331
See also: Study the competition 24–27 ■ Keep evolving business practice 48–51 ■ Avoid groupthink 114 ■ Ignoring
the herd 146–49 ■ Avoiding complacency 194–201 ■ Simplify processes 296–99 ■ Applying and testing ideas 310–11
DELIVERING THE GOODS
businesses. Improvements can come
quickly so that once the process
of benchmarking has identified
effective practices, these methods
can be adopted. The changes should
lift performance to the level achieved
by the industry leader, so that any
competitiveness gap is eliminated
quickly. In the future, benchmarking
can be repeated on a regular basis.
Benchmarking in practice
In the 1980s, the US photocopier
manufacturer Xerox used
benchmarking to restore its market
share. For ten years, it had been
losing customers to its Japanese
rivals Canon and Ricoh. These
companies had been gaining
ground because they were able to
undercut the prices charged by
Xerox, without compromising on
product quality. To identify what
they were doing wrong, Xerox
bought their rivals’ products and
took them apart. They discovered
that Canon and Ricoh designed their
machines so that they were made
from a relatively small number of
common components. Design
simplicity enabled the competition
to benefit from economies of scale;
bulk-buying components reduced
operating costs, making it possible
for Canon and Ricoh to offer
consumers lower prices. Xerox
responded by simplifying its
designs, so that the commonality
of components across Xerox models
rose from 20 to 70 percent.
Xerox’s US management team
also visited Japanese photocopier
factories to learn more about theirproduction methods. Upon their
return, the team members adopted
many of the production methods
they had seen. Benchmarking
also enabled Xerox to improve
the reliability of its products. From
1981 to 1990, customer complaints
fell by 60 percent. Over the same
period Xerox’s manufacturing
costs fell by more than 50 percent,
which enabled the company to
match the prices charged by the
Japanese, while maintaining its
profit margins.Raising standards
Governments have also used
benchmarking to improve
performance. For example, from
2000 to 2009, the Organization
for Economic Cooperation and
Development (OECD) surveyed
education standards in 65 countries
and identified that Finland
achieved the highest rankings in
reading, mathematics, and science.
Teachers from around the world
now visit Finland every year to
learn more about the Finnish
educational success. ■Benchmarking provides
an inventory of creative
changes that other
companies have enacted.
John Langley
UK Barclays Bank executiveFerrari’s pit-stop crew has a clear
chain of command, allowing them to
refuel the car and change all four
tires in less than seven seconds.Benchmarking across industries
Some companies learn from
another organization that operates
in a completely different market.
For example, in 2005, two doctors
from London’s Great Ormond
Street children’s hospital were
struck by the efficiency of the
Ferrari pit crew during a Formula
1 race.
Alan Goldman and Martin
Elliot observed that only one
person in the crew gave orders,
avoiding time lost in discussion,
and pit-stop routines were
standardized. Crew membersspecialized in one task, which
they practiced over and over,
until it was perfect.
Goldman and Elliot changed
working arrangements at Great
Ormond Street by applying
Ferrari best practice: clear job
descriptions meant that each
member of staff knew what
their role was, and a leadership
position was assigned for each
shift. As a result, patient
handover errors between the
operating room and intensive
care unit unit fell by 70 percent.