Benchmarking is the process of measuring your product, service, team or business against your competitors and industry leaders.
The goal of benchmarking is to understand your current position in relation to the “best positions or practices” and identify opportunities for improvement.
The mental model comes from the world of surveying where a benchmark is a reference or measurement standard used for comparison.
“Benchmarking is simply about making comparisons with other organizations and then learning the lessons that those comparisons throw up.” The European Benchmarking Code of Conduct
Types of benchmarking
- Internal: comparison of a business process to a similar process inside the organization.
- Competitive: competitor-to-competitor comparison of a product, service, process, or method.
- Functional: comparison to similar or identical practices within the same or similar functions outside the immediate industry.
- Generic: broadly conceptualizes unrelated business processes or functions that can be practiced in the same or similar ways regardless of the industry.