Benchmarking in Business: Types and Benefits

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Benchmarking in Business: Types and Benefits – Transcript

Greg Engle 

Today we’re going to talk about benchmarking. I want to make sure we level up. I want to make sure we talk about the different types of benchmarking. When we say the word benchmarking, there’s going to be a lot of people out there that think of technical benchmarking, which is to tear down a product, figure out what it does and so on but that’s a very powerful benchmark. The other version that we often do is we can call it context, benchmarking consumer benchmarking. It’s why do people choose what they choose and unpacking language, unpacking situations, unpacking those types of things of use? 

 

Bob Moesta

Yeah, and getting to hire and fire criteria. 

 

Greg Engle 

Both are very powerful. 

 

Bob Moesta

Both are needed as you develop. 

 

Greg Engle 

They’re used at different times, they’re used for different things but they’re both they can be married together very easily, 

 

Bob Moesta

We always refer to them as technical benchmarking, and customer benchmarking and they’re two very different processes. 

 

Greg Engle 

So I want to talk first about technical. From your perspective of an engineer of a product developer, what is technical benchmarking you? 

 

Bob Moesta

Part of technical benchmarking is that it has two roles. One role is to understand how you stack up against other product and or services in terms of technically fulfilling those requirements. At Ford, we would take an exhaust system, and we would tear it down, we’d basically get it to all its components, we put it on a big board. And then we take our exhaust system, we take Toyota’s, we take General Motors, we take all the different exhausts, and then we compare them side by side and look at them and understand.

Greg Engle 

Why is it important? 

 

Bob Moesta

It’s important for a couple of reasons. One is to understand if they’re technologically doing something different or not, and then to the overall performance of the system and making sure that as we end up understanding what consumers say, how does that relate back to the technical requirements that we have to put in place to build the specifications? So it’s the translation back? 

 

Greg Engle 

When I’m looking at it from a comparison of my product to somebody else’s product, I’m trying to figure out, do they know something? 

 

Bob Moesta

Yes. Are they doing something? Are they doing something slightly differently that I may or might want to mirror.

 

Greg Engle 

Yes, from a cost perspective, why are they doing it this way? Why would they do it that way? And so I can go back and think of different ways to do it. The second one you talked about was then trying to put it to some consumer metric.

 

Bob Moesta

There’s a methodology I learned very early on called QFD where the consumer says this, what’s the technical way which we know that we’ve met that requirement, and so the translation into the technical realm, think of it as a transform from the consumer world to the technical world, let’s just make sure that what we’re measuring relates back to what the consumer saying they want. 

 

Greg Engle 

Can we do technical benchmarking on a school? What types of things will we be benchmarking in a school? 

 

Bob Moesta

We could benchmark for technical, the size of the room, how many kids in the class? We can talk about the time they spend on each subject, we could talk about the different curriculum that they use, we can talk about the sequence of which they do that curriculum, we can talk about how they handle exceptions, kids who are a little bit behind, or kids that are a little bit ahead, all of those mechanisms we can start to benchmark to understand, How do they manage their school? Vs How do we manage our school?

 

Greg Engle 

One of the reasons we might want to do it is, let’s say, we’re in a school, and we started getting a bunch of kids that had learning differences, we might go and study at a learning different school, from the technical aspect of what they do? How do they teach? How are they getting this done? So that we can bring it to our school? 

 

Bob Moesta

Right. For example, one of the things we found was that might break them into smaller groups and as they have different groups, they had rules, and the rules were like the first question, if you don’t get something is to ask another student, as opposed to the rule of go ask the teacher. You start to realize that that simple mechanism changes the dynamic of the room, it changes the role of the teacher, it builds confidence for the kids. So, understanding that subtle mechanism of when you need help, ask a peer first, has a very large impact and we learned that through benchmarking. 

 

Greg Engle 

And I think it leads us to the next thing, which is consumer benchmarking. I often call it contextual as well because I’m trying to put people in context. But I will often bring in the things we learn from the technical benchmarking into this because it will be what products we choose to bring to the table. 

 

Because in consumer benchmarking, and this is something that we do with customers and our clients, which is we put them into context, we bring products with us, and we ask them to shop in the moment of what have they used? What would they use? They pick a product, and we talk about how they use the product. What is that benchmarking? What does that benchmarking do for us? 

 

Bob Moesta

This all goes back to the benchmarking that we’re doing here. It’s not about bringing the best product, this is not concept testing of finding which one do they like the most, it’s more like a mirror and forcing them to say, which would you pick and why? In some cases, it’s asking them why they didn’t pick these other things. When we go to them with different things, it’s with a range of experiences, it’s with a range of different things, no one of them is going to be perfect, but it helps us frame what they mean by things? 

 

Ultimately, how do they measure progress? And at the same time, what are they eliminating? It helps us with that higher fire criteria. Most people want to go to the customer with ‘here’s our three best concepts’. And what we would say is no, I want to go back with these eight different concepts so I can then learn what they like and don’t like and why it fits and why it doesn’t fit so we can describe product market fit.

 

Greg Engle 

I want to make sure we’re saying the right things, because we’re using words that we might give them concepts we’re going to do at the end. But the first thing we do is we give them things that are real in the marketplace. And we put them in a job to be done. And we say have you ever had this experience? And we lay out what the job is? And we know they’re going to say yes, because we picked them because they’re going to say yes. And then we have them look at the table that we have with all these different products. And there’ll be products that you wouldn’t think would fit for that job to be done. And we’re using orthogonal thing.

Bob Moesta

Orthogonal array, we’re using some designed experiment to help us understand the set of things to bring to them. 

 

Greg Engle 

We’re putting that on the table, and we’re letting them choose things that they’ve used in that situation before. And we find out why they choose those things? What about it? How do they pick it off the shelf? We talk to them about their journey of using it, we talk about their failures of using it, then we’ll also go back, and we’ll look at things that they didn’t pick and say well why did you pick this one? It’s all an attempt to get that job to be more full, more defined, so that our partners that do the research, the R&D, the marketing can have more language, more flexibility in that job to be done and that’s why we’re doing that. The technical we’re trying to figure out how can we do something? How are other people solving this problem?

 

Bob Moesta 

Yeah. It also brings into the cost aspect of it, how much does it cost us to do this? Its cost and performance is on the supply side. It’s price and value on this side, in terms of How much do I have to pay? How much am I willing to pay to make this kind of progress? And so ultimately, it’s trying to make sure we understand their ability to switch? And what are the features that are resonating? and the benefits that are resonating with it? 

 

Greg Engle 

Technical benchmarking is usually done on the supply side. And consumer benchmarking, is done on the demand side, as consumer would lead you to believe. I think when you do consumer benchmarking, you want to bring very technical people into that as well. Because you want them to hear the words. 

 

Bob Moesta 

Yeah, because there’s also this other problem of, the technical measure that we have doesn’t necessarily relate to what the customer means. So, somebody will say, this is slow, and oh, they want faster speed. And it’s like no, the outcome that they want is more, not speed. You start to realize, at some point, we got to make sure we’re connecting what the consumer says and what they mean, to the technical measures that we can measure that assure that we can deliver on their job. The other thing I would say is that in the book, we just launched into the five skills of innovators, this is prototyping to learn. This is a set of things that help us at the boundary of language, so the first round of job interviews is either phone interviews, or video conferences, but it’s all about the language they use. Ultimately, they get to this edge of language that they don’t have words for it anymore. This is that next level of now, how do we articulate experiences? And what are the words that they can prompt by interacting with the product?

 

Greg Engle 

Well, I think the first interviews we do, the jobs you don’t interviews to set the boundaries, are the interviews of why someone switched a behavior.

Bob Moesta 

Correct. That’s, a big hire. 

 

Greg Engle 

And the consumer interviews or the benchmarking interviews are about how people use.

Bob Moesta 

That’s correct, the little higher, and it’s like when do you buy the bottle of windex versus when do you spray the bottle of windex? 

 

Greg Engle 

Right, and we need both to give us language into the job so they’re very important to do. The hard part is that I think most companies are very good at technical benchmarking. 

 

Bob Moesta 

And they end up trying to beat each other and they literally outrace the customer, and the customer has no idea what they’re doing. 

 

Greg Engle 

I think that’s ingrained in most companies, not in all companies. The consumer interviews or the consumer benchmarking is a little bit trickier. Because it comes down to the same things that we run into problems with any kind of qualitative interviews, is what the customer says, and what they mean can be different than what the company employs here. It’s very important when you do this type of research that you try to divorce yourself of what your definitions are and accept the definitions of what the consumer is telling you. A consumer might say something’s creamy, you’re like, No, that’s not creamy, because creamy means this. 

 

Bob Moesta 

That’s right. Technically, it means that.

 

Greg Engle 

You have to understand what the what the person is, or bitter is another one we run into a lot. Bitter is a very technical thing but consumers will use bitter as bunch of different things. Or the number of steps, somebody will say, well I don’t care how many steps but then when you talk to them, they say yeah, this looks like it’s too many steps. 

 

Bob Moesta 

Or they’ll say things like, I trust this one. And you got to unpack that to say like, what does trust mean? What are the characteristics that make that more trustworthy than something else? And so you start to realize that trust is, an effect, not a cause? And so how do we actually unpack that down to what do we do that causes trust and the technical side,  all of those things are part of this and being able to understand what do people mean and getting it down to the technical requirements, which by the way this benchmark is really more for the product people and the technical side, so they can actually engineer and build better. It can be used with marketing and with sales, but the fact is, usually when sales or marketing lead it, they don’t go deep enough, they don’t get to the underlying causal mechanisms. 

 

Greg Engle 

Well, I think having someone lead it that divorces the company is vital. Whether it’s us or somebody else, I don’t care who it is. I’m going to call a bit of BS on what you just said because it’s important for everybody. Because what the main purpose of it is. This is what we struggle with our customers or our clients, that what the main purpose of it is, is to make the job to be done or full. And that helps everybody, it does help everybody. 

 

Bob Moesta 

My only point is if it’s led by other people besides the technical, they never usually get deep enough. That was my problem of why it was built was because they would only get to some surface level definition. 

 

Greg Engle 

You aren’t saying it’s not useful for the marketing of people, what you’re saying is, if they lead it, it could be problematic, if technical people lead it, it can be problematic. Getting that impartial person that’s divorced from your product is very important. And helps you make more progress. Because as we know, and we’ve discussed in multiple different podcasts across the two years we’re doing this, our two seasons are, we have biases, humans have biases. And we need to know them and trying to try to get over those biases are hard. 

 

And even as a third party, I have biases. But I have less because I’m not paid by the company. I’m not on the team that lives and breathes this thing repeatedly. And I actually have more biases to the consumer, because I’m trying to live through them. So that’s why you kind of want a third party doing this. Because of those things, you’re just saying. But I want to make sure you’re saying this completely so people understand it. Marketing learns more, because they learn the words people use, if you actually help people understand the struggle they’re in, people will realize they’re in more jobs be done than they actually are, especially when you’re talking about consumer packaged goods. Because we are in multiple jobs multiple times a day, all the time, technical people learn because we can get down to some hiring and firing criteria.

 

Bob Moesta 

Thresholds, targets, things like that.

 

Greg Engle 

That helps marketing and sales, it’s more important or helps more the technical people, that piece of the information. Language helps everybody. 

 

Bob Moesta 

Language helps everybody. And I think that’s usually the number one reason why people you know, like this whole approach is because it actually allows them to have one source, and then they all have to actually learn that source and translate it from that source, as opposed to kind of like, almost aggregate all the information and kind of like we both we all use the same words, but we have different definitions of it. 

 

Greg Engle 

Watching people go through this struggle, when we put all this product in front of them, which is not as overwhelming as a grocery store. Watching them through that helps everybody with a little bit of empathetic perspective. And that’s what we’re really trying to understand here is we’re trying to have empathy of when people are in this context, because what we know is people act differently based on the context they’re in.  I could take that same sort of product, put them in a different context, and I’m going to get different answers. 

 

So we want to make sure we stay in one context. So the important things with consumer benchmarking is you understand what you’re trying to understand. So you unpack which job you’re going after, what set of customers you’re going after. And then you put the product in place that stretches, the boundaries, things that you might think compete with you, you want to put in there. And we’ve even put nonfood things in there sometimes So we want to put that gamut of things that force people to actually make real choices, we want to put them in that context and let them tell us how they shop, how they pick what’s happened when they picked what’s worked on what’s not worked. So that we can then take that information, put it back to our job to be done and put more information in our job, put more forces of progress in there, put more tradeoffs because you hear a ton of tradeoffs. 

 

Bob Moesta 

Tradeoffs and hire and fire criteria are the most important thing here, like when what’s the threshold by which they go, I’m not going to do that.

Greg Engle 

Where I’ve seen your benchmarking gone wrong is when the technical team or it could be others, try to get so concrete in what that design requirements are. When they try to get to concrete, it goes off the rails and what I mean by that is when they start saying well, in this job or in this context, then it means this food must be this certain size. Well, no because I have different, I could have be treating adults that can just have a bigger size or kids that have smaller size or bigger dog or smaller dogs or whatever it could be. That’s going too far. 

 

Bob Moesta 

Well, and it’s different than the notion of most of the time when I say technical people they end up varying things in such a small degree that they actually have no impact? 

 

Greg Engle 

I think what we find in the consumer benchmarking is, as humans we want to find the answer as quickly as possible. And finding the answer is a really long process. Our consumers can tell us sets of things; they can’t tell us what to go build. So, we have to then take all that information and figure it out. And what I find is everybody wants THE answer, not a piece of the answer. And all our benchmarking, be it technical, consumer, whatever it is, it gives you pieces of the answer. It’s still your job to piece all that together to say, with the customer constraints with my business constraints, what can I build? 

 

Bob Moesta 

That’s right. That’s right. And ultimately, the customer is an expert in their problem. And they’re an expert in their outcomes, but they have no real expertise, usually in how to get there. And if they do, it’s typically with technology or things from the past, not that they know what’s possible. And so part of it is, is to realize, like, they can help you understand where, when and why. So you can figure out how, what, how and how much. Ultimately, it’s those kinds of separation of those two worlds that you actually have to kind of figure out. 

 

Greg Engle 

All right, so we normally do homework. 

 

Bob Moesta 

One homework would be, think of something that you’ve been wanting to buy, something you want, you’re stuck. And what I would say is can you look at multiple things and see how multiple things help you decide which one to do. Because a lot of times we end up kind of realizing like we can’t decide because we can’t compare and contrast. And you start to realize the role that having choices helps you eliminate so you can choose. So the homework is to think about something you’ve wanted to buy. And instead of trying to just focus on it and try to add one or two other things that you might purchase in place of that, or as a half step and understand how to benchmark, how would you like to compare and contrast those three or four other things to that one thing?

 

Greg Engle 

You’re saying you want people to build a competitive set?

Bob Moesta

Correct and benchmark to help them see what they’re really trying to achieve? 

 

Greg Engle 

What are what are they benchmarking on? 

 

Bob Moesta

So based on a struggling moment that they have. 

 

Greg Engle 

Okay, so what I would say is, I want you to build that set of options, competitive set, and I want you to start thinking about from a consumer aspect, how does it fit your context? How does it fit your desired outcomes? What trade offs would you have to make for each one? And those are the things that we from a consumer perspective want you to think of, from a technology perspective we want you to look at how are they solving the problems, how are each one of those things solving it differently from a technology. If it’s food, is one doing it in small bites? Is one doing it in a big bar? What are those technical things doing? Are they putting multiple ingredients? Those are the types of things we want you to think of from a technical aspect.