To innovate, you have to separate what’s possible from the impossible. And a good way to determine what’s in the realm of possibility is to explore what other innovators are up to and to benchmark success.
By benchmarking against innovative leaders, you get a sense of how and where to direct your creative energies. Identifying best practices also helps you gain buy-in from your team as you launch initiatives.
Yet if you’re not careful, benchmarking can lead you astray. In attempting to meet or exceed the performance of another organization, you may overlook differences in culture, employee training or internal processes. To benchmark properly:
Seek Role Models
Once you define your innovative project, scan the landscape for those who have demonstrated excellence in your area of interest. Then dig for answers.
Tom Mierzwa, a professor of innovation at the University of Maryland, suggests that you start by asking, “What are our competitors doing and what do we need to do?” And if they’re superior innovators, ask “Why are they better?”
“Search online for business articles — or the company’s 10-K or annual report — to learn about approaches they have taken, such as how their logistics chain or distribution works,” he said. “Then analyze what you can apply to your organization and implement some innovative practices.”
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Choose The Right Time Horizon
Innovations rarely explode on the scene. More often, they unfold in stages.
Nevertheless, it’s risky to benchmark solely against long-term indicators because they “can take too long to show up,” warns Scott Lenet, co-founder and president of Los Angeles-based Touchdown Ventures.
“Have a time frame for your metrics and align it with what you want to accomplish,” he said. He adds that many venture capitalists focus on financial measures such as internal rate of return and multiple on invested capital. “These numbers are great because they’re objective,” he said, “but they can take seven to 10 years to become apparent, and the average corporate venture capital initiative is shut down within four years.”
Broaden Your Perspective
As much as you try to innovate from within, enlist external allies as well. Gaining an outsider’s perspective can spark creative connections.
“Consider an outside party to help you with best practices in benchmarking,” Lenet said. “This way, benchmarking can serve as an audit on your innovation program and give you more objectivity” as you craft a pilot project or weigh investments in new frontiers.
Keep Your Goal In Mind
There are dozens of variables you can use to compare your performance with other organizations. With so many benchmarking metrics at your disposal, it’s easy to pick poorly.
Lenet suggests asking yourself, “What are we trying to accomplish over X years and does this activity contribute to that goal?” That way, you’re more likely to use benchmarking to your advantage.
Examine Similar Businesses
To maximize benchmarking, analyze similar types of companies. Comparing yourself to an entirely different type of organization can taint your results.
“Picking adjacent industries might be more useful than less adjacent industries,” Lenet said.
See What You’re Missing
If you’re eager to learn more about a company’s ability to innovate — and that organization is not a direct competitor — you may want to schedule a visit so that you can learn firsthand from their success. Lay the groundwork by explaining why you’re interested and what you hope to gain from a tour of their operation.
“People are often happy to share their innovative work with someone in a parallel industry,” Mierzwa said. “Highlight why it’s important to you to get an audience with them. Make them feel that what they’re doing is of value to you.”
Source: Benchmark Success To Boost Your Business Innovation | Investor’s Business Daily
