Benchmarking at Xerox

BENCHMARKING AT XEROX
Most scholars agreed that Xerox was the pioneer that started the systematic approach of
benchmarking. The enormous financial and operational improvement Xerox enjoyed was what made
benchmarking so attractive to other organizations. By studying the Xerox success story, one can learn
the whole process of benchmarking from the preparation phase to the maturity phase.
Originally named the Haloid Co., it changed its name to the Xerox Corp. in 1961 and enjoyed
record revenue growth year after year in the 1960s. This is thanks to the development of its copying
machine that utilized the unique photographic technology invented by Chester Carlson.
However, around the late 1970s and early 1980s, competitors from both the U.S. and Japan
started to consume Xerox’s market share, and Xerox failed to cope with the problem in a timely manner.
The competitors’ products had either better quality or lower price or both. Xerox needed a way to
regain competitiveness, the IBS Center for Management Research wrote in “Xerox – The Benchmarking
Story.”
In 1982, David Kearns became CEO of Xerox, and he initiated the famous “leadership through
quality,” which essentially was Xerox’s form of benchmarking. This program aimed to reduce costs and
place emphasis on quality control. Through this program, Xerox recovered the lost market share and
survived the competitive crisis. It went on to become the leading example of successful implementation
of benchmarking, researchers Larisa Dragolea and Denisa Cotîrlea wrote in 2009.
Under the new program, Xerox compared itself against Japanese competitors and found that “it
took twice as long as the Japanese competitors to bring a product to market, five times the number of
engineers, four times the number of design changes, and three times the design costs,” the IBS Center
for Management Research reported.
The initial results of the benchmarking showed that Xerox needed to increase its productivity by
18 percent annually to keep pace with the competitors. The executives at Xerox realized the severity of
the issue and dedicated a large amount of resources in developing Xerox’s own benchmarking model,
which included five stages and 19 steps. Figure 2 shows the details of the Xerox benchmarking model,
which are explained below:
• Planning: This phase involves identifying the process to be benchmarked, finding the competitor or
internal department that holds the best practice for the particular process, determining data indicators
and method for data collection, and collecting data.
• Analysis: This phase involves identifying performance gaps between the organization and the
benchmarking target and forecasting future performance levels for both companies.
• Integration: During this phase the benchmark team should present and communicate the findings to
management to commit resources to improvement projects and set goals for these projects.
• Action: This phase entails developing action steps for the improvement projects, carrying out the
action items, reviewing results, and adjusting the improvement process if goals are not met.
• Maturity: In this phase the benchmarking team reviews the results from the process that underwent
benchmarking and re-evaluates the company’s position versus its competitors. If the desired industry
leader position is acquired, benchmarking efforts can be started on a different process. Otherwise, the
team should go back to the action phase and adjust the improvement program.
THE XEROX WAY
Xerox also fully exploited the concept of generic benchmarking. It benchmarked L.L. Bean, a
sporting goods company, for their warehouse procedures, partnered with American Express to learn
their billing and collection process and studied Florida Power and Light’s quality process. In total, Xerox
benchmarked over 200 performance areas during the 1980s, Christopher Bogan and Michael English
wrote in Benchmarking for Best Practices: Winning Through Innovative Adaptation.
The benefit Xerox received through benchmarking was enormous. It improved customer
satisfaction by 40 percent, reduced defects by 90 percent and reduced labor costs by 30 percent. In
1992, Xerox became the first company to win all three prestigious quality awards, the Deming Award,
the Malcolm Baldridge National Quality Award and the European Quality Award.
CONCLUSION
First, a well-designed benchmarking team is important. This team should consist of personnel
with expertise in different areas to achieve maximum diversity of ideas.
Second, the whole organization should be committed to supporting the benchmarking effort,
from top executives to bottom level employees. This helps stimulate maximum efficiency in carrying out
action plans.
Third, when determining areas for benchmarking, the focus should be placed on critical success
factors of the company. For example, areas that are crucial to the company’s sales, customer
satisfaction and time-to-market should hold higher priorities.
Last, substantial research should be done when determining benchmarking partners. Most
likely, the areas determined for benchmarking will require multiple partners, as no one company can
have all the best practices. The process is meant to be time-consuming, and companies should not rush
into any decisions.
In short, the planning phase is the most important phase of the benchmarking process. Well-
executed planning phase action steps will build a solid foundation for success for the benchmarking
project.

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BENCHMARKING AT XEROX

THE XEROX WAY

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