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Dare to Compare

Companies shouldn't fear benchmarking.
Gabor Taroczy, CFO Europe Magazine
November 3, 2008

What caused the credit crunch? In large part, it can be explained by a lack of trust, most notably between banks. A similar lack of faith often hampers corporate benchmarking efforts, a subject addressed at a conference held by the Global Benchmarking Network (GBN) last month in Budapest.

Robert Camp, an early proponent of benchmarking at Xerox, and honorary president of the GBN, said that companies shouldn't fear sharing data with competitors. Given that every firm has some sort of unique capability, competitive advantage is gained from "creative implementation of best practices" rather than mere access to information, he added.

Yet when László Csuport, CFO of Transdanubian Waterworks, set out last year to create a benchmarking association for water utilities, he found that trust was in short supply. He made progress by enlisting a neutral third party, Corvinus University in Budapest, to collect and analyse data in areas ranging from energy efficiency to working capital management. Trust was ultimately gained, however, only when the association did away with "naming and shaming," a practice popular in some parts of the benchmarking world. In the reports issued to association members, a company can see its rank against competitors, but only the top three firms in a given category may choose to have their names revealed.

This proved a turning point for the association, which now includes 23 utilities in the region. It is now looking to expand further in central Europe, especially Romania and Bulgaria. Csuport believes that benchmarking is well-suited to the region, as companies face "similar surroundings, problems and opportunities for development." This makes it particularly useful — for both laggards and leaders — to share information, he adds. If only banks thought the same.