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How to conduct an outside industry benchmark for innovation

For innovation borrow ideas from other industries To generate radical ideas, approaches and strategies, benchmarking withing your industry is not particularly valuable. You must look outside your industry and business. Only with outside-industry benchmarks can you overcome paradigm blindness and create game-changing ideas.

I’ve written before that traditional benchmarking is stupid because, frankly, it leads to me-too ideas. Not only that, but it also shifts you into a never ending fixed mindset. A more strategic way to benchmark, is to look outside your industry for ideas. This logic of innovation is “lift and shift.” That is, search for great ideas in unrelated fields, lift them out of the context in which they took shape, and shift them into your company.

This topic isn’t new, but just like ethnography, it is still a rarity in the business world.

The main obstacle to outside-industry benchmark is implementation because business practices are quite different from one industry to another.The key is how to transform those practices to fit your industry.

Conduct industry benchmarks to open your eyes to what sucks

The only reason you should benchmark inside your industry is to conduct a CRAP (Competitor Rules And Practices) audit to determine what not to do. Put simply, if I want to know if we’re doing stuff that sucks, and if our competitor does stuff that sucks, I want to stop doing that and figure out ways to separate myself from that as much as possible.

In the second startup I was a part of, we we’re an online store that sold mom and baby clothes. We achieved success because the clothes were cute and achieved lots of media attention thanks to celebrities getting photographed with their kids wearing a matching pair.

I deliberately took the time to study other online stores, even the ones whom we didn’t compete with. Some ideas, such as, sending non-branded notifications after a purchase were completely scratched and replaced with personalized emails to every new customer thanking them for their purchase.

We were also known to go above and beyond the call of duty with our non-celebrity customers. One company we benchmarked and modeled our approach to customer service was Nordstrom. We already had the mindset, but took a deep dive and borrowed some of their tactics and implemented them online.

For example, we did quite a lot of blogging back then. So, within niche networks where we engaged in, it wasn’t uncommon to get questions from mom entrepreneurs about our efforts. We were not in the consulting business, but by simply engaging with these moms on their terms, we won over communities and got our fair share of community awards as a result.

This may not seem like a big deal but, much like it happens today on social networks, back in the day people were looking to get people’s attention by selling to them. We were not doing that. We were engaging with people on their terms, not ours. And they were not our customers!

If you’ve heard stories about Nordstrom’s fanatical attention to customer service, you’ll know how it connects to what we were doing back then.

5 steps to outside-industry benchmarking

There isn’t a set way of executing outside-industry benchmarking, but what I will say is that it requires a critical eye, and you should approach it like a journey of discovery. When I say critical eye, I mean you should develop a healthy dissatisfaction with the status quo and be relentless in separating yourself from what sucks.

Anyway, how do you conduct outside-industry benchmarking? Here is how to do it:

  • Identify the challenge you want to work on. What’s the challenge? New ideas to improve customer service, rethink the retail location, improve workflow…This part has to be laser focused, so I suggest you develop a solid idea of the different service models that exist online as well as offline; for example.
  • Setup a benchmarking team. The people who will go out to hunt for insights should be open minded. No experts, but people who are curious in the problem at hand and who are open to new problem solutions.
  • Identify your heroes. I like to keep it simple, so simply ask yourself: who do we admire and why? What are they the most at? What can we learn from them? If this is too intuitive for you, a more systematic approach is to come up with a list of exemplary companies that are better than you in your chosen challenge.
  • Conduct the outside-industry benchmarking process. This step is similar to other benchmarking processes. The phase includes desk research, company visits, process demonstrations, and management interviews. On the research side, I conduct a “What Works Scan” where I’m looking for specific tactics that have worked for other that I didn’t include in my list. A great way to do this scan is to use social media. There isn’t a day that doesn’t go by where Mashable doesn’t publish something related to how a company succeeded by doing something.
  • Map the insights and ideas to your own industry. The last step is a creative process. You begin by sketching what these ideas mean for your industry and company. The goal isn’t to mindlessly copy ideas, but to use the ideas as a cue for generating equivalent ideas in your business. To connect the dots, I use the What Works Matrix.

Bottom line: You won’t find uncommon insights in the mainstream, you also won’t find them in your own industry. Whatever works somewhere else can be adapted in your environment. It can be ideas that work to solve a similar problem in unrelated fields, it can be a trend that’s happening in another part of the world, or it can something you notice in your travels that you think might work in your market. Read my post about a  systematic way to ‘steal and adapt’ ideas that work for further insight.

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