Executive Briefings

Benchmarking for Business Excellence     

In the 1990s hundreds of businesses around the world had their eyes on the Boeing Co., which had promised to change the face of aviation with its release of a new commercial jetliner. From a design standpoint, Boeing did not disappoint, but the new jetliner's cost was another story. Boeing customers were looking at a price that exceeded the budget by 20 percent, and Boeing was looking at a sticky situation in need of immediate action.

Although the situation was quickly addressed, it raised an issue that was much larger in scope than a pricing error. How could a leading designer of commercial jetliners, defense platforms, and satellite and launch vehicles build a faulty pricing scheme? Clearly, Boeing could learn a few lessons to ensure its success through the next century.

Boeing's leadership set out to discover if a formula for success existed in accomplished organizations, regardless of maturity, location, or industry. A special team was chartered to investigate if a DNA template--a strand of fundamental characteristics--existed that coded for business excellence. According to a recent presentation at APQC's 2005 member meeting, the Boeing benchmarking project was a tremendous success and is demonstrative of what has kept the company in the lead position of the aviation industry for over 40 years.

Benchmarking Manager William Sacherek shared his strategies for successful benchmarking based on his 25 years of experience at Boeing. These best-practice strategies are incorporated in Boeing's benchmarking process but can be applied to all businesses interested in embarking on a benchmarking study of their own.

The foundation of a successful benchmarking study relies on support from every corner of the organization. According to Sacherek, the scope of benchmarking, as a discipline, has grown from focusing on a task within a process to taking a more strategic perspective, which means that rallying the troops must occur from the top down.

Sacherek advised that a CEO's endorsement is crucial to eliciting a response and getting involvement throughout a large organization for a benchmarking project. In addition to the CEO expressing interest, employees will be moved to participate if they see the alignment between the strategy of the company and the value of their input everyday, said Sacherek. Businesses can use metrics and other analytical tools or purchase sophisticated software, but they should not lose sight of the people involved in the process, Sacherek said. "That is the one thing that we don't get--that the real breakthrough comes from people. You can't compete with the people that come and work for you. You need their courage and their heart."

Aligning the direction of a benchmarking study with customers' values is also part of building a strong foundation. Sacherek suggested that businesses use customer feedback to demonstrate the need for change. "People in your company need to have a compelling reason for why they have to change, and part of that compelling reason is that your customers need to have this be successful," said Sacherek.

Corporate leaders must be comfortable with two basic concepts in order to benchmark successfully: the situation as-is and prospect of change. Assessing a situation as-is enables a business to correctly define and eventually improve the situation. To unveil the reality of a situation, Sacherek recommends speaking to actual users of the system or process under question. These people will know how the system works, how much it actually costs, how much time it really takes, and finally, if it works, said Sacherek. Understanding the current situation also enables leadership to see where their competitive advantage truly lies. "We roll the dice on every major project. It's very important that our company's leaders are aware of what the outside business realities really are," said Sacherek.
Sacherek warned that if a commitment to change does not exist, then any benchmarking study will be a waste of resources and time. At Boeing, leaders began to encourage previously thought taboo topics to be brought to their attention. By encouraging employees to talk about problems, rather than fear they are jeopardizing their jobs, benchmarking at Boeing was able to take flight and truly make a difference in the company, said Sacherek. "The culture should (convey) that there is a commitment to change and the merits of ideas count more than the position you are in," said Sacherek.

One concern that people have about benchmarking is that information sharing across competitors could possibly disclose valuable proprietary information. Sacherek said that the information unveiled from a benchmarking study is nonproprietary in nature, such as handling safety or preventing burnout in employees. By focusing on standard issues that plague organizations across the board, all benchmarking partnerships operate on a level playing field.

A second misconception that people have about benchmarking is that it is the equivalent of industrial tourism. This term describes the common trap people fall into after visiting a benchmarking partner's site and believing that purchasing the technology and adopting processes that worked well there will answer their businesses problems just as well. Sacherek warned against this thought process and said that benchmarking is "about finding a better way to do things, not [doing things] the same way or copying what other people do."

Boeing uses a Web-based benchmarking infrastructure, which involves a benchmarking group, a community of practice, APQC's Benchmarking Code of Conduct, an enterprise-wide procedure, and an external network. Sacherek focused on a few of these components, which he stated were vital to successful benchmarking.

A benchmarking team can bring value to an organization at the enterprise or functional level, said Sacherek. They allow leadership to analyze competitors' practices and build an external view of leading practices, among other things. A designated benchmarking team can also initiate knowledge sharing within an organization. According to Sacherek, "One focus of benchmarking should be on taking advantage of the intellectual assets already (resident in the) company."

With offices worldwide, a global company such as Boeing benefits from having a central benchmarking group that can act as a vehicle for sharing internal information across the enterprise.

Another tool to keep on hand during a benchmarking study is APQC's Benchmarking Code of Conduct, which Sacherek described as "invaluable." Keeping a standard code of conduct raises awareness of legal, ethical, and security issues and ensures that they are respected during the benchmarking study. Despite the rigid security measures Boeing adheres to, Sacherek shared that the company did not alter the code of conduct because the standards are appropriate across industries.

The third aspect of the Boeing benchmarking infrastructure that Sacherek highlighted was establishing an external network that abides by the rules of reciprocity. "Always make sure that the company you are benchmarking with has a vested interest in your success. ...They (need to) know that you have something of value to them and they have something to give you in return."

Sacherek also recommended that a benchmarking team be the first to offer something to their partner and fulfill the promise in order to strengthen the relationship. He also suggested that the principle of reciprocity be used in conjunction with APQC's Benchmarking Code of Conduct to avoid potential legal issues.

Preparation is an absolute must according to Sacherek. "If you wonder why benchmarking fails on implementation, it's because people don't do the upfront work. That's the bottom line. People who don't do the (preparatory) work will fail."
Sacherek recommended a few key points that all companies should consider when undertaking a benchmarking study.

A benchmarking study would be quite inefficient without a solid, up-to-date resource network that can be tapped into any time. At Boeing, 700 technical affiliations are part of its learning network. According to Sacherek, if the person learning "is not the person who is going to do the implementation, it will fail. It will be another report at a meeting." Sacherek advised that this network should experience the learning process, not simply read benchmarking results.

Sacherek warned against relying on information that is written or stored in an electronic database. The danger of using these forms of information, he said, is that they risk being obsolete, especially in the fast-paced global economy of the current time. "You want valid information that is relevant to the problem, that is in real time. What you are really looking for are people that are subject matter experts that you can call on for their tacit knowledge... Find people who are willing to share," Sacherek said.

When adapting best practices into a business, Sacherek advised that it should be piloted first in a typical situation. One way to demonstrate that the improvements are worthy of adoption is to engage metrics in the pilot study. "If the metrics change and you can prove that (a process) can be better and you share it across the enterprise (that another company is doing it), then you can convince the leaders that it will work," said Sacherek.

Sacherek recommended that a strategic benchmarking team within an organization take on the role of an adviser to establish a support system for adapting benchmarking practices. This ensures that participants of a major change initiative are on the same page and understand the value of the benchmarking study and their role in it.

Formal documentation, Sacherek said, is important to establishing expectations and goals of a benchmarking partnership. However, benchmarking is not a report. At Boeing, the documents exchanged among benchmarking partners are considered testimonies, rather than reports. "Benchmarking is a relationship. You want to have a testimony that says: How can we learn this from you? What can we do for you?, and If you hit a road bump along the way, you'll call us and let us know!" said Sacherek. The principle of reciprocity is explicit in the testimonies that Boeing exchanges with its benchmarking partners.

Benchmarking studies have deposited a tremendous amount of knowledge into the hands of businesses. Unfortunately, simply learning best practices does not guarantee that businesses will join the ranks of the mentors they wish to emulate, said Sacherek. By firmly committing to key elements within each step of the benchmarking process, businesses can initiate enterprise-wide improvements and enjoy the success of their efforts. With success in hand, Boeing plans to use benchmarking to reach its long-term goals.
http://now.eloqua.com

In the 1990s hundreds of businesses around the world had their eyes on the Boeing Co., which had promised to change the face of aviation with its release of a new commercial jetliner. From a design standpoint, Boeing did not disappoint, but the new jetliner's cost was another story. Boeing customers were looking at a price that exceeded the budget by 20 percent, and Boeing was looking at a sticky situation in need of immediate action.

Although the situation was quickly addressed, it raised an issue that was much larger in scope than a pricing error. How could a leading designer of commercial jetliners, defense platforms, and satellite and launch vehicles build a faulty pricing scheme? Clearly, Boeing could learn a few lessons to ensure its success through the next century.

Boeing's leadership set out to discover if a formula for success existed in accomplished organizations, regardless of maturity, location, or industry. A special team was chartered to investigate if a DNA template--a strand of fundamental characteristics--existed that coded for business excellence. According to a recent presentation at APQC's 2005 member meeting, the Boeing benchmarking project was a tremendous success and is demonstrative of what has kept the company in the lead position of the aviation industry for over 40 years.

Benchmarking Manager William Sacherek shared his strategies for successful benchmarking based on his 25 years of experience at Boeing. These best-practice strategies are incorporated in Boeing's benchmarking process but can be applied to all businesses interested in embarking on a benchmarking study of their own.

The foundation of a successful benchmarking study relies on support from every corner of the organization. According to Sacherek, the scope of benchmarking, as a discipline, has grown from focusing on a task within a process to taking a more strategic perspective, which means that rallying the troops must occur from the top down.

Sacherek advised that a CEO's endorsement is crucial to eliciting a response and getting involvement throughout a large organization for a benchmarking project. In addition to the CEO expressing interest, employees will be moved to participate if they see the alignment between the strategy of the company and the value of their input everyday, said Sacherek. Businesses can use metrics and other analytical tools or purchase sophisticated software, but they should not lose sight of the people involved in the process, Sacherek said. "That is the one thing that we don't get--that the real breakthrough comes from people. You can't compete with the people that come and work for you. You need their courage and their heart."

Aligning the direction of a benchmarking study with customers' values is also part of building a strong foundation. Sacherek suggested that businesses use customer feedback to demonstrate the need for change. "People in your company need to have a compelling reason for why they have to change, and part of that compelling reason is that your customers need to have this be successful," said Sacherek.

Corporate leaders must be comfortable with two basic concepts in order to benchmark successfully: the situation as-is and prospect of change. Assessing a situation as-is enables a business to correctly define and eventually improve the situation. To unveil the reality of a situation, Sacherek recommends speaking to actual users of the system or process under question. These people will know how the system works, how much it actually costs, how much time it really takes, and finally, if it works, said Sacherek. Understanding the current situation also enables leadership to see where their competitive advantage truly lies. "We roll the dice on every major project. It's very important that our company's leaders are aware of what the outside business realities really are," said Sacherek.
Sacherek warned that if a commitment to change does not exist, then any benchmarking study will be a waste of resources and time. At Boeing, leaders began to encourage previously thought taboo topics to be brought to their attention. By encouraging employees to talk about problems, rather than fear they are jeopardizing their jobs, benchmarking at Boeing was able to take flight and truly make a difference in the company, said Sacherek. "The culture should (convey) that there is a commitment to change and the merits of ideas count more than the position you are in," said Sacherek.

One concern that people have about benchmarking is that information sharing across competitors could possibly disclose valuable proprietary information. Sacherek said that the information unveiled from a benchmarking study is nonproprietary in nature, such as handling safety or preventing burnout in employees. By focusing on standard issues that plague organizations across the board, all benchmarking partnerships operate on a level playing field.

A second misconception that people have about benchmarking is that it is the equivalent of industrial tourism. This term describes the common trap people fall into after visiting a benchmarking partner's site and believing that purchasing the technology and adopting processes that worked well there will answer their businesses problems just as well. Sacherek warned against this thought process and said that benchmarking is "about finding a better way to do things, not [doing things] the same way or copying what other people do."

Boeing uses a Web-based benchmarking infrastructure, which involves a benchmarking group, a community of practice, APQC's Benchmarking Code of Conduct, an enterprise-wide procedure, and an external network. Sacherek focused on a few of these components, which he stated were vital to successful benchmarking.

A benchmarking team can bring value to an organization at the enterprise or functional level, said Sacherek. They allow leadership to analyze competitors' practices and build an external view of leading practices, among other things. A designated benchmarking team can also initiate knowledge sharing within an organization. According to Sacherek, "One focus of benchmarking should be on taking advantage of the intellectual assets already (resident in the) company."

With offices worldwide, a global company such as Boeing benefits from having a central benchmarking group that can act as a vehicle for sharing internal information across the enterprise.

Another tool to keep on hand during a benchmarking study is APQC's Benchmarking Code of Conduct, which Sacherek described as "invaluable." Keeping a standard code of conduct raises awareness of legal, ethical, and security issues and ensures that they are respected during the benchmarking study. Despite the rigid security measures Boeing adheres to, Sacherek shared that the company did not alter the code of conduct because the standards are appropriate across industries.

The third aspect of the Boeing benchmarking infrastructure that Sacherek highlighted was establishing an external network that abides by the rules of reciprocity. "Always make sure that the company you are benchmarking with has a vested interest in your success. ...They (need to) know that you have something of value to them and they have something to give you in return."

Sacherek also recommended that a benchmarking team be the first to offer something to their partner and fulfill the promise in order to strengthen the relationship. He also suggested that the principle of reciprocity be used in conjunction with APQC's Benchmarking Code of Conduct to avoid potential legal issues.

Preparation is an absolute must according to Sacherek. "If you wonder why benchmarking fails on implementation, it's because people don't do the upfront work. That's the bottom line. People who don't do the (preparatory) work will fail."
Sacherek recommended a few key points that all companies should consider when undertaking a benchmarking study.

A benchmarking study would be quite inefficient without a solid, up-to-date resource network that can be tapped into any time. At Boeing, 700 technical affiliations are part of its learning network. According to Sacherek, if the person learning "is not the person who is going to do the implementation, it will fail. It will be another report at a meeting." Sacherek advised that this network should experience the learning process, not simply read benchmarking results.

Sacherek warned against relying on information that is written or stored in an electronic database. The danger of using these forms of information, he said, is that they risk being obsolete, especially in the fast-paced global economy of the current time. "You want valid information that is relevant to the problem, that is in real time. What you are really looking for are people that are subject matter experts that you can call on for their tacit knowledge... Find people who are willing to share," Sacherek said.

When adapting best practices into a business, Sacherek advised that it should be piloted first in a typical situation. One way to demonstrate that the improvements are worthy of adoption is to engage metrics in the pilot study. "If the metrics change and you can prove that (a process) can be better and you share it across the enterprise (that another company is doing it), then you can convince the leaders that it will work," said Sacherek.

Sacherek recommended that a strategic benchmarking team within an organization take on the role of an adviser to establish a support system for adapting benchmarking practices. This ensures that participants of a major change initiative are on the same page and understand the value of the benchmarking study and their role in it.

Formal documentation, Sacherek said, is important to establishing expectations and goals of a benchmarking partnership. However, benchmarking is not a report. At Boeing, the documents exchanged among benchmarking partners are considered testimonies, rather than reports. "Benchmarking is a relationship. You want to have a testimony that says: How can we learn this from you? What can we do for you?, and If you hit a road bump along the way, you'll call us and let us know!" said Sacherek. The principle of reciprocity is explicit in the testimonies that Boeing exchanges with its benchmarking partners.

Benchmarking studies have deposited a tremendous amount of knowledge into the hands of businesses. Unfortunately, simply learning best practices does not guarantee that businesses will join the ranks of the mentors they wish to emulate, said Sacherek. By firmly committing to key elements within each step of the benchmarking process, businesses can initiate enterprise-wide improvements and enjoy the success of their efforts. With success in hand, Boeing plans to use benchmarking to reach its long-term goals.
http://now.eloqua.com