Design thinking

Recipes for Great Design part 5

Anna Hellmer

Benchmarking

Market saturation and rapid information-sharing capabilities make it essential for companies to continuously assess which ingredients differentiate their business and contribute to its success. Benchmarking can help identify trends and best practices used by direct and indirect competitors and inform a move toward unclaimed territory. It also helps organizations gain insights and inspiration into the most effective ways of working.

Benchmarking looks at the details and features of competitive offerings to discover what’s working in the market right now. It can help you decide whether to improve upon already popular experiences or to introduce innovative new ones. Benchmarking identifies the low-hanging fruit – solutions that the market clearly desires – to be claimed quickly, as well as the long-term trends that may be changing the greater business landscape.

The benchmarking method falls under the area of the design process we call Investigate Contexts, where we seek to understand people and the worlds they inhabit. To learn more about the Investigate Contexts phase and its methods, see the previous articles in our Recipes for Great Design series.

How to Benchmark

A good benchmarking process analyzes both direct competitors and related industries to create a broad matrix of insights. The following four types of competitors each reveal different insights, all relevant when designing a new business path: Direct Competitors

 

These are your closest competitors. Here you’ll find current best practices and easily compare your own offerings and experiences. Examining this competitor group will quickly present actionable insights that may be valuable; however, it may not serve as inspiration for innovation.
Example: For a bank, direct competitors include other traditional banks and banking disruptors that serve the same population.

Industry Neighbors

Industry neighbors are companies that work nearby and within the same sector, sometimes in a dependent or supplier role. Studying these companies can offer insight into trends and direction within the larger industry landscape. They may also provide great opportunities for building partnerships. Example: For a bank, industry neighbors include other companies that work with money, finance and transactions but are not direct competitors. This type of competitor may include credit card terminals, PayPal, WeTransfer, Venmo, investment companies, and other financial instruments or providers.

Comparable Experiences

Companies with comparable experiences are close to yours in the type of customer experience they deliver, its price range and service flow. They may also be competitors that provide an offering which customers choose over yours. A movie theater, for example, is not a direct competitor to a museum in the way that another movie theater would be, but consumers may choose one of these experiences over the other on a Saturday afternoon. In other cases (see Example below), a company may provide a similar experience but the offering itself is not directly competitive. Either way, studying these companies reveals a wide range of best practices and insights into what customers appreciate and expect across sectors.
Example: For a bank, comparable experiences include other service providers such as insurance companies, telcos and energy providers.

Disruptive Giants

This is where Uber, Airbnb, Google and other buzzword companies come in. They may be far from your industry or your way of doing business, but the power of these disruptors is that they change how people expect the world to work – and that impacts every organization. The way Uber manages its driver fleet, for example, may not interest you as a best practice. But the way they handle payments is changing the way people expect to conduct payments in general: quickly, discreetly and digitally. No matter the industry, these companies provide superior customer experience and act as a great source of inspiration.

Core Activities

The benchmarking process looks very different depending on how much time you put into it and the type of project you’re working on. However, it’s always useful to gain an understanding of the market space in which you operate, even if you only have a few hours to devote to benchmarking.

Summary

Do a pre-study to decide which competitors to focus on. Choose companies that are successful in their field – you want to learn from the best. Depending on the nature of your project, decide which type of information you seek. It could include details about competitor products, customer service, purchasing experiences, etc. Explore competitor offerings in their physical and digital spaces through desktop and field research. Visit stores that stock their products and follow service flows. Analyze components of products and/or services that directly or indirectly compete with yours to pinpoint exactly what makes those offerings successful. Focus on a range of areas, including technology, aesthetics/style, markets and functionality.

Stay tuned for Recipes for Great Design part 6