Term of the Day: Benchmarking

This is business-speak for comparing. Comparing to competitors within the industry. Comparing with similar sized companies. Comparing with similar products.

How are we, in relation to the 'other?'

It seems like something you can communicate easily. And it is if you've done your homework. You will want to know what, exactly, you are comparing. For example, diaper sales in the United States. If you are P&G (Proctor & Gamble,) you may want to know how many diapers you sell in New York City, in comparison to other brands, such as Kimberly Clark. You may compare figures such as profit margin, packs sold, profit per diaper and cost per diaper. You may sell more diapers than Kimberly Clark (i.e. Huggies) but yours cost more to make so your profits will be equal to or less than your main competitor. Benchmarking yourself to your competitor is vital to discovering how to beat them.

Being an avid diaperer, I currently use whatever brand sends me their coupons. My stash is currently Pamper-heavy but that changes with the sales. At any rate, Pampers hold waste longer than the Huggies, although Huggies sell you more diapers for less per diaper. It evens out. At the beginning of the month, I may spring for Pampers Swaddlers for my newborn, simply becuase they seem softer to me. But otherwise, they are pretty equal. If Pampers suddenly created a diaper that held the same but met or beat Huggies price, I would buy more Pampers with or without a coupon. They would do well to analyze something like this.

At that point, Pampers would have set a new benchmark. This is also akin to setting goals. Let's assume my toddler wets his pants 6 times a day (I wish.) First, I track how many times to make sure it really is 6 and not more or less. I do not with to inflict more of my goals on him than are fair. Then after tracking diapers several days, I find that, OK, 6 is pretty accurate. Once this is done, I go online and several sources tell me that if he's meeting all the milestones appropriately, he should be able to go tinkle on the potty at least 4 of those 6 times. Now I will start trying to sit him down and reward him or offer rewards for success. My benchmark is only 4 accidents. I can try to potty train in a day - and I've heard of successful instances - but its far more realistic a goal/benchmark.

Companies may go "all in," attempting to go far above and beyond the current benchmark. Like a casino, there are a few really big wins (think Apple's iPhone) but there are many many more losing machines. Benchmarking in business and in potty training will save you and your kids and your business many many tears.