The marketplace is dynamic and competition between businesses to obtain new customers and grow market share in their respected industries is now greater than ever.
New firms and entrepreneurial ventures are constantly trying their luck to penetrate the already saturated market. In order to survive and grow, companies must be focused on the quality of their product/service, gauge customer sentiments, follow best practices and keep an eye on performance indicators.
Why is it important to constantly carry out these evaluations? Management theorist Peter Drucker famously quoted “you can’t manage what you don’t measure.”
It is imperative for the management of an organisation to constantly evaluate the market, products and services offered by the businesses, the internal management of the businesses and other factors relevant to their operations in order to identify shortcomings and address them, in a bid to achieve financial success or even to stay afloat.
In Kenya alone, according to a consumer spending survey carried out by MasterCard in early 2021, “nearly four out of five (up to 79 percent) surveyed consumers are shopping more online since the onset of the Covid-19 pandemic.” Not only has the competition on the physical versus virtual market intensified, the Covid-19 pandemic and other economic factors have led to a global downturn in disposable incomes.
With lower levels of disposable incomes, the competition between organisations to maintain their consumers is at an all-time-high. Manufacturers, retailers and service organisations are all constantly carrying out market evaluation to stay ahead of the curve and outsmart their competitors.
An organisation's evaluation and control is a data gathering and action mechanism. This programme monitors the external business environment, internal performance of business units and individuals, and the output in terms of products and services of the organisation.
Once collected, the data is processed to present a picture of the company’s overall performance and to trigger action in response to conditions representing opportunities or threats. The evaluation and control consists of several component processes that monitor performance on a continuous periodic and event determined basis driving action when necessary.
Components include organisational performance measurement systems, external environment monitoring programme, condition reporting, corrective action programme, self-assessment programme, and benchmarking. Evaluation and benchmarking are both complementary processes focusing on the activities of the past, the present and the potential of the organisation in the future.
Benchmarking has a long history going back to the early period of evolution. Comparison has always been the essence of winning. Being able to react quickly and appropriately has helped man overcome significant hurdles. Benchmarking is an activity, which tells the position or status of a company in comparison to others. Usually benchmarking is done to compare with others considered to be best in class.
This involves identifying the current leader in the field, identifying the gap with that leader, and taking well strategised actions to close that rift.
Benchmarking during Covid-19 is indeed proving to be a difficult task, since the standards across most businesses and industries look significantly different than they did pre-pandemic. For entrepreneurs of startups, or for businesses getting back on their feet, it guides growth trajectory in significant ways. Management must identify the particular aspect of the organisation they wish to benchmark. Is it financial performance, brand reputation, staff motivation? Once established, the identification of key performance indicators takes place.
In the case of financial performance, these would include sales, margins, cost control, productivity. The evaluations must be comparable, this is done by defining segments within a network. It is important to gather data independently while ensuring consistency. Thereafter, the data analytics can be used to produce customised and meaningful reports, which should be simple to understand and show improvement over time.
Business owners and management can ask themselves some important questions, such as: How does my business compare to the rest within the same industry? Are there others out there who have similar problems? If so, what solutions have they found? Have they solved the problems already? If yes, then what worked for them? Can I learn from their experience? Is my organisation at the top or the bottom of the industry?
All good companies have a common thread, they are similar in how they function in terms of good management practices and governance, pushing for revenues, optimum productivity, implementing lucrative marketing strategies, cost control, staying ahead of the curve, maintaining good stakeholder relations and credibility, whilst following industry best practices. Good companies all follow the same golden rules, it is usually the not so good ones which are lacking in different ways.