8.2.2 Basic steps for benchmarking product development

There are some basic steps in benchmarking, shown in Fig. 8.2, which need to be followed to maximise the return on any investment in benchmarking (Zairi, 1998; Czarnecki, 1999; Barclay et al., 2001).

Fig. 8.2 Basic steps in benchmarking.

Clearly define the benchmarking objectives
Before beginning a benchmarking study, the organisation should be clear on what the subject is to be; what are the desired outcomes; who will use the results; and how will the results be used to benefit the organisation in the future. It is all too easy to embark on wide-ranging data collection, which, in the end, provides very little useful information for the organisation and its specific requirements.

Determine the sources of benchmarking data
The benchmarking can be internal and using internal data sources, but usually the comparison is with companies within the specific industry or in industry in general. Sources include the following:

     Published materials. Case studies, industry surveys and research
        into R&D management methodology and practices provide an
        excellent source of primary data. These materials can also be
        used to prepare a list of potential benchmarking partners.

     Databases. For example those prepared by the Industrial Research
        Institute (IRI) in the USA, provide an excellent source of information
        on level of spending on R&D, number of R&D employees, number
        of patents granted, etc. Regular summaries of these data are
        presented in the Journal of Research – Technology Management.

Identify companies and individuals that can act as benchmarking partners
This partnership can range from an infrequent exchange of general information about company operations and practices to regular meetings where details relating to company practices are shared with a common aim of improving the overall practices of both partners. It is important not to be limited to similar companies in the selection of partners. Look to the best practices, wherever they occur. The object is to learn from the leaders, those with world-class operations and techniques.

Form a benchmarking team
Although an individual can conduct a benchmarking study, a team effort will usually get a better return. Involving a cross-section of people with different skills and organisational responsibilities will provide benefits not only in the capture of the information but it will also enable greater acceptance and more rapid assimilation of best practices into the organisation.

Determine, design and execute the data collection process
There are various ways of collecting benchmarking information, including telephone interviews, postal surveys, face-to-face meetings and desk-top research. Clearly, the type of information required, the level of detail and the available budget will determine the methodology. The best approach is probably to start with the relatively simple desk research to provide the background material and further clarify the critical information required from surveying or from face-to-face meetings.

Analyse and implement the findings
Very often there will be a number of valuable findings from the study. It is important to prioritise these and to focus on the implementation of a manageable few. Commitment and support from senior management is an important starting point. It is also essential that besides showing that these are 'best practice initiatives' there must also be clear evidence to all who are involved in the implementation that there is real benefit to their business.

It is important in setting up a benchmarking or assessment system that it should be (Barclay et al., 2001):

     relevant to the users' needs;

     fairly comprehensive;

     capable of a variety of approaches;

     both educational and action-oriented;

     capable of being used in total or selectively;

     able to 'force' the development and implementation of action plans.

In other words, set up a system that does not overwhelm with information, but gives the knowledge needed to lead to product development improvement. In Box 8.1 is shown the development of benchmarking in the New Zealand Dairy Board, which shows some methods that can be used in benchmarking the total product development in a company.

Box 8.1 The New Zealand Dairy Board (NZDB) experience 1993 An audit of the NZDB by the Boston Consulting Group (BCG)        required for statutory reasons and covering all parts of the        business. The major recommendations for R&D focused on the        improvement of the product development process in achieving        greater speed to market and greater success rates. 1994 Development of a phase-gate process for product development        and implementation across all parts of the organisation. 1995 Consolidation of PD Processes with increased emphasis on        'doing things right'. 1996 Recognition that future gains in R&D effectiveness would most        likely come from 'doing the right things' in addition to 'doing        things right'. 1997 A small cross-functional benchmarking team was formed        initiating a three-pronged approach:     · Decision practices. An internal survey of the performance and        areas for improvement against key decision practices required        for 'best practice'. The decision practice framework was defined        by the Strategic Decision Group (SDG) in California (see        Matheson & Matheson, 1998). Analysis of the survey data by        SDG pointed to a number of specific areas for improving the        decision practices that lead to 'doing the right things'.     · ProBE survey. Developed by Robert Cooper and Scott Edgett        at the Product Development Institute Inc. (Ontario, Canada).        An internal survey designed to evaluate product development        performance against 11 critical success factors was used to        identify areas of strength and weakness relative to industry        average results and those of the top 20% of firms in the        Product Development Institute database.     · Secondary data. A range of published materials including        annual reports, management journals, the Industrial Research        Institute (IRI) R&D database were used to provide background        information on industry and individual company performance.     · A set of prioritised initiatives, centred around 'doing the right        things' was recommended. These focused on linking R&D to        business strategy including technology planning and portfolio        management.     · Implementation of these initiatives was begun. 1998 A second BCG audit of the NZDB confirmed most of the        recommendations of the internal benchmarking team and        endorsed their implementation. 1999 A further benchmarking study was started with Arthur D. Little,        focusing on the use of metrics to track R&D performance. The        scope of the project was widened to include all parts of the        innovation process and not only R&D. A suite of metrics was        developed based on lagging, real-time, leading and learning        indicators. These metrics were implemented in the business        units of the NZDB.

This benchmarking development shows in sequence the aims of firstly product development efficiency (doing things right) and then product development effectiveness (doing the right things); and also the use of different evaluation methods and different consultants. The important part in benchmarking is to choose the correct measures or metrics.

Think Break The NZ Dairy Board is a large company and is able to employ a range of     consultants. If you were a small or medium-sized company: 1. Discuss the ways you could measure product development     effectiveness and efficiency. 2. How would you select and use suitable methods of benchmarking     product development for your company? 3. How could you identify the essential product development activities,     outcomes and decisions for the successful business performance of     new products? 4. How could you design suitable product development processes for     your company?