In my decade of experience in CRE I have seen far more bad benchmarking studies and reports than I have seen good ones. It can almost be dubbed an epidemic other than for the fact that many bad ones truly are trying to be good and insightful but simply miss the mark for deliverability.
Benchmarking is the activity of evaluating where something is today and comparing it to where it should actually be given market conditions, performance of competitors, performance of other companies or simply an industry standard. Benchmarking is supposed to do one of two things: 1) identify opportunities for improvement (savings) or 2) identify where you are doing well so you can do more of it. Both of these are premised on the understanding that benchmarking is intended to drive action.
Bad benchmarking reports usually fail in the same ways:
- Assume a perfect world where any action could be taken.
- Are overly aggressive in the amount of work that can be completed.
- Assume that bad data is an implication that performance is also bad.
- Form false equivalencies between the data being benchmarked and the standard being used (apple vs. orange situation).
- Rely on incomplete or faulty data (on either or both sides of the comparison).
- Do not identify specific actions that can drive improvement (instead rely on general comparisons only).
All of these lead to the same result: the benchmark study is presented showing a 30% savings opportunity across several areas of spend; the room is ecstatic in the belief that you are suddenly going to save them millions of dollars; everyone leaves happy and content; only a fraction of the save actually happens because it was never realistic to hit the target to begin with.
Most of the performers of the benchmark studies will readily acknowledge the achievement gap when challenged. They will point to the need to identify specific actions, offer to assist, push really hard but still ultimately say it is up to the business to actually force through the changes – regardless of political realities, uncontrollable circumstances or in-the-weeds assumptions that turned out to be impossible to make real.
Benchmarking is an wholly valuable exercise that can absolutely yield amazing results for companies when performed correctly or managed as part of an on-going improvement initiative. However, it can easily go very, very wrong and lead to a great deal of unfulfilled targets.
If you can’t make phone calls or conference calls that take less than 5 minutes, you may be a talker. If you want to have a pre-meeting for every meeting, you may be a talker with a lack of confidence. If you can’t send in a deliverable without getting everyone to sign-off in advance, you may be trying to simply cover your ass.
I’m currently working with a consultant who literally sent me a 5 page PowerPoint deck that simply covered how we were going to build a 10 page PowerPoint deck over the next 2 weeks. It was something that time and energy was clearly invested into and was intended to actually be used. Simply doing work without an overkill structure was a foreign concept to them. Every call we had with more than 2 people needed to have a pre-call in advance.
This is not how efficiency works and it’s not how great work gets done. Great work is not born out of a committee and achieved on conference calls. Great work requires risk and experience and knowledge and a touch of ESP. No where in the ingredient list is conference calls.
That title is probably going to rub a few people wrong. “Why shouldn’t we help the client get to the right decision?” And as with anything in life, there’s some nuance to the issue.
Let’s start at the top though, our job is to help a client make the right real estate decisions. Hard stop. Doesn’t that go against my thesis? Absolutely not. Our job is to give them all the information they need, package it in an understandable way, and give the client a framework for making their decision. But at the end of the day we cannot actually make the final decision for them.
Yet too often we try to make the decision for our client. We push a decision that we think it best and fight anything different. We push a decision because we think things are delaying too long. We push a recommendation that is “right” but doesn’t match the client’s culture and business.
Ultimately all decisions involving the client’s money is theirs to make. If we take that decision away from them we are putting them in a position of greater risk to themselves and their business. We need to ensure that the client moves in a timely fashion and we must look out for their best interests. But ultimately we are there to support them.
If we become over-involved in the actual decision then we put them and ourselves in an awkward position. As advisers we must effectively advise. Less than that and we are not giving the client the information they need for a good decision. More than that and we put them in a position of accepting a decision they don’t really support or can be successful with.
Junior anything. Either a person can do the work or they can’t. To throw an experience label on someone because of age or years of experience should never be part of an organization. One of the worst things that you can do is take a top young performer and constantly remind them that they are the “Junior” team while those who have “put in their time” are the top dogs.
We’re all taught from a young age to just “do our best.” As long as we give it everything we have that’s all we can do. I’d like to call bull****.
Doing your best and still failing implies that there are opportunities for improvement. Doing your best also implies that you should do it yourself. Bringing someone else in or grabbing a team is somehow against the rules.
Results matter. At the end of the day, results may be all that matter if Wall Street is our measuring stick. Failure while trying your best is still failure. Grab your team, get your go-to problem solvers lined up. Do anything for the answer – don’t just “do your best.”
When you are in consulting you will occasionally come across those times when you have a client who is absolutely wrong and refuses to understand the right way. This is a situation known as no-win and one which you will discover what you’re made of. There are two ways to handle this situation:
- Support the client down their wrong way of thinking simply to keep them happy.
- Continue pushing back and not support the wrong way.
If you follow the first, you’re essentially doing anything you can to keep getting a check. Even the argument of “I’m only doing it so that I stay involved and minimize the damage” is insincere. Sure, there’s always compromises possible and trying to find the best available option given the situation you are in – but down that road is bullet 2. Supporting someone to keep going in a way that will only lead to a bad outcome is never right.
Customer Service in this instance insists on telling the customer that they are not right. Our job isn’t to be happy and supportive, it’s to help our clients reduce costs and/or increase profits. Anything that goes against those two missions is not in the client’s best interests. And as soon as we are going against the client’s best interests we’re no longer neutral consultants there to help, we’re now active participants in the situation simply trying to increase our own revenue stream. That’s part of where the big financial institutions went wrong this decade.
I’m not saying to throw up your hands and not try to help. Simply put, do right.
Statistics is built on the basis of believing there will always be outlying events that could occur but shouldn’t. Risk management is about understanding those events, mitigating against them, and making the best decision possible. What is mitigation if not profiling?
When looking at a distribution center I first create inventory and storage profiles. What are the standards? What is the 80% and then what are the superstars. Honestly I rarely care about the 80%. The key is the superstars. Handle those right and the rest will usually fall in line.
Do you think Jimmy Johnson treated Troy Aikman the same way as a second string safety? No. There are stratospheres that must be defined and managed differently. A Tier 1 MSA is not the same as a city of population 100k. They may have some similar characteristics, but the Tier 1 is usually better suited for that 400 seat call center.
If you treat everything the same you will, by definition, get a subpar result.