In my discussions and readings, I’ve come across several ways that leaders try to improve organizational performance. Let’s consider one approach that might be called “Just do it” and could be parodied as follows. The Maximum Leader decides that twenty different metrics express the performance of an organization, and then mandates a 50% improvement in each metric.
Pretty simple. What’s wrong with that approach? There are several drawbacks.
The first problem is that people can’t work on too many things at once. The same is true about organizations in the context of initiatives that involve multiple parts of the organization and so require coordination. People and organizations both need to focus.
A second problem is that it may not be practical, or sometimes even theoretically possible, to achieve large performance increases across the board. Each metric expresses a different operational aspect and may be subject to different, practical limits to achievable improvements.
Third, people and organizations need to be convinced and inspired to act. Unless you can mandate prison time – or worse – on top of mandating all the improvements, people need reasons which are best articulated persuasively and linguistically, that is, as sentences. (Mere words aren’t reasons and so aren’t best at persuading, although they can summarize and inspire, e.g., Onward and Upward!)
A conventional alternative to massive mandates is comparing oneself to other organizations in order to identify several important areas in which an organization is falling short (problem #1 – focus), other organizations achieving better results (problem #2 – practicality), and to express the problem and need succinctly in order to persuade others to get fully on board (problem #3 – articulation).
Benchmarking in theory can achieve all of these, since it starts with data that enable comparison with other organizations. As we have written elsewhere, benchmarking has been held back because it’s applied often in cases where data availability is a problem, and because the lack of automation leads to high costs, uncertain outcomes, and the biases that are necessarily introduced by the manual methods that are employed.
Benchmarking engines are the way forward, especially when they lead to concise, specific insights, expressed well, on a large variety of dimensions that can be addressed departmentally, not just organization-wide. These insights are a spur to action – the action of deciding whether something is a practically addressable issue that should be a near- or mid-term priority, and then doing something about it. The issue could be either a problem or a cause for praise, and the actions can improve on the problems or lead to copying the practices that resulted in the good outcomes revealed by benchmarking.
Organizations need to focus on practically soluble issues that can be set up for action and can be articulated persuasively to people.