Philippe Chereau: "Benchmarking the Best Is Sometimes a Matter of Survival"

Benchmarking is essential to corporate strategy. But when constantly observing others, how can a company avoid becoming too much like them? Is it really necessary to strive for innovation at all costs? Philippe Chereau, Professor of Strategy and Entrepreneurship at SKEMA Business School, explains how to learn from competitors without abandoning one’s own strategy. Part two of the interview.

The principle of benchmarking is to compare yourself with others. But how can a company differentiate itself from its competitors if it takes inspiration from them? Sociologists Paul DiMaggio and Walter Powell refer to mimetic isomorphism: according to them, by adopting changes inspired by other organizations, companies believe they are modernizing and differentiating themselves, but ultimately end up becoming more alike…

It is perfectly natural for companies to engage in imitation. Benchmarking is in fact grounded in performance feedback theory: firms assess their performance not only against their own past objectives, but also against that of their competitors. If they fall short of both their internal targets and industry performance, they will logically seek to understand why others are succeeding and adjust their organization or business model accordingly.

In mature industries, this often leads to the emergence of a dominant design: key success factors become largely the same for everyone. In this context, benchmarking the best is not a risk – it is a condition for survival. The objective is not to be different at all costs, but to achieve a sustainable level of performance.

By contrast, in high-growth industries, customer segments and strategic approaches are far more diverse. Benchmarking then serves to identify the practices of companies that are succeeding in the specific segment a firm is targeting. Imitation therefore does not necessarily produce uniformity; it can also become a lever for participating in a growth dynamic.

Even so, if companies within an industry become too similar, couldn’t this ultimately have negative consequences for the sector as a whole?

Yes, that perception can certainly arise, particularly in industries nearing the end of their life cycle. We have seen this, for example, in the media sector: when offerings become too similar and profitability declines, consumers may eventually lose interest. However, this phenomenon reflects the evolution of the industry itself more than benchmarking as such.

In fact, at the end of an industry’s life cycle, benchmarking becomes an even more strategic tool. Companies generally face two options: either they transform their business model and seek new sources of growth by observing firms that have already managed this transition successfully, or they remain in a declining market and focus on extracting the highest possible returns from it.

An industry never disappears overnight. Some firms exit the market—sometimes by choice—while others survive and can remain highly profitable by becoming the last strong players in that market.

Benchmarking then helps companies understand how these firms sustain their performance despite market contraction, enabling them to limit losses or, in some cases, even improve profitability.

Could benchmarking be compared to a form of legal corporate espionage?

In a way, yes. Benchmarking is a form of continuous competitive intelligence practiced by effective leaders. It encourages a strategic management approach to business operations – that is, the planning of resource allocation over time.

Over the past decade, some researchers have argued that strategic planning is dead. But this is a misunderstanding. Planning does not mean locking in the future for the next ten years; it means deciding how to allocate resources as effectively as possible, sometimes over a horizon of only six months.

You recently criticized this trend in an opinion piece, arguing that planning has fallen out of fashion.

Absolutely. Today, there is a great deal of emphasis on “strategy along the way” – the idea that companies should move forward using the resources they currently possess while seizing opportunities as they arise. But every new opportunity may require a different positioning, and therefore a different strategy – and potentially an entirely new business model.

Changing strategy can happen quickly. Changing a business model is far more time-consuming because it transforms the entire organization. It is like steering an ocean liner: deciding to change course is instantaneous, but the ship itself takes much longer to turn. Many companies fail because they change strategy without adapting their business model. They end up heading straight into the wall.

Leaders who genuinely practice strategic management use benchmarking continuously.

Today there is a growing trend encouraging entrepreneurs to launch businesses without benchmarking

Yes, there is clearly a fashionable belief encouraging entrepreneurs- whether students or experienced professionals – to “think outside the box” and pursue disruption at all costs. This is the logic behind Blue Ocean Strategy: creating an entirely new market.

However, experience shows that true disruption rarely succeeds.

When it does succeed, it offers a tremendous competitive advantage, but it also requires a great deal of time. Companies must educate the market, convince early adopters, and accept several years without profitability. Businesses such as Airbnb, Tesla and Meta all took a long time before becoming profitable, and they survived primarily thanks to massive external financing – something most entrepreneurs simply do not have access to.

Recent research also shows that it is often more effective to innovate within an existing market than to create a completely new one. In an established industry, the rules of the game are already known: companies understand which practices work and which business models are viable. This is precisely where benchmarking becomes valuable.

Ultimately, success depends not only on the idea or the product. When several pizzerias operate on the same street, the most successful ones are not necessarily those serving the best pizza, but those whose entire business model is coherent—from customer service and opening hours to pricing and organization. Benchmarking helps companies understand and master these best practices before seeking to differentiate themselves.

Young entrepreneurs tend to want to innovate at all costs.

Yes. I often tell entrepreneurs that innovation should never be pursued for its own sake. Take the example of La Mère Poulard restaurant at Mont-Saint-Michel. If a young chef decided to completely reinvent its historic omelette recipe, they might attract a new clientele—but they would most likely alienate the customers who came precisely to enjoy a familiar experience.

The key is therefore not to innovate at any cost, but to align the level of innovation with the company’s strategic posture – and then execute that choice consistently.

Let’s take the luxury industry. Chanel, for example, appointed a new creative director at the end of 2024. Is Matthieu Blazy free to do whatever he wants, or must he adapt his creativity to the brand’s heritage?

When a designer joins a house such as Chanel, they have to work within that heritage. However, while the strategy and overall positioning remain broadly unchanged, the way they are executed can evolve. The reason is simple: customers change. A new generation arrives with different expectations, which may require a different allocation of resources—greater investment in communication, customer experience, or retail—without fundamentally altering the brand’s DNA.

During a consulting assignment for a major luxury group planning to expand into China, we benchmarked its competitors. Two distinct business models emerged. Some brands focused on volume through franchise networks staffed by local salespeople trained in the brand’s values. Others, positioned in the hyper-differentiation segment, relied exclusively on wholly owned boutiques staffed by European employees to deliver an authentic Western luxury experience.

The benchmark revealed one essential point: companies can achieve comparable profitability while relying on very different business models. The objective is therefore not to imitate everyone else, but to choose a business model that is consistent with the company’s positioning and execute it effectively.

Does a benchmark have a limited lifespan? Once a company becomes a market leader, does it stop benchmarking?

That depends entirely on the stability of the industry. In highly regulated or oligopolistic markets, where the rules change very little, a thorough benchmark may remain relevant for several years. By contrast, whenever an external shock reshapes the competitive landscape – whether through technological innovation, geopolitical disruption, or structural market transformation – the benchmark must be completely reassessed. The company may have to change its strategy and, consequently, its business model.

Even dominant companies, however, must continue benchmarking. A company like Apple does not compare itself with “everyone.” It benchmarks only firms that share the same strategic positioning. Comparing Apple with Lenovo, for example, would make little sense. Although their financial performance may appear similar, their business models – premium differentiation versus a more standardized approach – are fundamentally different.

In practice, large corporations benchmark business unit by business unit. Each unit compares itself with competitors operating according to a similar strategic logic. This makes perfect sense because a multinational group typically manages a portfolio of different strategies, each of which must be implemented through its own corresponding business model.

Does benchmarking therefore demonstrate that no company can succeed entirely on its own?

To a certain extent, yes. Competition is healthy because it continuously pushes companies to improve – provided they benchmark the right “analogs.” Businesses grow by measuring themselves against the best-performing firms in their industry that have made strategic choices similar to their own.

Benchmarking therefore becomes a form of introspection. Companies compare themselves with the best not to copy them, but to understand where they stand and which practices can be adapted to their own context.

That said, every observed practice must be carefully evaluated. A competitor’s good idea is not necessarily transferable. It all depends on the company’s resources, culture, and, above all, its strategic positioning and growth choices.

This is why every benchmark should ultimately be assessed against three criteria: its consistency with the company’s vision and internal organization, its acceptability to stakeholders, and its operational and financial feasibility.

So benchmarking is ultimately an exercise in “know thyself,” grounded in both humility and ambition?

Absolutely.