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Madness as Usual


  • Stefan Kühl
  • Thursday, 25. April 2024

How to Create a Crisis out of Nothing

Benchmarking is a continuous process of measuring one’s products, services, and practices against those of one’s strongest competitor, or the company that is considered the leader in the field. The idea behind benchmarking is that, when it comes to organizational change, instead of looking inwards, navel-gazing, one should find new ideas in the tried-and-tested processes of pioneering companies.  

Benchmarking, it is hoped, will produce a better understanding of the reality of the market, a more accurate analysis of the strengths and weaknesses of competitors, and an objective evaluation of customer demands.  

Typically, the theoretical assumption is that benchmarking is an ‘objective’ stocktaking, a surprising assumption for many practitioners, given that even ‘best practice enterprises’ rarely have an ‘objective’ overview of all the figures and given that the figures used internally are, understandably, not made available to other enterprises in an unfiltered form. But – who knows? – perhaps the point of benchmarking isn’t the vaunted ‘objective stocktaking’ after all. 

It is increasingly accepted in organization studies that it is only under very stable conditions that an organization can ‘scan’ its environment with reasonable reliability. In a complex environment, it is believed, enterprises and other organizations produce their own environments by, first, creating their own interpretations of the confusing, chaotic, and antagonistic world in which they find themselves and, then, operating in this constructed environment. Enterprises, on this view, do not react to given environmental conditions; they invent, create, and construct their own realities. They ‘set the scene’ according to what they want the market conditions, the political environment, or the customer demands to be, and this becomes the framework for their actions. 

The creation of environmental conditions is often an uncontrolled process. Management usually has limited success in determining what is understood as a relevant environmental factor within the organization. Benchmarking is an attempt to get a grip on this uncontrolled process, an instrument by means of which a considered picture of an organization’s environment can be created. 

There can be no certainty regarding the future of an organization – that is the difference between the future and the past and present. This uncertainty about the future creates symptoms of stress within organizations. It is not clear whether the organization is well prepared for the coming years. It is not clear whether there is a risk of falling into hibernation mode. With the help of benchmarking, enterprises try to provide themselves with an answer to the question, so popular with social workers, ‘Are you okay?’ The active observation of the environment and the openness for change involved in benchmarking appear to provide a kind of ‘insurance’ against future developments. 

But benchmarking can also create a pressure for change within an organization. It can serve as an artificially induced crisis that is just serious enough to shake up the business. Benchmarking is supposed to provide the organization with a view of itself from the outside, and, as a result of the alienating effect produced by this outside perspective, the organization is meant to develop a willingness to change more quickly. In the course of handling the crisis (a process that is, of course, appropriately supervised), the firm is supposed to discover new ‘insights’ and self-regulated processes of change. In the most extreme cases, the management uses benchmarking to define the organization in terms that make reform appear inevitable. In such cases, benchmarking is something like an artificially induced failure that is meant to produce pressure for change. 

Through the selection of benchmarking criteria, the specific type of benchmarking, the benchmarking partners, and the type of supervising consultancy, organizations can control the results of the benchmarking process. There is only one result that benchmarking will never achieve: an ‘objective stocktaking’ of the environmental conditions of the organization. 

Prof. Stefan Kühl

links in his observations the latest results from research with the current challenges of the corporate world.

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