The literature on innovation shows the importance of knowledge-brokering, borrowing technologies and concepts from multiple sources and combining them to come up with new products and services. Benchmarking has enjoyed explosive growth. It was stimulated by the quality movement, which institutionalised the idea of learning from others. Companies such as The Advisory Board and the Saratoga Institute have made good money by gathering information from numerous companies and then selling those data to members, so that they can compare how they are doing to norms for others of their size and in their industry. No modern management conference seems complete without panels and speeches, where people share success and failure stories to spread 'best practices'. Participants in university executive programmes often tell us that they learn as much from the experiences of their fellow participants as they do from the faculty teaching them. These practices of benchmarking and learning from others are useful. However, there are also dangers to benchmarking and, despite the best intentions, it can damage rather than enhance company performance. These hazards can be surmounted, but only by leaders who are thoughtful about what they learn from others and how they go about doing so. The first problem with benchmarking is obvious yet rarely acknowledged. If your strategy is to copy what others do, the best you can be is a perfect imitation of someone else. So, almost by definition, the best you can hope for is to reach rather than exceed existing performance levels. To earn exceptional returns, and note that these returns could be exceptionally bad as well as exceptionally good, your organisation needs to be different from competitors and to do different things, or to do the same things but at a much higher level of accomplishment. You can see this dynamic play out in the worldwide motor vehicle industry. For literally decades, competitors have been chasing Toyota. At first, they copied its total quality management can only see what it is doing, not what it plans to do. The second problem with benchmarking is that companies often copy only the most visible and superficial aspects of another's management approach. So, when United Airlines tried to copy Southwest Airlines, it put its flight attendants and gate agents in casual clothes, flew only Boeing 37 airplanes, and stopped serving meals on the flights. However, these practices were not the key to Southwest's ongoing success; Southwest's unique culture that is able to engage the discretionary effort of its workforce to produce both productivity and outstanding customer service is much more important than the physical, more readily copied elements of its approach. In a similar fashion, the success of SAS Institute, the largest privately-owned software company in the world, has less to do with its much ballyhooed benefits such as on-site daycare, generous health insurance, and lavish physical facilities including facilities for exercising, and much more to do with a culture that permits creative software programmers to work with fewer limits and distractions on their efforts than you see at typical firms with a more hierarchical and centralised set of controls.
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