Close or Distant Competitors

Close or Distant Competitors

Most companies will compete with those competitors who resemble them the most. Thus, Citroen/Peugeot competes more against Renault than against Porsche. At the same time, the company may want to avoid trying to 'destroy' a close competitor. Here is an example of a questionable 'victory';

Bausch & Lomb in the late 1970s moved aggressively against other soft lens manufacturers with great success. However, this led one after another competitor to sell out to larger firms such as Revlon, Schering­

I'lough and Johnson & Johnson. The result was that Bausch & Lomb faced much larger competitors ­ and it suffered the consequences. For

512 • Cliaptsr 12 Creating Competitive Advantages

Marketing

How Benchmarking

tions, organizational performance

Helps Improve and the entire customer value Highlight

deliver;' process.

Competitive Performance

12.1 Another early benchmarking

pioneer was Ford. Ford was losing In most industries, one or more

sales to Japanese and European companies are known to outper­

car makers. Don Peterson, then form their competitors. According

chairman of Ford, instructed his to McKinsey, the management

engineers and designers to build a consultants, industry leaders typi­

new ear that combined the 400 cally develop products two­and­a­

features that Ford customers said half times faster than the industry

were the most important. If Saab average. Anderson Consulting

made the best seats, then Ford consistently found 2:1 differences

should copy Saab's seats. If Toyota in productivity between world­class plants and

had the best fuel gauge and BMW had the best the remainder. The quality gaps they found

tyre and jack storage system, then Ford should ranged from 9:1 to a staggering 170:1. Richard

copy these features also. Peterson went further: Buetow, Motorola's director of quality, sees even

he asked the engineers to 'better the best' where bigger differences: 'Best­in­class companies', he

possible. When finished, Peterson claimed that says, 'have error rates 500 to 1,000 times lower

the highly successful new car (the Taurus) had than average.' Benchmarking i.s the art of finding

improved upon, not just copied, the best features out how and why some companies perform tasks

found in competing cars.

much better than others. hi Europe Ind Coope Retail and WooKvorth

A benchmarking company aims to imitate or, use statistical models to benchmark the perform­ better still, to improve upon the best practices of

ance of their outlets. This allows them to com­ other companies. The Japanese used benchmark­

pare the performance of pubs and shops even ing persistently after the Second World War,

though they operate in different environments. copying many American products and practices.

Benchmarking has also meant them finding other In 1979 Xerox undertook one of the first western

companies with similar systems in use. benchmarking projects. Xerox wanted to learn

Today many companies, such as AT & T, Du how Japanese competitors were able to produce

Pont, Ehda Gibbs, Ind Coope, Intel, Lucas, more reliable copiers and charge prices below

Marriott and Motorola, use benchmarking as a Xerox's production costs. It started with its

standard tool. Some companies benchmark the Japanese subsidiary Fuji Xerox, where it found

best companies in their industry. For instance. that Canon could sell a photocopier for less than

ICL, a British computer company now owned by Xerox could make one in the United States. By

Japan's Fujitsu, benchmarks Sun Microsystems buying Japanese copiers and analyzing them

for manufacturing, However, when ICL wanted to through 'reverse engineering', Xerox learned how

benchmark distribution systems, it chose retailer to greatly improve its own copiers' reliability and

Marks & Spencer as the best benchmark. In this costs. However, Xerox did not stop there. It went

sense, benchmarking goes beyond standard 'com­ on to ask additional questions: Are Xerox scien­

petitive analysis'. Benchmark against the 'best tists and engineers among the best in their

practices' in the world, not just against direct respective specialities? Are Xerox marketing and

competitors.

sales people and practices among the best in the Once a company commits to benchmarking, world? To answer these questions, the company

it may try to benchmark every activity. It may set had to identify world­class, 'best practice' compa­

up a benchmarking department to promote the nies and learn from them. Although benchmark­

practice and to teach benchmarking techniques ing initially focused on studying other companies'

to departmental people. Yet benchmarking takes products and services, it later expanded to

time and costs money. Companies should focus include benchmarking work processes, staff func­

their benchmarking efforts only on critical tasks

Competitor Analysis • 513

that deeply affect customer satisfaction and com­ better practices may have emerged elsewhere. pany costs, and for which substantially better

Benchmarking might cause the company to focus performance is known to exist.

too much on competitors while losing touch with How can a company identify 'best­practice'

consumers' changing needs. Finally, benchmark­ companies? As a good starting point, it can ask

ing might distract from making further improve­ customers, suppliers and distributors whom they

ments in die company's core competences. rate as doing the best job. Alternatively, it can

When Roberto Schisano joined Alitalia, he contact big consulting firms that have built large

found another way in which b en dim,­irking can files of 'best practices'. An important point is that

go wrong: 'Our previous benchmarks were the so­ benchmarkers need to resort to industrial espion­

so bunch,' he said, 'the other European state air­ age. Japan's Canon and the United Kingdom's

lines, not those seeking to be market leaders like Lucas Industries encourage reciprocal visits from

BA or Southwest. And when one mentioned companies that they use as benchmarks. 'Industrial

losses, the reply was "Oh, we're not as bad as Air dating agencies', such as the Benchmarking Centre

France."'

and the international Denchmarking Clearing House (IBC), now exist to help firms find partners.

After identifying the 'best practice' com­ panies, the company needs to measure their per­ formance regarding cost, time and quality. For example, a company studying its supply manage­ ment process found that its buying cost was four times higher, its supplier selection time four

times longer, and its delivery time sixteen times worse than world­class competitors.

Companies must be careful not to rely too much on benchmarking. Since benchmarking takes other companies' performance as a starting point, it might hamper real creativity. It might lead to an only marginally better product or prac­ tice when other companies are leapfrogging ahead. Too often, benchmarking studies take many months, so by the time they are completed.

example, Johnson & Johnson acquired Vistakon, a small nicher that served the tiny portion of the contact­lens market for people with astigmatism. Racked by J & J's deep pockets, however, Vistakon proved a formidable opponent. When the small but nimble Vistakon unit introduced its innovative Acuvue disposable lenses, the much larger Bausch & Lomb had to take some of its own medicine. According to one analyst, 'The speed of the [AcuvueJ roll­out and the novelty of [J & J's] big­budget ads left giant Bausch & Lomb ... seeing stars.' By 1992, J & J's Vistakon was no. 1 in the fast­growing disposable contact­lens market. 4

In this case, the company's success in hurting a close rival brought in tougher competitors.