The start of a new year is always a good time to look back and reflect and to set new goals for the upcoming year. How have you performed over the past year? Which targets are you setting for the upcoming year? Competitive benchmarking is a useful tool to help you with your strategic goal setting. But what is competitive benchmarking exactly and what are the key moments to use it?
Benchmarking: a powerful tool
Benchmarking provides agri food companies with an objective measure of their business, by comparing their performance with that of similar companies. You cannot judge your performance by just looking at yourself. Compare it to a race that you run on your own, without a stopwatch: how do you know if you’ve done well when you cross the finish line?
In the past, we didn’t have a stopwatch; the amount of data was limited, so you operated based on what you knew, your experience, and what you heard in the market. Now, we are in the middle of the ‘Fourth Industrial Revolution’, which will leave no industry untouched, and the data is there for the taking. The companies that are winning the race, are doing so because of data. In other words, it offers companies opportunities to evolve.
Three questions you should ask yourself when setting targets for 2022
A company should, at all times, be able to answer these three questions:
- How am I performing?
- Who are the winners and losers in my market?
- How is my value chain performing
First, you need to look at yourself and how you are performing. Second, from that insight arises the question: who performs best? Who are the winners and losers in my market and why? Lastly, you need to look at the entire value chain: where is it heading? Am I in the right place? Or should we integrate forward or backward?
When companies start benchmarking - and by doing so take a step towards data-driven working - these three questions form the backbone of the journey they are going through.
Benchmarking provides you with an objective mirror
With benchmarking you can identify the strengths and weaknesses in your own business model in relation to the competition. This helps you determine the right strategic ambitions, in perspective of the market.
Benchmarking allows you to see in what areas you are doing well as a company, and where you should focus on improvement. It provides an objective framework for your goals, so you can maintain or obtain a competitive advantage. But when do you use competitive benchmarking?
Key moments to use competitive benchmarking
There are several moments when benchmarking is essential in your strategic decision-making:
- When determining your annual budget: Benchmarking enables you to challenge the goals you set, and fact-check where you are (not) in line with the market. This way you consciously choose in what areas you want to outperform the competition, where you want to be on par, and where you might be below the market.
- In strategy sessions: Benchmarking helps factually assess your position relative to the competition. Is your growth strategy delivering above average results? Have you progressed or declined in your relative performance? Who is winning and who is losing in the market? From this perspective you can have much more focused conversations about strategy.
- When informing key stakeholders (like banks, investors, shareholders): Benchmarking is an excellent means to contextualize information about your company, especially to people who don’t operate in the market daily.
The ‘success’ of benchmarking lies in making conscious choices, supported by data. Using data this way as a company is the road to becoming the best in class. With all the data that is publicly available, this competitive advantage is within reach for any company that takes a step towards data-driven working. Want to know more about benchmarking and what it can do for you? Download our whitepaper benchmarking via the button below.