When Benchmarking Is Dangerous

Comparing Apples & Oranges JPG

One Saturday a few months ago, a friend and I were leaving a Dallas Maverick’s game (yes, I’m a fan) to meet up back at my home. We were driving separate vehicles, and in a moment of masculinity I challenged my cohort to a friendly game of “last-one-there-buys-dinner.” I’m sure in a fit of childish exuberance you’ve done the same.

While cruising down the highway, I thought I noticed his SUV in passing and knew I had this one in the bag.

I was sorely mistaken. When I pulled up to my home he was already there waiting for me.

It happens to the best of us.

We benchmark our achievements and progress to our competitors, but sometimes we’ve made a mistake. We’ve compared ourselves to those we ought not be compared. We’ve boxed our company into an industry too specific — too static — to define our true competition. Like the CD manufacturers before iTunes (who thought they were in the CD making business instead of the music distribution business) or the railway industry (which thought it would always be the standard for distribution) before pipeline, trucking and airlines took a chunk of their market, we have compared ourselves to the wrong SUV and end up having to buy everyone else’s dinner.

Benchmarking can be dangerous. Wield its childish exuberance with maturity, plenty of research and skepticism.

And don’t be caught at Q4 with your true competitors holding your potential market share, and your company out of a meal.


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3 Comments on “When Benchmarking Is Dangerous”

  1. Mr. D Mueller says:

    Seth, really good write up on benchmarking. I mean really…

  2. Phil Johnson says:

    Couldn’t agree more! I have a colleague who continually tells me I should be benchmarking performance against another competitor, except whilst we appear to use similar models on the surface we are both two very different machines, and benchmarking actually doesn’t solve the problem. Of course, it does have its uses now and again when used correctly :]

    • Seth Mueller says:

      Right on, Phil.

      It’s necessary to be aware of competition, what they’re doing, and where you fit in, especially if you’re fighting for the exact same market space. But that’s not the end-all approach — and it can lead to some devastating strategic tunnel-vision…just ask all those CD manufacturer’s that have disappeared, been downsized or acquired/merged ;).

      Awareness is good, but it’s not everything. Where the industry is headed and where you are positioned in the minds of customers compared to competitors (direct and substitutes) is much more important.


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