Thursday, July 07, 2011

Why innovation can't be benchmarked

I must confess that in a previous life I was fascinated by the concept of "benchmarking".  This was during my wild and uncertain years, when issues like Total Quality Management seemed the order of the day.  Every firm in the late 80s and early 90s was determined to improve quality, and the nascent Baldrige award and ISO certification programs encouraged firms from different industries to benchmark their best practices against the "best in class".  Many firms opened their doors to demonstrate their efficient processes to others.  In hindsight it's clear that benchmarking was simply an exercise in defining and then achieving some industry standard "best practice" as personified at one firm.  We never stopped to ask ourselves if the process was necessarily important, relevant or if it could be eliminated entirely.  At that point we were only interested in whether or not it was efficient and error-free.

Many business processes could be benchmarked across industries because much of the focus was on "back office" processes that didn't need to differ much from one industry to another.  For example, it didn't really matter how an electronics firm and a pharmaceutical firm processed purchase orders - there didn't need to be many radical differences and there really wasn't a competitive advantage to be gained.  So, teams of employees focused on improving internal processes trooped around to examine other firm's processes in the hopes of discovering the secret sauce that made one firm more efficient than another in a given process.

But now I hear of firms talking about benchmarking the innovation methods and processes of other firms.  For example, it's not unusual to hear a firm just starting an innovation initiative ask to review the innovation processes or methods of an industry "leader".  Many books have been written that intend to depict how Apple innovates, or how Google innovates, or P&G, since these are some of the recognized leaders.  You can gain some insights from these books or from reviewing another firm's innovation process, but more often than not you'll discover the differences are more important than the similarities.  Benchmarking innovation isn't just misguided, it's misdirected.

The reasons why benchmarking innovation is difficult, if not impossible, are many, but here are a few:
  • Innovation is closely tied to strategy and vision.  Unless you share a common strategy and vision with another firm, you can't mimic or benchmark their processes
  • Innovation is time sensitive and time bound.  Some firms consider opportunities in time periods of decades.  Some consider anything longer than 90 days far too distant.  Your time planning horizon and ability to scan the future must align in order to benchmark methods and approaches
  • Innovation is dictated by wants/needs/jobs to be done or technology vision.  Some firms assert the future and the market and reject customer insights.  Well, not completely, but Apple does claim to ignore customer needs and build what it thinks people want.  Some firms, like P&G, do an enormous amount of customer research.  Your approach - inside/out or outside/in - must match in order to compare your approach to that of other firms.
  • Innovation is expansive or contractive.  Some firms encourage interaction with customers and partners through open innovation.  Some place far more emphasis on internal innovation.  Some use a mixture.  Again, your approach must align to the approach of a firm you plan to "benchmark".
  • Innovation can be insourced or outsourced.  Many firms rely on trusted partners to help generate ideas, develop alternatives and in some cases even develop products.  Others do the majority of this work in house.  Your methods and insourcing/outsourcing strategy must match to those of firms you plan to benchmark
Finally, there a real cultural difference between firms that "get" innovation and those that don't, that simply can't be benchmarked.  In firms that innovate consistently, the expectations, culture and attitudes are attuned to innovation in a way that simply can't be copied, benchmarked or replicated quickly in another firm.  Those changes come with time, and with proof of the commitment of the firm to innovation over the long term.

And thats, perhaps, the biggest reason you can't simply benchmark another firm's innovation success.  While you may eventually adopt the tools and replicate the methods, if you can't also adopt the cultural shifts, the urgency and the commitment, then your firm simply won't be successful. 

This isn't to say that innovation doesn't have good, consistent methods and approaches, or that the tools are necessarily unique to each deployment.  Only that each firm innovates in its own way, to its own needs and visions, and in its own timeframes. 
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posted by Jeffrey Phillips at 11:20 AM


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