Technology benchmarking

OPINION: Understanding the relative complexity level of technology employed by an enterprise – private or public – should be the essential first step in the improvement of its productivity.

Across all fields of economic activity, it is technological change that contributes most to increased productivity. At a fixed level of technology, generally lesser impact results from changes in the traditional measures of productivity: the effectiveness of use of land, labour, raw material and capital.

Benchmarking an enterprise’s use of technology will provide insight into its potential productivity and the uniqueness of its competitive advantage.

Today’s successful companies invariably have at least one, or possibly several, strategic technologies that assure a defining competitive advantage. Their technology knowledge is embodied in their operational culture and influences all aspects of their activity.

Benchmarking is the widely-employed exercise of comparing the performance metrics of an enterprise’s processes and systems to those of others in the same, or related sectors. Typically, quality, time and cost are measured.

What is less commonly included in such comparison is the technology component. It is possible, however, to broadly quantify the relative complexity of the technology employed and the understanding of its use in a manner that enables benchmarking.

A generalised starting point for such benchmarking is provided by the following table. It summarises the broad levels at which technology is employed. This ranking can be refined for the specific situation and as technical understanding deepens. What is of key interest is the degree to which each process/system/product step variously results from:

globally-path breaking innovation
refinement of pathbreaking innovation to regional raw material or need
comprehensive in-house knowledge that enables additional gain from leading-edge technology
general use, with superficial understanding, of well-established technology provided by “off-the-shelf” items or licensing.

This “technology employment” level may be scored according to its ranking (10–50). A supplementary score for the traditional productivity factors (1-9) can be added to this technology score.

Level	Technology employment	Score
Five	Among the few globally who consistently develop improved processes, products or services from which they capture value as a market leader.	50
Four	Culturally differentiated in deep technical knowledge that extends opportunity from leading-edge technology to deliver goods and services of superior quality.	40
Three	A fast follower, broadly similar to most in its sector in the use of advanced technology, but without distinctive competence. Achieves occasional innovative spike.	30
Two	Operates locally by its capable use of well-proven “off-the-shelf” technology.	20
One	Eschews technology. Works with traditional practices.	10

Developing technology literacy

Firms operating at levels two and three may find the initial steps of this technology benchmarking challenging.

It can be daunting to achieve anything more than a superficial understanding of just what it is that competitor firms on levels four and five know, and do, that is critical to their technical success. It is not in the interests of successful firms to talk publicly of the method of their achievements. Even where there is public disclosure in patents, the full story is rarely told. Critical steps will be excluded. Confidential knowhow will be involved.

This is the opaque environment that the aspirational outsider needs to make some sense of. Questions must be asked widely. With diligence, the inquiring mind will be rewarded. Diverse people will all know something. Slowly the parts of the puzzle can be filled in.

Knowledge of the technologies and the technological capabilities employed in a sector can better inform the development of new products, processes and systems in your organisation.

In guiding this process, the board will find its technology literacy strengthened. It will be assisted in this by increasing the proportion of its member directors who themselves have strong technical backgrounds.

About the author

Dr Stuart R Corson is a chemical engineer who consults on technology innovation. He received the Arne Asplund Award for his practical contributions to how the world makes paper.

The views expressed in this article do not reflect the position of the IoD unless explicitly stated.

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