“Big data” is a popular term to describe our ever-increasing access to information. So far, it has received mixed reviews. On the one hand, others feel that more data leads to more confident decision making and greater accuracy when monitoring desired outcomes.
Others believe that too much information can lead to “analysis paralysis,” prolonging the decision making process and hampering the ability to effectively implement change.
So which viewpoint is correct?
You can make the most of your company’s big data through benchmarking. Benchmarking is a useful tool as you strive to continually improve your business processes. Simply put, it helps you find better ways to do what you do. It compares one set of measurements of a process, product, or service to others within your organization or an external organization.
Any business process can be benchmarked and it is a valuable exercise whether you are a manufacturer, distributor, service company, non-profit entity, or training organization.
Benchmarking historically focused solely on financial performance and information was limited to key executives and shareholders. More recently, successful organizations have seized the opportunity to share information more broadly and they have come to rely on big data for much more than the financials. They use it to:
- Enhance the probability of success
- Change the company’s culture from inward-looking to outward-facing
- Improve the quality and quantity of performance information
- Drive accountability by making key performance indicators more visible
Measurements taken before implementation confirm that a problem really exists and set a baseline to measure future performance. After the solution is implemented, the measurement is conducted again. The variance tells you the degree of success of the project. Examine the measurement carefully before rushing to conclusions and to avoid data overload. You cannot know if your plan succeeded unless you thoroughly measure the quantitative results.
One of the common mistakes companies make when benchmarking is only looking at their own industry group or companies in their back yard. However, most business processes are common across industries. For example, Toyota would have similar fundamental Human Resource processes for recruitment and staff training as an accounting firm. So consider benchmarking your business against a company that is well known for being a high performer in a particular area.
The benchmarking process involves nine basic steps:
- Identify what you want to benchmark.
- Identify comparative companies.
- Determine your data collection method and collect the necessary data.
- Communicate expectations and gain acceptance from your team.
- Project future performance levels.
- Establish functional goals.
- Develop action plans.
- Implement specific actions and monitor your progress.
- Recalibrate your benchmarks as necessary.
Technological advancements have given companies access to so much data that it can be overwhelming. The best place to begin is by addressing your major issues first; isolate the significant few from the trivial many. Identify a select number of issues and begin the benchmarking process. Then use your “big data” to evaluate the results and effectively implement lasting change.