Page 333 - (DK) The Business Book

DELIVERING THE GOODS 331

See also: Study the competition 24–27 ■ Keep evolving business practice 48–51 ■ Avoid groupthink 114 ■ Ignoring
the herd 146–49 ■ Avoiding complacency 194–201 ■ Simplify processes 296–99 ■ Applying and testing ideas 310–11

businesses. Improvements can come production methods. Upon their
quickly so that once the process return, the team members adopted
of benchmarking has identified many of the production methods
effective practices, these methods they had seen. Benchmarking
can be adopted. The changes should also enabled Xerox to improve
lift performance to the level achieved Benchmarking provides the reliability of its products. From
by the industry leader, so that any an inventory of creative 1981 to 1990, customer complaints
competitiveness gap is eliminated changes that other fell by 60 percent. Over the same
quickly. In the future, benchmarking companies have enacted. period Xerox’s manufacturing
can be repeated on a regular basis. John Langley costs fell by more than 50 percent,
UK Barclays Bank executive which enabled the company to
Benchmarking in practice match the prices charged by the
In the 1980s, the US photocopier Japanese, while maintaining its
manufacturer Xerox used profit margins.
benchmarking to restore its market
share. For ten years, it had been Raising standards
losing customers to its Japanese Governments have also used
rivals Canon and Ricoh. These simplicity enabled the competition benchmarking to improve
companies had been gaining to benefit from economies of scale; performance. For example, from
ground because they were able to bulk-buying components reduced 2000 to 2009, the Organization
undercut the prices charged by operating costs, making it possible for Economic Cooperation and
Xerox, without compromising on for Canon and Ricoh to offer Development (OECD) surveyed
product quality. To identify what consumers lower prices. Xerox education standards in 65 countries
they were doing wrong, Xerox responded by simplifying its and identified that Finland
bought their rivals’ products and designs, so that the commonality achieved the highest rankings in
took them apart. They discovered of components across Xerox models reading, mathematics, and science.
that Canon and Ricoh designed their rose from 20 to 70 percent. Teachers from around the world
machines so that they were made Xerox’s US management team now visit Finland every year to
from a relatively small number of also visited Japanese photocopier learn more about the Finnish
common components. Design factories to learn more about their educational success. ■

Benchmarking across industries

Some companies learn from specialized in one task, which
another organization that operates they practiced over and over,
in a completely different market. until it was perfect.
For example, in 2005, two doctors Goldman and Elliot changed
from London’s Great Ormond working arrangements at Great
Street children’s hospital were Ormond Street by applying
struck by the efficiency of the Ferrari best practice: clear job
Ferrari pit crew during a Formula descriptions meant that each
1 race. member of staff knew what
Alan Goldman and Martin their role was, and a leadership
Elliot observed that only one position was assigned for each
Ferrari’s pit-stop crew has a clear person in the crew gave orders, shift. As a result, patient
chain of command, allowing them to avoiding time lost in discussion, handover errors between the
refuel the car and change all four and pit-stop routines were operating room and intensive
tires in less than seven seconds. standardized. Crew members care unit unit fell by 70 percent.