Bench Warmer

Management fads of the 80s are all dying. But benchmarking remains as popular as ever. Why? Pioneer Robert Camp has the answers.

Xerox had A problem In 1984. Its name was synonymous with copiers, but Japanese competitors like Canon and Sharp were selling ‘Xerox machine’ at a lower price than Xerox itself could afford. How were they able to do it? Like any good manufacturer, Xerox had disassembled and deconstructed the products made by its competitors to check their parts. It turned out they were all of comparable quality and there were no differences in engineering. The answer lay not in the. machine itself but the process by which It was made.

A civil engineer from Cornell with an PhD in logistic from Penn State, Robert Camp was part of a six-member team that Xerox then put together to ‘systematically identify superior practices from other organisations’ that could provide competitive advantage in the marketplace. The project was overseen by the vice-president for manufacturing at Xerox who called it ‘benchmarking’, a catchy term hitherto used by land surveyors to measure heights. Camp eventually used it as the title of the book he authored in 1989, after the project was through. “I wrote it because there was great interest in what we had done from outside the company,” he recalls. “Our customers wanted to do their own benchmarking and wanted to learn from our experience.”

Though it started with direct competitors, Xerox expanded the scope of its benchmarking project widely over the five years that Camp was on the team. For example, it went in for functional benchmarking where best practices were studied irrespective of industry. In logistics, for example, Xerox benchmarked against LL Bean, a catalogue sales company, which had an excellent warehousing system. “No company is good at everything, but there are always those who are exceptional in particular areas. We proved that benchmarking with best practices outside your own industry works,” says Camp.

The 80s were management’s golden years, when a whole new vocabulary was invented and a slew of interesting fads took hold. Terms like the learning curve, restructuring, intrapreneurship, zero-based budgeting were all introduced during this time, along with Japanese management practices like quality circles and kanban. If benchmarking has managed to outlive its contemporaries and remain a favoured management tool today, it’s because the idea ties in with something intrinsic to human nature - the need to compare: “It’s no rocket science,” says Camp. “It's what you do when you go shopping for groceries. Best practice benchmarking only requires a certain level of detailing to get it right.”

At its most basic, the term benchmarking refers to a piece of data, a number against which your own numbers can be compared. Take a question like ‘is the company making enough money?’ There are around least 60 indicators - net profit margin, return on capital employed, gross value added as a percentage of sales - that serve as a basis for comparison on this question. The next step is to identify the companies you might want to compare yourself with on these parameters. Large conglomerate groups like the Tatas might start internally, with every group company benchmarking against the best performing one. “It may not be possible to replicate what they are doing, but the idea is learn from those who are doing better than you. If you decide to implement best practices borrowed from others, you need change management skills,” says Camp.

Types of Benchmarking

Direct competitors have always been the hardest to benchmark against, since they don’t tend to open their doors to market rivals easily. In the past, corporates have relied on annual reports, case studies in journals and magazines and the occasional poached executive to learn how their competitors managed better. At Xerox, Camp started with the fact that Canon ran a leaner operation, employing fewer workers on the shop floor. But it was the next level of detail that revealed a different way of working. “We found that they had one indirect Worker (who did not actually assemble the product) to every direct worker. At Xerox, we had two indirect workers for every direct worker,” he says.

While corporates will always remain secretive about their research and development, many are now more relaxed about sharing their best practises, possibly because they know these cannot be readily replicated and encashed upon by the competition. In fact, most companies today can be expected to respond favourably to a request for a study tour of their facilities. Camp gives examples like Disney, IBM and the Ritz Carlton hotel chain which have developed full-fledged teaching programmes on 'their way' of doing things and proactively invite executives of other companies to participate. “People have come to understand that information sharing leads to improvements all around,” says Camp. “In the internet age, the whole process has be-come that much easier. It’s faster, cheaper and less formal. You no longer need to send your benchmarking team to spend the day at the company you want to study. You can use the internet, video-conferencing, pre-packaged best practice case studies.”

Retiring from Xerox in 1995, Camp set up Global Benchmarking Network (GBN) to tap into the market for consulting. In India, GBN operates through the Mumbai based BestPrax Club, which recently organised a workshop where international benchmarking gurus participated and several corporates - Castrol, Yes Bank, Tata Power, Eureka Forbes, Hindustan Zinc, Birla White - presented their best practices. Judging by the large turnout and lively participation at the conference - held on the day the monsoon first hit Mumbai - benchmarking remains very popular with India Inc.