Two companies can do exactly the same thing. Only one will achieve the intended result.
A competing company lowers its prices.
Introduces a new service.
Changes its visual identity.
Invests in new technology.
From the outside, this looks like a well-thought-out strategy worth emulating. Since a given solution has worked for others, it seems natural to ask whether it shouldn’t be implemented in your own organization as well.
This is exactly where many organizations start talking about benchmarking.
The problem is that observing the market is not yet benchmarking.\
The greatest value of benchmarking isn’t answering what the competition is doing. It is understanding why they are making those specific decisions.
What you see is only part of the picture
Business decisions are not made in a vacuum.
Each one is a response to a specific situation, constraints, or goals that often remain invisible from the perspective of an outside observer.
A price cut might be part of a growth strategy.
It could also be an attempt to free up capital tied up in inventory.
A new service might open the door to a new market for the company.
Or it might be an attempt to salvage declining sales of an existing offering.
Looking solely at the outcome, it’s very easy to jump to the wrong conclusions.
Copying decisions does not mean copying their results
Let’s imagine two people embarking on the same journey.
One sets off because they have meticulously planned the route and know exactly where they want to go.
The other simply sees someone moving ahead, so they head in the same direction.
For a while, both will travel along the same path.
However, this doesn’t mean they are heading towards the same destination.
It is very similar with business decisions.
Two organizations can implement an identical solution and still achieve completely different results. Not because the solution itself is good or bad, but because it was adopted in response to different needs.
Benchmarking starts with questions
In our work, we often encounter the belief that benchmarking is all about finding best practices.
That is only part of the process.
It is much more important to understand the circumstances under which these practices were developed.
Why did the company choose this solution?
What problem were they trying to solve?
What constraints did they consider?
What risks were they willing to accept?
Only the answers to these questions allow us to assess whether a given solution has a chance of working in another organization as well.
The most valuable insights don’t always come from the competition
Benchmarking is very often associated with analyzing companies operating in the same industry.
It’s a natural direction.
However, it’s not always the most valuable one.
Organizations from different sectors face similar challenges. They manage processes, serve customers, plan growth, and make decisions regarding resource utilization.
Sometimes the solution we are looking for has already been developed in a completely different industry.
This is exactly why benchmarking shouldn’t be limited solely to observing direct competitors.
If you are also interested in how organizational changes are designed, read the article on Designing change without people.
Data is a starting point, not the answer
Modern organizations have access to an increasing amount of data.
They can compare prices, products, communication styles, financial results, or customer reviews.
This is valuable knowledge.
At the same time, data does not explain the reasons behind the decisions made.
It shows what happened.
It doesn’t show why.
It is the interpretation of data that makes benchmarking a tool to support organizational growth, rather than just a compilation of market information.
Benchmarking shouldn’t end with a report
Many benchmarking projects end with a presentation containing a set of metrics, charts, and examples of best practices.
This is valuable material.
However, it doesn’t mean that the organization already knows what decisions it should make.
The report is the beginning of a conversation.
Only by analyzing the causes, dependencies, and consequences can we translate the gathered information into actions with a solid business justification.
It is exactly at this stage that benchmarking ceases to be market analysis.
It becomes a tool supporting decision-making.
Benchmarking doesn’t answer the question of who is the best
At CrimsonLab, we treat benchmarking as a process of discovering dependencies, not finding ready-made answers.
We are interested not only in what decisions other organizations make, but also in what drives them and what conditions allow them to yield the expected results.
Thanks to this, benchmarking does not lead to copying solutions.
It leads to their conscious evaluation.
Sometimes this means implementing new practices.
Sometimes it reassures the organization that its current course of action is correct.
Both conclusions can hold equal value.
Before you ask what the competition is doing…
It’s worth asking yourself a different question.
Why are they doing it this way?
If we don’t know the answer, it’s very easy to confuse cause and effect and implement a solution that worked under completely different circumstances.
Effective benchmarking is not about copying someone else’s decisions.
It’s about understanding the mechanisms that led to those decisions.
That is usually where you will find the knowledge that allows you to make better decisions in your own organization.