try to fix this by benchmarking at the workflow level, which makes way more sense. But we immediately meet another obstacle. Workflow is extremely contextual to the company doing the work. So there’s no meaningful way to measure one set of workflows against another. To experience why, pull out one puzzle piece and ruminate on whether it shouldn’t be a different shape—and what would happen to the rest of the puzzle if it was. Like the puzzle piece, workflows are forced to be a certain way to fit into their context. And benchmarking one workflow or a subset of overall workflow out of context against another company’s workflow or subset makes no sense. Heck, workflows have so many aspects beyond mere statistics that we can’t even average them to provide a benchmarking scale.
What are we actually benchmarking when we compare these “hows?” Corporate culture, including functional silos—among the primary drivers of how work gets done. Plus information technology—another primary driver of how work gets done. These two factors together have an overwhelming effect on workflow design and workflow utility. But can we benchmark corporate culture? Good luck finding objective and specific measures. Can we benchmark technology infrastructure? Believe me, if we could, IBM, Sun, Microsoft and a whole raft of others would be benchmarking IT systems looking for a competitive edge. And the fact that they haven’t should put to rest the very thought of doing so.
Kumquats, indeed (with my apologies to those liking kumquats).
Bottom line, you can benchmark the “what”—statistical outcomes—in objective and meaningful ways that aid both companies and customers. But you can’t benchmark the “how”—interim steps behind these outcomes—without breathing ether (or laughing gas). That’s my view.
CRM consultant, speaker and author Dick Lee is founder and principal of St. Paul, Minnesota-based High-Yield Methods. Aside from his extensive consulting history, he’s been a leader in industry education and has written several books and numerous articles on CRM, customer-centricity and front office business processes. Dick’s perspectives have been featured in “The Wall Street Journal,” “Business Week,” numerous CRM and marketing industry publications and on National Public Radio.
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