Contrast is the basic method of identifying things. Contrast - horizontal, vertical and multi-dimensional comparison. The logic behind the ratio. The logic of indicators and the level and dimension of management indicators. Benchmarking and the power of example.
4.5 Levels and Dimensions of Benchmarking
After setting various management indicators, the rest is the comparison work. Through comparison, we can discover various changes, trace the trajectory of changes in things from the changes, find the root of the problem, and thus find the laws of the development of things. This process is called benchmarking.
There are two basic forms of benchmarking: (1) comparing with yourself; (2) comparing with others.
1. Comparing with yourself
Comparing with yourself is the same indicator. Compare with your own history, compare with the best level in history, and compare with the goals you set. Most companies that implement management by objectives will set three goals:
(1) Basic goals: The bottom-line goals that the company must achieve according to the needs of the company's development strategy.
(2) Challenge goal: To maximize the capabilities of employees at all levels of the company, and to achieve the goal that all employees strive to achieve after overfulfilling their tasks.
(3) Moving target: In the process of implementing strategic goals, goals are adjusted after re-examination based on the industry, market, external environment and corporate conditions. This goal strives to be feasible, is the basis for assessment, and refers to the basic goals and challenge goals.
With these three goals, companies will inevitably form a goal-based evaluation, reflect on problems in the strategy implementation process, and find ways to improve.
2. Comparing with others
Comparing with others includes comparing with competitors, comparing with the industry, comparing with upstream and downstream industries, comparing with better cross-industry companies, and comparing with potential substitutes or entrants.
Compared with the industry, it means that if a company wants to develop and lead, it must exceed the growth rate of the industry. If it cannot keep up with the growth rate of the industry and cannot even achieve the basic indicators of the industry, then the company must be in decline within the industry. How can we become a leading company in the industry if we don't even have the ability to rise when the tide lifts all boats? Companies that cannot actively lead the industry will often be swept away by the waves.
Traditional industries have dualism. What is dualism? In an industry, there are often two companies of similar size competing fiercely. They are similar in size, but they are far away from the third place. For example, in the cola industry, there are Coca-Cola and PepsiCo. These two companies are ebbing and flowing, and no one can defeat the other; in the smartphone industry, there are Apple and Samsung.
Among Internet companies, there is only the first, not the second. For example, there is only one instant messaging tool, QQ, and even Microsoft's MSN and Google's Gtalk have to give in. This is why many emerging Internet industries The first and second place will merge after reaching a certain level. For example, Ganji.com merged with 58.com, Meilishuo merged with Mogujie, Qunar merged with Ctrip... A large number of merger cases tell us that in the emerging Internet, Only the first in the industry can survive, which is fundamentally different from the dualism of traditional industries.
A company must work hard to catch up with the growth rate of the industry in order to gradually stand out in the process of rushing through the waves. Otherwise, it will become silent in the industry. Especially in the stage when the concentration of the industry is rapidly increasing, it is necessary to seize the opportunity. , rapid expansion, exceeding the growth rate of the industry. For example, in order to keep up with the development of the real estate industry, Vanke proposed a strategic development speed goal of doubling the industry's growth rate in 2014.
Comparison with competitors is a must. The shopping mall is like a battlefield. If you cannot kill your competitors, you will be killed by your competitors. This is a life and death battle for an enterprise, so you must develop beyond your competitors. Although in game theory, the first place is often more inclined to adopt a following strategy, while the second place has greater enthusiasm for innovation [1]. However, in the new era of the integration of "Internet +" and big data, "cross-border robbery" has become the new normal. Enterprises need to be prepared for the entry of other competitors at any time, so the first place must also maintain sufficient acumen and be driven by innovation. Outperform your competitors.
If the company is the first in the industry, it can adopt the follow + innovation strategy, that is, follow the innovation of the second or main competitor to ensure that the company will not lose any industry trend and ensure that it always stays ahead and in the process Always be innovative.
Comparison with upstream and downstream industries is easily overlooked by many companies. Why compare with upstream and downstream industries? The reason is actually very simple. In the same industry chain, if you run fast, your upstream and downstream customers will definitely hold you back; if your upstream and downstream customers run faster than you, you will be abandoned by them. . Enterprises in an industrial chain must be linked and develop simultaneously. With the advent of the "Internet +" era, the entire industrial chain will become more and more transparent and the connections will become closer and closer. If enterprises do not pay attention to the upstream and downstream The development of the industry cannot allow the linkage effect of the industrial chain to appear. Enterprises must pay attention to the development indicators of upstream and downstream industries at all times, including the company's growth rate, profit level, scale, concentration, etc. They must not only track and compare relevant indicators of enterprises with which they have business dealings, but also compare with those in upstream and downstream industries. Compare various indicators to ensure that enterprises can keep pace with the development of upstream and downstream industries.
Some companies are already leading in their own industry or subdivisions of this industry. At this time, in addition to considering the above benchmarks, they also need to learn from the advanced experience of other industries to find new opportunities for the company. Breakthrough point or starting point for development. A good company will continue to absorb advanced models within and outside the industry. Experience within the industry helps improve the operation and management of the company, while experience outside the industry can often bring more innovative ideas to the company and lead the company to innovate within the industry.
After selecting a clear benchmarking object, you need to clarify the benchmarking dimensions. From what aspects should we benchmark? You can refer to the following 5 dimensions.
(1) Scale indicator
Scale indicator is a very important indicator. The size of an enterprise represents a kind of strength, the right to speak in the market, the degree of trust of users, and the tilt of resources such as government and society. The same investment capital of 10 million yuan will put a lot of pressure on a company with an annual revenue of only 50 million yuan and a profit of only 5 million yuan; and for a company with an annual revenue of 5 billion yuan, , the investment amount of 10 million yuan does not require the use of one's own profits, and the problem of early capital investment can be solved through bank loans. The size of an enterprise represents the strength of the enterprise, and banks prefer to cooperate with strong enterprises. Even if the project investment is unsuccessful, for an enterprise with a scale of more than 5 billion yuan, a loss of 10 million yuan is easy to digest; For a company with a scale of 50 million yuan, a loss of 10 million yuan may be fatal.
The size of an enterprise also means customer recognition and market influence. Only when your company reaches a certain scale will more people have heard of you and more people will trust you.
The size of a company also represents a kind of credibility. If a new product is launched on the market, consumers will be suspicious and afraid to buy it when they see that it is produced by an unknown manufacturer; and if it is produced by a well-known manufacturer, then the endorsement of this manufacturer will increase the product's popularity. credibility, consumers will be willing to try this new product. The scale of an enterprise directly affects the influence of its brand, the trust of consumers, and the trust of customers. It will also have more credibility guarantee capabilities in purchasing and sales orders.
The size of an enterprise also directly affects the relationship between the government and the enterprise, and affects whether the enterprise can obtain more preferential conditions from relevant government policies. If the government has a piece of land listed for sale, and both an unknown company and a well-known company want to acquire it, then the government will definitely want the well-known company to acquire it, because the well-known company will be more effective in using this land to build factories in the future. to make money. Or the government believes that well-known companies will develop more steadily than unknown companies. As long as enterprises can develop steadily, they can contribute more performance to local governments, create more job opportunities for local governments, and thus better develop the local economy.
When we benchmark from the perspective of enterprise scale, the first thing to measure is turnover, while e-commerce platforms may measure more GMV (Gross Merchandise Volume, comprehensive order sales), that is, the transaction volume of the platform Amount; secondly, it can measure the number of users, user activity, number of products, number of employees, etc. Different industries have different scale measurement indicators. The scale of a hospital can be measured by the number of medical staff, number of beds, number of patients, annual operating income, etc.; the scale of a restaurant can be measured by the restaurant area, number of guests, sales, etc. Enterprises need to select specific scale indicators based on the characteristics of their own industry and develop a tracking benchmarking system based on the indicators.
(2) Speed ??indicator
The speed indicator represents the comprehensive vitality of an enterprise and its future development potential. The current scale base and development speed of an enterprise determine its future scale. The speed indicators here include not only the growth rate of scale, but also various speed indicators of operation management. In different industries and enterprises of different sizes, the evaluation criteria for growth rate are different. If it is a very small company in the industry, it needs a greater growth rate to be able to stand out in the industry; if it is already the leader in the industry, then the company's growth rate only needs to exceed the average growth rate of the industry and its main competition. The leader's position can be maintained by increasing the growth rate of the company. For a company with a scale of hundreds of billions of yuan, a growth rate of 10% is already a very large growth. For a company with a scale of tens of millions of yuan, a growth rate of 100% is not necessarily rapid growth.
In addition to scale growth, the speed of enterprise operation and management also directly reflects the vitality of the enterprise. If the approval of a report in an enterprise takes several weeks to complete, then such an enterprise is slow; if the approval of major projects in an enterprise only takes a few days, then such an enterprise is fast.
JD.com is very famous for its fast delivery. Since JD.com launched the "211 delivery system", it has attracted a large number of Tmall users. Their product prices are the same, and JD.com can deliver goods on the same day. To deliver the goods, Tmall requires third-party delivery, which basically takes 2 to 3 days to deliver. Speed ??builds JD.com’s competitive strength, so it can stand out in a business environment with a one-dimensional structure and turn an e-commerce company into a logistics company. In essence, Tmall is an e-commerce company, while JD.com is a logistics company.
Speed ??determines the future of an enterprise. Without speed, many problems will be exposed. As the same saying goes, when an enterprise is developing, no matter how big the problem is, it is a small problem; but when the enterprise is not developing, no matter how small the problem is, it is a big problem. Therefore, speed is very important. If a company has a problem, it can either be solved through rapid expansion and management problems can be quickly solved during development. Problems are often difficult to solve if they are not addressed through speed of development. The management level of Chinese enterprises is generally poor. If the development speed of an enterprise drops, many problems will be exposed. Therefore, many enterprises are looking for development solutions rather than management solutions.
(3) Efficiency index
Efficiency index refers to the comparative relationship between enterprise input and output. If time is invested, it is called time efficiency, and the denominator is time. For example, monthly output value, monthly sales, monthly profit, etc. are efficiency based on one month as the time unit.
If other resources invested, such as capital, number of people, and funds are used as the denominator, there will be more efficiency indicators. For example, if the input is the number of people, there will be indicators such as per capita output value, per capita sales, per capita profit, per capita output, per capita sales; if the input is personnel wages, there will be labor yuan equivalent to sales, labor yuan equivalent to output value, labor yuan equivalent to sales Indicators such as volume, labor unit profit, etc.; if the investment is net assets, there are indicators such as net asset turnover rate and return on net assets.
Benchmarking indicators require us to design them flexibly, and different business characteristics require the use of different indicators. If you compare the working hours and non-working hours of employees in the service industry, there are indicators such as employee idleness rates. In some service industries, employee idleness rates are very high. If you go to a restaurant during non-meal time, you will find that there is a large amount of "surplus labor". This is the norm for catering companies, because consumers have fixed times to eat.
Smart catering business owners will come up with better ways. For example, when employees have a lunch break or when there are not many customers, they can let employees do other work, they can let employees engage in marketing work, and search for various data and information on the Internet. ; It can also allow employees to process mooncakes, cakes or other products that can be sold in the name of the company.
It may not seem difficult for one person to hold multiple jobs in the future, but what is more important is to have a complete business plan, find a path for implementation, and then implement it efficiently.
In the process of benchmarking efficiency indicators, we also need to conduct experiments, which can help us greatly improve efficiency. When we study the efficiency of various aspects of corporate operation and management, we need to make certain adjustments based on the impact of certain variables and track the effects of the adjustments. Then we compare the improvement effects with the adjusted resource investment to see which solution is more effective. Effective and more efficient, thereby continuously optimizing the efficiency of the entire company.
For example, companies can experiment with advertising investment in different months or quarters, invest more advertising expenses in a certain area, invest less advertising expenses in a certain area, and then analyze their impact on overall sales performance. According to the impact of the output, make another adjustment next month or next quarter, then track the performance data, and verify the output efficiency of various resource inputs under formula conditions based on experiments, thereby optimizing input and obtaining maximum output.
Efficiency is the core weapon of corporate competition. Which of the two companies will eventually become the leader in the industry will depend on which one has the highest efficiency. Efficiency represents the best use of resources, and represents who can produce more under the same output conditions; who consumes the least resources under the same output quantity and quality conditions; and who can produce the least resources under the same market price. The highest profit. For example, company A costs 80 yuan to produce a product; company B only costs 70 yuan to produce this product. As long as company B sets the price of the product at 75 yuan, company A will soon disappear from the market, because company B still has a profit of 5 yuan when selling each product of 75 yuan, while company A only makes a profit of 75 yuan per product. It's a loss of 5 yuan. In the short term, Company A can compete with Company B at a loss, but it will not last long, because Company B will not lose money when it is profitable and will continue to grow and develop, while Company A cannot last long.
It is not an exaggeration to say that efficiency determines the life or death of an enterprise. Today's market competition has gradually entered a fierce stage, with serious product homogeneity and customer relationships not being so close. Especially in a market environment like China, a one-cent price difference can completely break up the previous partnership, and can definitely cause the so-called "loyal customers" to lose, especially in the B2B field. Although price is not the most important competitive factor, when product quality, design, service and other conditions are the same, price will become a key factor in competition. Only by controlling costs can price have an advantage or flexibility. , in order to ensure that the company can win more customers while making profits.
(4) Benefit indicators
The so-called benefit indicators refer to the evaluation criteria for making money. Although benefits are generally considered to be profits, the definition of benefits may be different for companies at different stages of development. In the early stage of a company's business, the efficiency indicator is growth rate, rapid development, not profit. If the company regards profit as the first priority in the initial stage, then the chance of development will be very small; when the company develops at a high speed, efficiency The indicator is no longer growth rate, but quality, including product quality, management quality, system quality, process quality, supply chain quality, factory quality, R&D team quality, and overall management team quality. If you do not establish quality indicators, when the company develops and grows, the bigger the company is, the weaker the company's strength will be, the hollower it will be internally, and the more dangerous it will be. Just like a balloon, it will get bigger and bigger as it is blown, and the risk of bursting will be higher and higher. ; When the company reaches a mature stage, the company's efficiency indicators truly return to the ultimate goal of profit.
As a rational data analyst, you cannot simply understand the meaning of indicators literally. You must define the concept of word meaning according to the actual situation of the company, and find the healthy and stable development of the company at different stages. key elements. It is very dangerous to always put profit indicators at the top of the company's operations. In fact, there are many such examples in real life.
A certain product of a company sells for 100 yuan in the market, the cost of the product is 80 yuan, and a gross profit of 20 yuan is earned from selling one product. The company reduced the cost to 70 yuan through internal improvements and product process innovation. The company is very satisfied with the gross profit of 30 yuan. The market price of this product continues to remain at 100 yuan, and the total market size is 10 billion yuan. The company's market share is very low, with about 300 million to 400 million yuan every year. sales. When the competition in the entire industry became more and more fierce, other companies also improved efficiency and reduced costs through efficiency optimization and innovation. The development of the company began to be threatened, so the selling price of each product was reduced to 70 yuan. When the company is making money, it is not willing to sacrifice profits to gain market scale. When the market competition becomes fierce, there is no room for price reduction, and the company loses a great opportunity to develop scale. If the company lowers the price of its products to 75 yuan when it first reduces the cost to 70 yuan through innovation, it can greatly increase the company's market size and outpace some small competitors or those who cannot afford a price war. Once companies clear out the market, the scale of the company will be able to expand rapidly. Once you miss this opportunity, you will have to face painful market competition and may even be driven out of the market by newcomers.
Therefore, enterprises should have different strategies and different efficiency measurement indicators in different development periods. It is very detrimental to enterprises to completely use profits as a measurement indicator of efficiency.
Efficiency and effectiveness are a natural pair. Only by improving efficiency will there be higher benefits, but with higher benefits, it will affect efficiency. Why? When a company's products have very high profits, the company's internal motivation to save costs will be insufficient, and employees' enthusiasm for innovation will also become worse. Since they are making money, why should they change? This reason seems to be very reasonable. When the product still has a gross profit of 30%, the company will not spend a lot of energy looking for innovative methods that may only save 1% of resources. And those companies with low gross profits will spend every penny and save every penny, and ultimately achieve greater efficiency improvements through savings. Sometimes it is not a good thing if the company's performance is too good. It will only cover up the deficiencies of management and efficiency, and cultivate the inertia of employees.
(5) Comprehensive index
The comprehensive index is an index that combines the first four indicators (see the figure below). It can also be regarded as a measure of a specific Indicators are obtained through weighted relationships or specific algorithms. For example, CPI, PPI, PMI, etc. are all comprehensive indicators, although they only express the meaning of one dimension.
To evaluate whether a company can develop healthily and sustainably, information such as the company's size, market share, ranking within the industry, growth rate, profit level, profit margin, and debt level can be comprehensively considered. Set a weight for each dimension, and then calculate the weight to obtain a comprehensive index. If a company is large in scale and ranks high in the industry, but its profitability (profit margin) is low, growth is slow, and debt burden is very heavy, then we can give such a company different treatment options. Evaluation, that is: C=f (scale, market share, ranking, growth rate, profit margin, debt ratio). We can also combine 4 indicators to evaluate the overall situation of an enterprise or the characteristics of the entire enterprise, so as to evaluate the overall situation of an enterprise in different enterprises. Make analysis and judgment on development model.
According to different business purposes, different indicator models can also be set to evaluate enterprises. For an enterprise, multiple comprehensive indicators can be used to evaluate its operating status. For example, for a catering company, we can easily find hundreds of evaluation indicators, each of which targets different production factors. For example, a catering company generally has 7 major factors: dishes (dishes, drinks, packaged products, etc.), stores (seats, bar, etc.), customers, employees, suppliers, addresses, funds. Each element can set various management indicators from 4 dimensions (scale, speed, efficiency, and benefit).
If the indicators in each dimension are comprehensive, we can weight these 7 production factors to get the comprehensive evaluation scores of the company in these 7 aspects. From this, we can judge the management shortcomings of this catering company. Where are the long boards and an in-depth study of the company’s future improvement path (see the figure below).
For the chain service industry, based on its store business model, we can develop a "store opening model", that is, through the positioning of products and services, the gross profit margin of the product, the passenger flow around the store, and the target customer group By controlling the quantity and operating expenses, you can calculate how big a store should be opened. If the customer flow is insufficient and only restaurants with an area of ??700 square meters or less can be opened, then stores with an area of ??more than 1,000 square meters should not be considered. This will result in losses due to excessive rent burden and unsaturated operations. Many companies rely on their feelings when opening a store. Experienced people can very clearly estimate how big a store should be, how to position it, how to market it, and how to manage it, so as to ensure profitability after opening a store. People without experience can only do it through trial and error. Now that the cost of trial and error is getting higher and higher, a good mathematical model can actually completely replace this kind of professional expert. Of course, this data model requires the company to continuously enrich and improve its data accumulation and monitoring of various management indicators.
4.6 Benchmark management and the power of role models
Learning from the practices of benchmark companies and the experience of advanced companies can improve the company and greatly improve the management effect of the company, and the probability of success is very high. high. Therefore, when we study data, we must study the data of benchmark companies and use the data to provide suggestions and opinions for our company's improvement measures, thereby ensuring that our plans are more feasible and more likely to succeed.
Using data to quantify benchmarks can build a standard from data indicators, just like a high jumper jumping high. If there is no benchmark horizontally in the sky, the height of his jump will often not reach his limit. By constantly adjusting the height of the benchmark, athletes can constantly refresh the height of their jumps. The same goes for enterprise management. If an enterprise can use excellent enterprises as benchmarks and constantly challenge itself, it will definitely surpass this benchmark enterprise.
The data itself will also become a benchmark. People who like running have an experience: every time they measure the number of running steps, they hope to surpass the previous highest record every time, so some friends will run farther and farther and like running more and more. In business management, you can also set a data indicator, such as the number of phone calls per day. First set 80 phone calls per day, and then ask team members to continuously exceed this number. You will find that the team members are basically very good on the first day. It is easy to complete the task, and some people will continue to sprint for new records in order to get a good ranking. If we set a weekly sales target and write this target and the actual weekly sales below, then when the target is not reached, team members will think about how to achieve the target and how to exceed the target. . In fact, this is the result of inner comparison, the result of comparison between actual and virtual goals. This is the power of benchmarks. Enterprises should set a benchmark and allow the team to continuously exceed it.
In order to make the benchmark set more scientific and find a path to achieve this benchmark, we need to study benchmark companies, learn from other people's practices, and constantly discuss in the process: why we can't do it to, and others can do it. One of the most basic functions of benchmark setting is: goal motivation and finding a path to achieve the goal.
Setting benchmarks can turn the daily work and management of an enterprise into a competition, a process that requires hard work to achieve better results. The benchmark of digitalization is to quantify the performance of enterprises through data indicators, find and fill the gaps through comparison, and in the process explore ways to optimize company management, business processes, and business structures, thereby significantly improving performance. Without benchmarks, companies will only feel good about themselves and lag far behind their competitors without realizing it. This is very dangerous.
In 2004, when the author provided consulting services for Vanke's third 10-year mid- to long-term strategic planning, it was by studying the practices of outstanding benchmark companies that Vanke, a leader in the domestic real estate industry, could see further. , look at how advanced international companies manage companies, build houses, and make decisions, so as to find the gaps with them. The benchmark company for Vanke to learn from is PulteHomes, which has never suffered a loss for 50 consecutive years in the hugely volatile real estate market. This is a company that Vanke can learn from seriously and humbly. Vanke may surpass this company in terms of scale, but in China, a market with natural scale advantages, big does not mean strong. You must learn with an open mind, establish a goal that can be achieved through hard work, and be able to continue to see what world-class companies are doing with an open eye, rather than just being satisfied with your own profits, so that you can continue to surpass yourself.
In the process of serving domestic companies, the author found that the bigger the company, the more arrogant the employees are and they think they are awesome. Any excellent enterprise has management problems. A well-developed enterprise has management problems that have not yet been exposed, or have been exposed to the point of causing serious damage. When an enterprise does not develop well, various problems will arise. Coming. If you always think you are great, it will be difficult to find a benchmark for learning. In fact, every company has its own characteristics, even small companies have their own specialties.
When the author was working for a local energy company, I once suggested that it learn from an energy company in the United States. When the author made this suggestion, more than half of the company’s senior management team almost unanimously agreed. Said: "We are already bigger than this company!" This makes the author feel that some large enterprises in China have almost reached the point of being arrogant by relying on various monopoly resources (including monopoly resources constructed by natural resources, government resources and relationship resources). In fact, the business of this foreign company is very similar to that of this domestic company, but the per capita output value of this domestic company is less than one million yuan, while the size of this foreign company is 3/4 of it, and the number of employees is 1/ Less than 10. Just looking at this indicator is worth learning from other people’s experiences. Of course, this kind of suggestion cannot be promoted in such a company, because the author knows that if the same per capita output value is to be achieved, a large number of people in this domestic company will be "laid off", and this is the case for this company Corporate managers can't stand it. At least the vast majority of executives will reject the author's suggestion because they are worried about losing their jobs.
The full text is excerpted from "Enterprise Business Data Analysis - Ideas, Methods, Applications and Tools" by Zhao Xingfeng
Contents of the previous issue:
Commonly used analysis ideas in data analysis - comparison Analysis (1),
①Contrast is the basic method of identifying things
②Contrast - horizontal, vertical and multi-dimensional comparison
Commonly used in data analysis Analysis Ideas - Comparative Analysis and Analysis (2)
①The logic behind the ratio
②The logic of indicators and management indicators
The next issue will be more practical!