Tag Archives: benchmarking

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.

benchmarking against the competition is stupid

Another reason why benchmarking against competitors is stupid

benchmarking against the competition is stupid

One of the problems of measuring an organizations innovativeness is R&D spending. If you ask people: Who’s more innovative between Apple and Microsoft? They’ll say Apple. Yet if we measure them based on patents and R&D spending, most people don’t know what they’re talking about. Microsoft blows Apple out of the water on R&D.

Yet, the reality is that Apple is more innovative than Microsoft.

Spending huge on R&D does not equal innovation.

You can spend all you want on innovation, but you can’t guarantee success. In fact, the most innovative companies are not necessarily the biggest spenders, according to Booz & Company’s recent global innovation study. What matters instead? The ability to build the right innovation capabilities to connect with the overall business strategy and other critical capabilities.

But what the heck does that mean?

These lists make for good conversation, but they also prove to be worthless if not approached with objectivity. Why?

As Jason Cohen points out, organizations (and humans) have an unhealthy fixation to emulate #1:

We tend to fixate on whoever is #1, in business as with sports, tacitly assuming that the contest is mostly skill and therefore the tournament has selected the rightful leader. But I’m not so sure we know that skill/luck proportion. I’m not so sure we can assume the contest (marketing, sales, product) and tournament (the marketplace) picks #1 based on repeatable, codify-able skill-set. Same with #2 or anyone else.

That number #1 is dictated by a system, a market, not people. On top of that, if you give people a list of the most innovative companies; they’ll want to emulate #1. It’s that simple. We’re suckers for it.