Philippe Chereau: "Benchmarking is essential for every business"

Go ahead and tell Philippe Chereau that benchmarking is pointless! The Professor of Strategy and Entrepreneurship at SKEMA Business School will happily explain exactly why you’re wrong. And he makes a compelling case: at a time of intensifying competition and rapidly changing markets, comparing your practices with those of the best, identifying opportunities for improvement and anticipating changes in your industry are essential to staying competitive. Here is the first part of our interview with him.

Who should entrepreneurs benchmark themselves against when starting a business?

Against the highest-performing companies within their own strategic group – their “analogs” – meaning businesses that have made similar positioning and growth choices. These companies provide the most relevant benchmarks because their performance usually reflects a particularly coherent business model. The purpose of benchmarking is not to copy their decisions, but to understand how they mobilize and align their resources to execute their strategy.

In mature markets, key success factors tend to be relatively stable. This is known as a dominant design: the best-performing firms have all mastered the practices that constitute the real ticket to entry and long-term success. Benchmarking helps identify these shared best practices before deciding where meaningful differentiation is possible.

By contrast, in fast-growing markets where key success factors are still emerging, benchmarking serves not only to observe leading practices but also to determine whether to follow the existing trajectory or forge an entirely new one.

Should companies also benchmark themselves against weaker performers?

Absolutely. Benchmarking is not just about studying the best. It is equally valuable to examine comparable companies that perform less well. These businesses – the “antilogs” – often reveal what should be avoided.

When two companies pursue similar strategic choices but achieve very different results, the explanation usually lies in inconsistencies within their business models: their value proposition, revenue model, cost structure, organization, sales system, or resource allocation.

Top performers highlight best practices, while weaker performers expose the pitfalls to avoid. The real value of benchmarking lies in understanding why certain business models consistently generate superior performance over time.

Who should companies avoid benchmarking themselves against?

The principle of benchmarking is straightforward: compare like with like.

A company with 200 employees generally has little to gain from comparing itself directly with a multinational corporation whose resources, constraints, and objectives are fundamentally different. However, if its ambition is to become a mid-sized company or expand internationally, it can benefit from studying larger firms that have successfully completed that transition.

The choice of benchmark companies should therefore always depend on the question being asked. For example, a highly innovative manufacturing SME may seek to understand how similar firms improve profitability or optimize asset utilization by prioritizing different types of innovation – product versus process innovation, incremental versus radical innovation, and so on. Benchmarking should always be aligned with the trajectory the company intends to pursue.

Are some strategies better than others?

There is no universally superior strategy. What distinguishes high-performing companies – those that achieve profitable growth – is above all the quality of how they execute their strategic choices.

Benchmarking makes it possible to analyze this execution by examining the business model, i.e. the operational translation of strategy. It looks at the value proposition, target customers, revenue model, cost structure, management, R&D, production, marketing, sales, and human resources.

The objective is not to collect a list of good ideas, but to understand how successful companies coordinate and allocate their resources to build a coherent whole. It is this coherence that sustainably explains their performance.

Can there be different – and even contradictory – best practices?

Best practices always depend on the strategy being pursued. A company whose priority is innovation will not organize its resources in the same way as one focused on cost leadership or operational efficiency.

However, within the same strategic group, the highest-performing companies generally share common characteristics. Benchmarking aims precisely to identify the practices that enable firms to master the key success factors of a given business model.

The goal is therefore not to create a universal checklist of best practices, but to understand how leading companies build a coherent business model before deciding where differentiation is both possible and desirable.

Are there different types of benchmarking?

The underlying logic remains the same. Benchmarking consists of analyzing the business model of the companies chosen as reference points.

It goes beyond comparing products or services by examining all the components that enable a company to execute a particular strategy.

In practice, the process begins by measuring the economic performance of the selected companies – their ability to generate profitable growth, whether through a margin-driven competitive advantage supported by differentiation, or through a volume-driven advantage based on efficient asset utilization. The next step is to identify the organizational choices that explain this performance. In this way, benchmarking becomes a genuine strategic management tool, designed to realign a company’s own business model with the most effective practices observed.