Benchmarking, football VAR and pilots…
In the ever-evolving world of business, staying ahead of the competition is essential. Companies constantly seek ways to improve their processes, enhance performance, and achieve greater success. One powerful tool that has emerged in this pursuit is benchmarking. Benchmarking allows businesses to compare their performance against others, gain insights, and implement changes to reach new heights. In this article, we will delve into benchmarking, exploring its types and levels, benefits, potential challenges and discuss a recent benchmarking between football’s VAR and airline pilots.
Benchmarking is a strategic management technique that involves comparing a company’s performance with that of its peers or industry leaders. It provides a structured approach to assess various aspects of business operations, helping identify areas for improvement and opportunities for growth. Benchmarking is not limited to a single approach; it encompasses several types and levels tailored to different organisational needs.
Types and Levels of Benchmarking
1. Internal Benchmarks
Internal benchmarks involve comparisons between different departments or functions within an organisation. This type of benchmarking helps identify disparities and opportunities for improvement within the company itself. For instance, a business might compare the efficiency of its sales department to its marketing department to pinpoint areas of inefficiency or areas that require more resources.
2. Competitive Benchmarks
Competitive benchmarks, on the other hand, focus on comparing a company with its competitors in the same industry. Businesses employ techniques like reverse engineering, where they purchase a competitor’s product and dismantle it to understand its content and configuration. By doing so, they gain insights into their competitor’s strengths and weaknesses, enabling them to adapt and improve their own offerings.
3. Functional (Operational/Generic) Benchmarks
Functional benchmarks go beyond industry boundaries. In this type of benchmarking, internal functions are compared with those of the best external practitioners of those functions, regardless of the industry they are in. For instance, a company might compare its accounts receivable department’s performance with that of a leading credit card company. This approach allows businesses to adopt best practices from other fields and apply them to their operations.
4. Strategic Benchmarks
Strategic benchmarks are a subtype of competitive benchmarking aimed at driving strategic action and organisational change. This level of benchmarking considers long-term goals and objectives, helping companies align their strategies with the evolving business landscape. By studying the strategies of successful competitors, businesses can adapt and make informed decisions to gain a competitive edge.
Benefits of Benchmarking
Benchmarking offers numerous advantages to businesses, regardless of their industry or size. Here are some key benefits:
1. Performance Improvement
Benchmarking helps identify areas where a company falls short of industry standards or best practices. This knowledge allows organisations to make targeted improvements, optimizing their processes and performance.
2. Competitive Advantage
By studying and adopting the best practices of industry leaders or top-performing competitors, businesses can gain a competitive advantage. This can lead to increased market share and profitability.
3. Enhanced Efficiency
Benchmarking often reveals inefficiencies in a company’s operations. Addressing these inefficiencies can result in cost savings and improved resource utilization.
4. Strategic Insights
Strategic benchmarking provides valuable insights into industry trends and competitors’ strategies. This information can inform long-term strategic planning and decision-making.
5. Innovation and Adaptation
Benchmarking encourages innovation by exposing companies to new ideas and approaches from other industries. It helps businesses adapt to changing market conditions and customer demands.
Challenges in Benchmarking
While benchmarking offers substantial benefits, it also presents challenges that organisations must navigate:
1. Data Quality and Availability
Obtaining accurate and relevant benchmarking data can be challenging, as it often requires access to proprietary or sensitive information from competitors or industry leaders.
2. Applicability of Best Practices
Not all best practices observed through benchmarking may be directly applicable to a specific organisation. Companies must carefully evaluate which practices align with their unique circumstances.
3. Resistance to Change
Implementing changes based on benchmarking findings may face resistance from employees or stakeholders accustomed to existing processes.
4. Benchmarking Costs
Conducting benchmarking studies, especially on a large scale, can be costly in terms of time, resources, and expenses.
Functional Benchmarking in VAR Communication
An excellent example of functional benchmarking can be found in the world of sports, specifically in football’s use of Video Assistant Referee (VAR) technology. Premier League referees faced communication challenges during VAR decisions, leading to confusion and controversy. In response, the Times newspaper reported that British Airways pilots shared their expertise in communicating under pressure with top-flight officials.
The pilots emphasized the importance of clarity and accuracy in communication, emphasising the need for brief and direct dialogue. They drew parallels between the roles of pilots and referees, highlighting the necessity for absolute clarity, especially in noisy and heated environments.
Additionally, the pilots stressed the significance of simplicity in language, much like when landing abroad, where a standardized vocabulary helps overcome language barriers. Similarly, referees communicating with assistants and VAR in chaotic situations require clear and concise language to avoid confusion.
This example illustrates how functional benchmarking can transcend industry boundaries to improve communication and decision-making. By learning from experts in a different field, football officials can enhance their performance and provide fans with more transparent and efficient VAR processes.
In conclusion, benchmarking is a powerful tool that offers valuable insights and opportunities for businesses to excel in their respective industries. By understanding the types and levels of benchmarking, harnessing its benefits, and addressing potential challenges, organisations can leverage this strategy to drive continuous improvement and achieve their goals. Functional benchmarking, as demonstrated in the VAR communication case, serves as a reminder of benchmarking’s versatility and its potential to revolutionize various aspects of business and beyond.