What Is Strategic Benchmarking?
When you include strategic benchmarking in your planning, you can compare your improvements in strategic performance to that of performance leaders in your field of activity in addition to comparing them to the past performance of your own business. You have to decide what aspects of your strategic performance you want to compare and find one or more similar businesses. Once implemented, you can use strategic benchmarking to develop a system of best practices within your company.
Benchmarking of the alignment of core operations with strategic goals lets you ensure that strategy and basic company competencies are consistent. Examining the best-performing companies with similar operations, evaluating the consistency of their strategic orientations and how well they reach their strategic targets lets you compare your company's performance with theirs. You can establish benchmarks for performance in comparison with highly successful companies and work on the alignment of strategy and core competencies to improve performance. You either have to adjust your strategies to take advantage of what you do best or improve competencies in the areas you target.
Your corporate strategy defines goals for your company and specifies your approach to your competitors. Evaluating your overall strategic approach examines how industry leaders compete and how their competitive priorities align with their strategies. If your overall strategy aims at increasing profitability, it isn't consistent with competing against a company on price. Benchmarking competitive performance based on the performance of industry leaders and improving your performance by modeling your alignment of competitive priorities with overall strategy on theirs helps you reach your targets.
Your overall corporate strategy has to build on the strengths of your organization. If your strategy is not consistent with your strengths, you waste resources and miss potential improvements. Examining how companies with similar strengths implement strategies to build on them and maximize performance helps you develop corresponding strategies or build the necessary strengths. When you benchmark performance levels for these companies, you can work on your strengths and matching strategies to reach and surpass these benchmarks.
For an effective execution of a company strategy, individual managerial orientations have to be consistent and aligned with the strategic objectives. Examining how market leaders achieve a consistency in managerial orientations and benchmarking their resulting performance improvements gives you a target for your own improved performance and a process for meeting it. If your strategy is to compete on quality and a manager is focused on cutting costs, his orientation and company strategy are not aligned. You need to apply the kind of process used by successful companies to ensure such alignment, and you can then reach your benchmarks.