INSTRUCTIONS
650 word paper
•
Introduction
•
Provide a critique of several tactics that can be used to engage employees in the organic
change process.
•
Describe how benchmarks are best used in the change process
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Conclusion
References:
Ajelabi, I., & Tang, Y. (2010). The adoption of benchmarking principles for project management
performance improvement. International Journal of Managing Public Sector Information and
Communication Techniques, 1(2), 1-8.
Carter, M. Z., Armenakis, A. A., Feild, H. S., & Mossholder, K. W. (2013). Transformational
leadership, relationship quality, and employee performance during continuous incremental
organizational change. Journal Of Organizational Behavior, 34(7), 942-958.
doi:10.1002/job.1824
Freytag, P. V., & Hollensen, S. (2001). The process of benchmarking, benchlearning and
benchaction. The TQM magazine, 13(1), 25-34.
Mento, A. J., Jones, R. M., & Dirndorfer, W. (2002). A change management process: Grounded
in both theory and practice. Journal Of Change Management, 3(1), 45.
A change management process:
Grounded in both theory and practice
Received (in revised form): 30th May, 2002
Anthony J. Mento
is a professor of Organizational Behavior at the Sellinger School at Loyola College. Dr
Mento has taught in executive programmes at such institutions as Aegon, Deutsche
Bank and the US Government as well as at Loyola.
Raymond M. Jones
is a professor of Organizational Strategy at the same university. Prior to academic life, he
was an executive at Occidental Petroleum Corporation. Dr Jones helped design and
taught in the executive programmes of this paper’s anonymous corporation.
Walter Dirndorfer
is a graduate of Loyola’s executive MBA programme. He is a project manager at a
defence contractor who requested anonymity as a result of increased security measures
after the events of 11th September.
KEYWORDS: change management, lessons learned, mind mapping, project
management, storytelling, metaphors
ABSTRACT There exists in the literature a number of change models to guide and instruct
the implementation of major change in organisations. Three of the most well known are
Kotter’s strategic eight-step model for transforming organisations, Jick’s tactical ten-step model
for implementing change, and General Electric (GE)’s seven-step change acceleration process
model. This paper introduces a framework that draws from these three theoretical models
but is also grounded in the reality of the change process at a Fortune 500 defence industry
firm. The purpose of the paper is to provide guidance to the practitioner leading an
organisational change process. This guidance is grounded in both theory and practice. The
guidance is further enriched by the demonstrated use of such methodologies as mind
mapping, lessons learned, storytelling and metaphors.
Anthony J. Mento
Professor of Organizational
Behavior, Sellinger School,
Loyola College, 4501 North
Charles Street, Baltimore,
MD 21210, USA
Tel: ⫹1 410 617 1507;
Fax: ⫹1 410 617 2005;
e-mail: amento@loyola.edu
MODELS OF THE CHANGE PROCESS
Three models have stood as exemplars
in the change management literature.
The first model is Kotter’s (1995)
eight-step model for transforming
organisations. Kotter’s model was
developed after a study of over 100
organisations varying in size and
industry type. After learning that the
majority of major change efforts failed,
Kotter couched his model as a way of
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avoiding major errors in the change
process. It is best viewed as a vision
for the change process. It calls
attention to the key phases in the
change process. Two key lessons
learned from the model are that the
change process goes through a series of
phases, each lasting a considerable
amount of time, and that critical
mistakes in any of the phases can have
a devastating impact on the momentum
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Mento et al.
of the change process. Kotter’s model
is aimed at the strategic level of the
change management process.
Jick (1991a) developed a tactical level
model to guide the implementation of
major organisational change. His ten-step
approach serves as a blueprint for
organisations embarking on the change
process as well as a way to evaluate a
change effort already in progress. He
notes that implementing change is an
ongoing process of discovery, with
thoughtful questions continually being
asked throughout the change journey.
Jick states that implementation is a blend
of both art and science. How a manager
implements change is as important as
what the change is. How well one does
in implementing a particular change
depends ultimately on the nature of the
change, on how sensitive the
implementers are to the voices in the
organisation, and on the recognition that
change is a continuous, not a discrete
process.
The seven-step change acceleration
process used at GE (Garvin, 2000: 131)
follows closely Lewin’s (1947) notion of
unfreezing, movement and refreezing as
the essential components of the change
process. In essence, the model focuses on
the leader’s role in creating urgency for
the change, crafting and communicating
the vision, leading the change, measuring
the progress of change along several
dimensions, and institutionalising the
change. Institutionalising the change, or
the refreezing, involves changes in the
organisational design factors, ie creating a
fit of systems and structures to enable
change. Kerr (quoted in Garvin, 2000),
one of the developers of the model,
refers to the series of seven steps as a
pilot’s checklist. According to Garvin
(2000) checklists are used by even the
most experienced pilots; yet they offer
no new insights. Instead, they make
existing knowledge more visible and
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accessible, ensuring that all essential steps
are followed. Discipline, not discovery is
the goal of the checklist.
The three models of the change
process are configured in Figure 1 as a
Mind Map. Mind mapping is a creativity
and productivity enhancing technique
that can improve the learning efficiency
and capability of individuals and
organisations (see eg Buzan, 1989; Mento
et al., 1999). The Mind Map visually
shows the intellectual roots upon which
we drew. Three plus years of practical
experiences, however, further shaped
these theoretical constructs with change
management at an anonymous defence
contractor (ADC). Because of increased
security measures after the events of 11th
September, the defence firm requested
anonymity after the write-up of the
projects had commenced. Thus drawing
lessons learned from both the theoretical
literature and a practitioner’s experience,
this paper provides guidance to the
leader of an organisational change
process. This guidance is grounded in
both theory and practice. Furthermore, it
demonstrates and is enriched by the use
of such methodologies as mind mapping,
lessons learned, storytelling and
metaphors.
COMPANY BACKGROUND
In the 1990s, the defence industry was
greatly affected by a shrinking defence
budget after the collapse of the former
Soviet Union. The reduced defence
expenditures caused a consolidation of
firms within the industry. The division
under study was acquired and became a
core business area for the acquiring firm
in the mid-1990s. Additional acquisitions
created a de facto market of internal
engineering organisations, all vying for
the same corporate resources to fund
both product improvements and new
product development. A critical
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A change management process
Figure 1
Three models of
the change
process
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Mento et al.
Figure 2 Visual
metaphors
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䉷 Henry Stewart Publications 1469-7017 (2002)
A change management process
imperative for the divisions internally,
and the company externally, was to learn
how to adapt more quickly to this
changing environment. The munificent
environment of the 1980s was being
replaced by a more parsimonious context
in the 1990s. Given this environmental
shift, it became imperative for ‘our’
division to have an effective change
management programme. Two of the
authors became involved with this
project, one very directly and one in a
consultative capacity.
The paper will explicate 12 steps that
are recommended when one wants to
implement change. These 12 steps are
based on lessons learned from the change
models discussed above filtered through
the actual experience that occurred
throughout the late 1990s. These 12
steps are shown holistically as visual
metaphors (Morgan, 1998; Davenport,
1999) in Figure 2. They are detailed in
what follows.
A FRAMEWORK FOR CHANGE
Step 1: The idea and its context
It is important as the starting point of a
change effort to highlight the idea for
what needs to be changed or what new
product should be introduced or what
particular innovation might bring a
significant lead over competitors. A
source for ideas for improving the
organisation can arise through creative
tension (Senge, 1990). Senge notes that
creative tension evolves from clearly
seeing where we want to be, our vision,
and telling the truth about where we are
now, our current reality. The gap
between the two generates a natural
tension. In an interview (Tichy and
Charan, 1989), Jack Welch similarly
notes a key characteristic of any leader is
to first face reality.
There is a key distinction between
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leading a change effort around ideas
developed through creative tension as
opposed to implementing fixes to current
organisational problems. When one
focuses on problem solving, the energy
to change comes from the desire to
escape an unpleasant status quo. With
creative tension, the energy for the
change comes from the vision, of what
one wants to create, juxtaposed with the
current reality. With problem solving, the
energy for the change diminishes as the
problems become less pressing and the
situation is improved. Senge notes that
the energy for change that drives the
problem-solving process is extrinsic
because it represents a way to escape
from the status quo. Change driven by
creative tension tends to be intrinsic.
The extrinsic/intrinsic orientation can
have a significant impact on the
consequences of the change effort. In the
context of a learning organisation,
extrinsic motivation for change produces
adaptive learning, whereas change driven
by creative tension yields generative or
new learning. Recognising change (the
need for, the idea of, and the context
thereof) is just the first step.
Step 2: Define the change initiative
Defining the change initiative tracks
closely with Jick’s step 1 of analysing the
organisation and its need for change. It is
useful at this point to define the roles of
the key players in all change efforts:
Strategists, implementers and recipients
(Jick, 1991a). Change strategists are
responsible for the initial work:
Identifying the need for change, creating
a vision of the desired outcome, deciding
what change is feasible, and choosing
who should sponsor and defend it. The
vision creation assists in the formation of
creative tension that can yield generative
learning. Change implementers are the
ones who make it happen. Their task is
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Mento et al.
to help shape, enable, orchestrate and
facilitate successful progress. Change
recipients represent the largest group of
people that must adapt to the change. In
the case of a new product development,
the end user is also a recipient who must
be convinced that the change will be
beneficial to them. If the initiative lacks
credibility with any of the targeted
audiences, the initiative is dead before it
even begins.
The actual case was a late-1990s
project that involved the development
of a tactical radio system for the
military. The idea was that the
revolution in the cellular market would
allow for the development of one
radio whose software could be
reprogrammed to mimic any of the
military’s current inventories of radios.
The change management team was
successful in defining the change and
getting the target audience behind
them.
Step 3: Evaluate the climate for
change
This step is similar to Jick’s step 1
(analyse the organisation and its need for
change) but with further elaboration.
Both change strategists and implementers
must implicitly understand how the
organisation functions in its environment,
how it operates, and what its strengths
and weaknesses are. Such understanding
will assist in developing alternative
scenarios that could be created by the
proposed changes. This will facilitate
crafting an effective implementation plan.
As part of this analysis, change masters
need also study the company’s history
with previous change. Although failures
of the organisation in implementing
previous change efforts do not forever
doom an organisation to future failure,
Dalziel and Schoonover (1988) suggest
that these patterns of resistance are likely
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to be repeated. In such situations, a
gradual non-threatening, and more
participative process is advocated to
break the failure syndrome.
The authors’ tactical radio project
experience reinforced the need for
assessing the company’s readiness to
support a change initiative. Two indices
were utilised to evaluate the readiness of
a company to change. One measure
evaluates the current organisational stress
of the company (see Beer’s matrix for
assessing the impact of a change effort;
Beer, 1980: 58). No product
development or improvement ever
occurs without someone else’s effort
being hindered. There is the stress of
everyone competing for the same
common resources — money, people and
sponsorship. A non-trivial hurdle for any
new initiative is not the competitor from
outside your company, but rather the
one you face down the hall. The second
measure is historical readiness to perform
new projects. Scepticism is very natural
when the change is a Big Hairy
Audacious Goal (the BHAG components
of a vision of effective companies, as
defined by Collins and Porras, 1996).
Patterns of the past are often hard to
break. It is helpful to champion a
concerted effort of using lessons learned
(Daudelin, 1996). Learning from past
development efforts will avoid making
errors in the planned change. Executives
and managers will continue with familiar
patterns of operations unless they are
taught a more retrospective approach.
The lessons learned methodology is
further discussed in step 12.
Compatibility of change goals with the
company’s Long-Range Strategic Plan
(LRSP) is a significant plus. To gain
support for the previously mentioned
radio project, it was important to tie into
ADC’s LRSP goal of expanding into
commercial airborne radars. The
division’s efforts were sold internally as
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being part of an integrated avionics sales
pitch. Most aircraft vendors want only
one company to install the avionics, of
which the radios and radar are the major
components. This programme was sold
on the idea that either the division could
continue to buy the radios from the
people against whom it was competing
or could build its own in-house radio.
This radar alliance created a silent partner
rather than a vocal opponent. Three
words to follow are to prioritise, focus
and align your efforts such that you build
an internal alliance(s) to support your
efforts.
Step 4: Develop a change plan
This step tracks closely with Jick’s step 7
— craft an implementation plan. At a
minimum, the plan should include
specific goals and provide detailed and
clear responsibilities for strategists,
implementers and recipients. A plan that
does not solicit input with respect to
both the content of the change as well as
the process of the change will surely
prove to be non-optimal. A proper
balance between specificity and flexibility
is key; too much specificity can lead to a
plan that does not mesh well with
evolving organisational needs.
When developing a plan for
implementation, one must tailor the
approach to the frame of reference
(FOR) of the individual participants. A
change will require the efforts of people
at many levels in the company with
many diverse roles. Each person will
have their own FOR that will affect
how resistant or open to the effort they
will be. Some of the basic framing
methods to consider are the hammer, the
carrot, the challenge and the prestige
(often useful with researchers). In all
instances, creating the implementation
plan is very much like planting seeds in
a garden. Groundwork needs to be done
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to discover what seeds will be most
fruitful or whether the ground needs to
be broken apart forcefully (the hammer)
before anything will take root and grow.
Many times, the approach also depends
on the needed speed of implementation.
Short-term pressures usually involve the
hammer, but this does not win people
for a long-term project. Listening to and
actively seeking the involvement of the
recipients of the change will prove
fruitful in performing many of the later
steps in the process. Getting people to
see a future return on their personal
investments today (carrot) is a successful
method in long-term projects. FOR
involves more than just deciding ‘Pay me
now or pay me later’. Rather, the proper
balance must be reached between the use
of power to ensure order compliance and
the use of time to build commitment.
Hill (1994) offers insights on these
issues when discussing power dynamics
in organisations. She notes that the
existence of organisational politics is a
way of life. Political conflict can be
viewed as a function of three variables
— diversity, interdependence and
competition for scarce resources.
According to Hill, both precipitating and
prevention factors exist in all
organisations with respect to political
conflict. The use of both positional and
personal power is needed to successfully
manage the interdependence between
various stakeholders in the modern
network organisations. Being cognisant of
the change time frame and one’s power
sources segues to the most critical
decision in implementing change with
the tactical radio project, the sponsorship
step.
Step 5: Find and cultivate a sponsor
This stage corresponds to both Kotter’s
(1995) notion of developing a powerful
guiding coalition and Jick’s (1991a) step
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Mento et al.
7 — line up political sponsorship. Kotter
is referring to the support of powerful
line executives who can help create a
critical mass of support for the change.
Jick tends to offer more specific
guidance. He urges the recruitment of
influential informal leaders and the
development of a commitment chart.
The commitment chart should help one
to: Identify target individuals or groups
whose commitment to the change is
needed; define the critical mass needed
to ensure the effectiveness of the change;
develop a plan to gain the commitment
of the critical mass; and create a
monitoring system to assess the
progress.
In the radio project, a single individual
played the role of the sponsor. The
sponsor is to be viewed as the person
that will legitimise one’s cause. The
strategy used to win and keep a sponsor
must be defined in the FOR. It must
emphasise the needs, expected levels of
pain for the organisation, clear goals and
a time frame. Points for possible exit
along the way must be indicated.
Sponsorship is easier to win and maintain
when the person believes their decision
is not irreversible. If the sponsor does
not show a real commitment, however,
the resistance from the recipients will be
significant, and one’s ability to acquire
the required resources will be more
complex. The sponsor needs to be
informed frequently and regularly of
progress in order to adapt their talk or
their walk to push the effort. He/she
must possess a sufficient amount of
organisation power and influence to
obtain the resources required for success.
The sponsor must express, model and
reinforce the initiative for the maximum
effect. He/she should be pushing to
generate strategic convergence both
vertically down and horizontally across
the organisation. Recruiting the
individual at the lowest level in the
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organisation to whom all the change
recipients report is often a good choice.
Implementation of the change occurs
from the top down, but the content for
the change must be developed from the
bottom. A sponsor at too high a level
may introduce unnecessary risk due to a
lack of direct involvement.
A second ADC project involved a
missile development programme. The
authors’ goal was for the sponsor to
support the replacement of the current
seeker portion of the missile with their
own department’s version. A sister
department within their division was
responsible for integrating the missile and
was presently purchasing the seeker
section from the major competitor. The
VP responsible for the entire division
was recruited as a sponsor. He had
influence over the current Program
Manager (PM). More importantly, the
VP changed how success was to be
measured for the PM. The measurement
for success was changed from the
number of units produced to the profit
per unit produced for the firm as a
whole. Without the actions of this
sponsor, the PM would have, most likely,
resisted change because there would have
been little reward for the increased risk
for making such a change. The sponsor
expressed, modelled and reinforced the
initiative. It was successful. In contrast,
difficulty with sponsorship occurred on
the AMC’s radio project. Sponsorship
was never secured high enough in the
organisation to obtain an alignment of
changing goals. While initially viewed
favourably, the new product development
activities were frozen when a potential
large-scale merger was announced. It was
never possible to change the FOR of the
negative risk/reward ratio engendered by
the proposed change at the time of the
proposed merger. The sponsor was not
sufficiently powerful to prevent the
freeze on activities.
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Step 6: Prepare your target audience,
the recipients of change
This stage of the change process is best
understood from the perspective of the
recipients of the change. This issue is
not clearly dealt with in any of the
other three models of the change
process. Jick (1991b) argues that change
is not possible unless, at the very least,
the change recipients accept the
change. Change is not possible unless
people are willing to change
themselves. Jick makes the cogent
points that change can be ‘managed’
internally by those who decide when it
is needed, and how it ‘should’ be
implemented. Actual implementation,
however, occurs only when employees
accept the concept of change, generally,
and of the specific change, internally.
It has been observed that it does
not matter whether the change is
perceived as being a positive or a
negative. Resistance is generated
because the status quo will be affected.
People are comfortable with knowns.
The introduction of a change, even for
the better, is an unknown. It adds
stress to people. Specific strategies for
dealing with resistance as well as the
advantages and disadvantages of each
approach can be found in Kotter and
Schlesinger (1979). They advocate the
use of focus groups, surveys and
suggestions to bring the issues of
resistance to the surface. Resistance to
change efforts is directly related to
how the situation is framed (Gabarro
and Kotter, 1993). Speaking with the
audience most affected by the change
gives immediate feedback and allows
the target to express their FOR.
Resistance is a natural emotion that
must be dealt with and not avoided. If
one can look at the positive aspects of
resistance to change, by locating its
source and motives, it can open further
possibilities for realising change.
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Hultman (1979) states: ‘Without
resistance to change, we are skeptical
of real change occurring. Without real
questioning, skepticism, and even
outright resistance, it is unlikely that
the organisation will successfully move
on to the productive stage of learning
how to make the new structure
effective and useful.’ Resistance to
change should have previously been
considered at Step 3, ‘Evaluating the
climate’.
Step 7: Create the cultural fit —
Making the change last
During the evolution of any change
effort, the change must became rooted to
the existing culture. In essence,
organisation members need to accept and
understand the fact that change is in
reality ‘how things are done around
here’. In Kotter’s step 8, failure to anchor
the change initiative with the corporate
culture is a grievous error. Step 5 in the
GE change model deals with getting
change started with concrete actions and
developing long-term plans to ensure
that change persists. ‘Changing systems
and structures’ (step 7 in the GE change
model) is concerned with altering
staffing, training, appraisal,
communication and reward systems, as
well as roles and reporting relationships,
to ensure that they complement and
reinforce change. A strategic initiative
that is congruent with the established
organisational culture has a high
probability of success. When a disconnect
exists between the corporate culture and
the change, culture can diminish the
potency of the change initiative. If a
conflict is expected, it should be
discovered during the climate evaluation
and the development of change plans
steps. An adaptation plan can be created
through a consistent vision, BHAGs and
development of clear linkage between
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strategic direction, core competencies and
corporate culture. When this occurs and
when the cultural changes are viewed as
an investment over time rather than a
quick fix or a change de jour, the
likelihood of success is significantly
enhanced.
Step 8: Develop and choose a change
leader team
In his ten-step tactical model for
implementing change, Jick (1991a) makes
the observation that, in large-scale
change, the leader plays a critical role in
creating the corporate vision. The leader
both inspires the employees to embrace
the vision, and crafts an organisational
structure that consistently rewards people
who focus their efforts on pursuing the
vision. In step 5 of the model, which
deals with supporting a strong leader
role, Jick takes the view similar to the
one learned in the change process at
AMC. A change leader team can better
provide the necessary leadership role than
can a single individual. A team can be
carefully assembled to maximise the
appropriate skill sets. Billington’s (1997)
review of the team literature found that
there are three essentials of an effective
team: Commitment, competence and a
common purpose. Commitment refers to
the achievement of specific performance
goals. Core competencies of team
members are a critical determinant of
how effective a team can be. The best
teams invest the time and the effort to
explore, shape and agree on their
purpose that is to be internalised both
individually and collectively. The team
must be self-energising and
self-motivating in believing they are the
agents of change. Diversity of skills and
opinions makes a team strong as long as
all share the vision. (Katzenbach and
Smith, 1993).
In our radio project, there were seven
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people who did the necessary design,
marketing and fieldwork. Team members
had to rely and trust that their
counterparts were equally committed to
the change goal. They did have highly
visible sponsorship. The sponsor would
drop by the development lab and check
the progress. He would bring sandwiches
for dinner as the team worked late at
night. He was available continually to
listen to their concerns. He knew they
all were motivated by the challenge (no
carrot or hammer) of creating a new
business area for the company. In all
change efforts, timing is critical.
Unfortunately, new business creation
ceased to be a high priority when the
LRSP shifted, owing to a proposed
large-scale merger. When anti-trust issues
subsequently killed the merger, new
business creation again became a part of
the LRSP. By that time the team was no
longer together. Nor were they anxious
to reassemble. They were no longer
motivated by the thrill of the challenge.
Step 9: Create small wins for
motivation
Creating short-term wins as a way to
motivate employees is critical during a
long change effort (Kotter, 1995). One
must plan for and create visible
performance improvements. Employees
involved in those improvements should
be recognised. Without specific
important and visible short-term wins,
people may give up and default to
change resister status. A change team
may be working on a BHAG that
requires a multi-year effort. It is very
difficult to keep the change leader team
self-energised if they do not see any
tangible benefits corresponding to their
level of effort. The longer and more
drastic the change, the more necessary it
is for small victories to be celebrated.
The further the goal is in the future, the
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more important are the achievable goals
that must be built as part of the roadmap
to success. It is human nature to work
on what we are measured against.
The constant battle for resources and
the continual need to update the sponsor
also drive the need for small victories.
Often, the sponsor is in fear of
over-commitment and must feel that
positive progress is occurring. The small
victories can be as simple as meeting a
design milestone and having a special
lunch or happy-hour event. The display
of appreciation by the sponsor goes far in
spawning more teamwork and opening
the lines of communication. It is often
through the informal small win
celebrations that new ideas will surface.
The authors’ project experience has
shown this to be true. New
opportunities originated from ideas that
were first surfaced at these informal
gatherings. In essence, the small win
events are transformed into brainstorming
events. The more informal setting
frequently results in the better mixing
and generation of ideas.
At ADC, the focus was on
communication with the sponsor and the
strategists and implementers who held
needed resources. Effective
communication with the sponsor had
been a recurring theme. The tides in a
company will constantly be changing and
so will the needs of the programme. As
an effort becomes larger, often the
resource power of the sponsor will be
exceeded, and the sponsor either needs
to draw additional support or to obtain
sponsorship themselves. Communicating
the message in the same way will not
have the desired affect at the different
levels of the organisation. It is important
to tailor each communication to the
FOR of the audience. The radio project
sponsor failed to communicate
strategically in his efforts to obtain
higher-up sponsorship at the time of the
proposed merger. The sponsor failed to
recognise that the proposed merger had
changed his superiors’ FORs. His
communication was no longer effective,
as it was not couched in terms of how it
would impact the merger.
Step 10: Constantly and strategically
communicate the change
The concept of constantly
communicating the change throughout
the organisation is adapted from Jick’s
step 9 — ‘Communicate, involve people,
and be honest’. From the very beginning
of the change effort, effective
communication is critical. The process by
which the change is introduced can set
the tone among recipients with respect
to acceptance or rejection. The goals of
the communication effort should be: To
increase the organisation’s understanding
and commitment to change to the fullest
extent possible; to reduce confusion and
resistance, and to prepare employees for
both the positive and negative effects of
the change.
Step 11: Measure progress of the
change effort
This step is in concurrence with step 6
of GE’s Change Acceleration Process,
which is Monitoring Progress. This
involves creating and installing metrics to
assess programme success and to chart
progress, using milestones and
benchmarks. The notion of assessing the
effects of change goes hand in hand with
developing a small wins strategy (step 7)
in order to motivate sustained effort for
the change effort. Schaffer and
Thompson (1992) caution companies to
avoid the ‘rain dance’ of change
improvement programme measurement
that entails a concentration on activities,
as opposed to tangible, measurable
results. They recommend focusing on
䉷 Henry Stewart Publications 1469-7017 (2002)
Vol. 3, 1, 45– 59
Journal of Change Management
55
Mento et al.
results-driven programmes that bypass
lengthy preparations, and instead aim for
quick measurable gains within a few
months. The key is to measure often
only those variables believed to be
logically related to important milestones
in the change effort. In psychometrics,
the idea is to avoid criterion deficiency,
ie assessing the wrong or a deficient
measure of the true concept one wants
to assess.
Change progress needs to be measured
at all stages of the programme, not
merely at the end. In a recent Business
Week article (Burrows, 2001), Hewlett
Packard’s CEO Carly Fiorina comments
that business planning is similar to sailing
in that ‘you are going to need to tack at
times’. Tacking is highly dependent upon
knowing in what direction the winds are
blowing. In creation of the cultural fit
and in creation of the proper motivation
when building the team, it was
recognised that the proper measurements
and reinforcements are critical to keeping
the programme on track. Measurement is
also concerned with all members
involved in the change effort being
crystal clear with respect to roles, goals
and expectations. It has been observed
that organisations too often forget to
have the proper tools or information
available to measure the amount of
progress achieved. Using an example
from the HP article, implementers were
successful in changing the business into
four organisations instead of 83 business
units. This, however, required a new
cost accounting system that lagged the
changes. The company was claiming a
certain level of financial benefit but was
not measuring the proper characteristics
to support this result. As the
measurement system came on-line,
managers were shocked to discover that
the system was suffering a lack of
financial accountability and transition
costs were somewhat out of control. In a
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Journal of Change Management
Vol. 3, 1, 45– 59
similar manner, many people measure
success on winning a contract. If the
contract win is done at a price too low
or under the assumption of too great a
technological risk, however, the contract
in actual financial terms is a loss with
subsequent cost over runs and late
deliveries.
Step 12: Integrate lessons learned
No other model of the change process
directly deals with the process of
generating a set of lessons learned
through reflection. At the root of
lessons learned is reflection. Reflection
is a personal cognitive activity that
requires stepping back from an
experience to think carefully and
persistently about its meaning through
the creation of inferences (Baird et al.,
1997; Kleiner and Roth, 1997; Seibert,
1999). Reflection, using a set of
techniques first suggested by Daudelin
(1996), brings to light insights and
learning themes (concepts) by directing
and guiding change strategists and
implementers to think actively about
the learning that is going on during
the change process itself. Reflection
then connects learning directly to job
performance and yields more relevant
personal learning. Reflection is an
extremely powerful way to learn from
experience. It is a major component of
individual learning, and individual
learning is the building block for
organisational learning. At the heart of
the reflection process is the use of
carefully thought out trigger questions.
Research has shown that people are
generally poor reflectors unless provided
with questions about their experience
as stimuli (Seibert and Daudelin, 1999).
Very useful is a set of questions
developed by the US Army in their
After Action Review Process (AAR),
as documented by Garvin (2000).
䉷 Henry Stewart Publications 1469-7017 (2002)
A change management process
These questions are: (1) What did we
set out to do? (2) What actually
happened? (3) Why did it happen? and
(4) What are we going to do next
time?
‘Those who forget the past are
condemned to repeat it’ is the quote that
often comes to mind with respect to
change efforts. At all times, not just at
the end of a project, effort needs to be
expended on a retrospective look at what
works and what did not. These efforts
allow for the continuous refinement of
the evolving process. Many of the lessons
learned should concentrate on the
problems and solutions of dealing with
both the formal and the informal
organisation. Organisation design factors
such as policies, procedures,
compensation and organisational structure
are just the tip of an iceberg when
evaluating your organisation.
Documenting the cultural norms,
unwritten rules of work, the political
system and informal leaders will serve
you well in your use of lessons learned.
The best companies are learning
organisations that will not forget, but
rather learn from the past.
CONCLUSION
The use of metaphorical storytelling
(Botkin, 1999; Jensen, 2000) based on
the theme of a ship embarking on a
perilous journey facilitates the summation
of the change stages encountered at the
authors’ firm. While preparing to embark
on the challenging voyage, one needs to
do certain things to improve the chances
of success. It has to be clear in one’s
mind why one is taking this trip (The
idea and its context). Next, one needs to
have a fairly good understanding of
exactly what one intends to accomplish
by taking this voyage (Define the change
initiative). It is always necessary to have
some idea of what the weather will be
䉷 Henry Stewart Publications 1469-7017 (2002)
Vol. 3, 1, 45– 59
like when one intends to begin the
journey (Evaluate the climate for change).
Prior to departure, one must have an
accurate set of nautical charts and sailing
plans that will help to overcome
obstacles and barriers in the person of
pirates and rocks (Develop a change plan).
Similar to Columbus, before embarking
on the long voyage, one needs to line
up a powerful and benevolent sponsor
(Find and cultivate a sponsor). A sound
step to take next would be to work with
the selected crew in clarifying roles, goals
and expectations that they need to be
aware of during the duration of the
voyage (Prepare the target audience, the
recipients of the change). A further step is
to make sure that the ship is capable of
accomplishing the task and that the route
chosen, given the expected storms and
bad weather, is not beyond the structural
integrity of the ship itself (Create the
cultural fit — making the change last).
Along these lines, one of the most
important preparatory steps is to make
sure the carefully chosen crew are
committed, competent and share the
same goal of a safe and exciting journey.
People should work together like a
well-oiled piece of machinery (Develop
and choose a change leader team). There
must be specific milestones or goals to
reach during the journey to provide
feedback with respect to how well and
how fast one is sailing toward the
objective. Also one should stop in
various ports of call to celebrate one’s
good fortune in arriving safely and to let
off steam after being at sea and alone for
great lengths of time (Create small wins for
motivation). It is important to let one’s
sponsor know on a regular basis how
well one is doing, and to share with the
crew why one is taking the actions one
is taking, as well as taking the time to
listen and learn from the suggestions of
the crew (Constantly and strategically
communicate the change). As the voyage
Journal of Change Management
57
Mento et al.
continues over months and years, it is
necessary to consider the progress made,
whether one is indeed going in the right
direction or whether one has been
blown off course. It is necessary to
ensure also that the morale of the crew
is positive and that the route and plan
are flexible enough to accommodate
changes in sponsors, and in the weather
(Measure progress of the change effort).
Finally, at the end of the journey, an
after action review should be conducted
so that knowledge gained through
reflection is captured and disseminated
among other ship captains and crews
throughout the organisation who might
be embarking on similar perilous
journeys through the unforgiving
environment (Integrate lessons learned).
All 12 steps are not to be regarded
only sequentially, but also as an
integrated, iterative process to enable
change. Business and engineering are
about growing, changing, adjusting and
improving the accepted norms and
procedures today to make the future
brighter. Engineering is often referred to
as turning dreams into reality. But one
fails to realise that miracles often do not
occur overnight and that there is actually
a progression that must be painfully
followed. The thought for the 21st
century change leaders is that they must
be astute decision makers and marketers,
trusted innovators, agents of change,
preachers of difficulties, master
integrators, enterprise enablers,
technology stewards and knowledge
handlers. They will need first-rate
managerial, technical, interpersonal and
scientific skills. Complex systems and
issues will need to be embraced and they
must reach the decisions about the
amounts of time, money, people,
knowledge and technology they are
willing to commit to meet what should
be a common end goal that was well
communicated and accepted all around
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Vol. 3, 1, 45– 59
the company. Hopefully, the authors’
change model will provide some
much-needed guidance along these lines
and will help to ensure that their voyage
will be successful.
REFERENCES
Baird, L., Henderson, J. C. and Watts, S.
(1997) ‘Learning from Action: An Analysis
of the Center for Army Lessons Learned’,
Human Resources Management, 36(4),
385–395.
Beer, M. (1980) Organization Change and
Development: A Systems View, Goodyear,
Santa Monica.
Billington, B. (1997) ‘The Three Essentials of
an Effective Team’, Harvard Management
Update, Reprint No. U9701A, Harvard
Business School Press, Boston.
Botkin, J. W. (1999) Smart Business: How
Knowledge Communities can Revolutionize
your Business, Free Press, New York.
Burrows, P. (2001) ‘The Radical: Carly
Fiorina’s Bold Management Experiment at
HP’, Business Week, cover story, 19th
February.
Buzan, T. (1989) Use Both Sides of Your Brain,
3rd edn, Plenum, New York.
Collins, J. C. and Porras, J. I. (1996) ‘Building
your Company’s Vision’, Harvard Business
Review, 74(5), 65-77 (Reprint No. 96501).
Dalziel, M. M. and Schnoover, S. C. (1988)
Changing Ways: A Practical Tool for
Implementing Change Within Organizations,
American Management Association, New
York.
Daudelin, M. W. (1996) ‘Learning from
Experience Through Reflection’,
Organizational Dynamics, 24(3), 36–48.
Davenport, T. (1999) Human Capital,
Josey-Bass, San Francisco.
Gabarro, J. J. and Kotter, J. P. (1993) ‘HBR
Classic — Managing your Boss’, Harvard
Business Review, 72(3), 150–157.
Garvin, D. (2000) Learning in Action: A Guide
to Putting the Learning Organization to Work,
Harvard Business School Press, Boston.
Hill, L. (1994) Power Dynamics in
Organizations, Note 9-494-083, Harvard
Business School Press, Boston.
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A change management process
Hultman, K. (1979) The Path of Least
Resistance, Learning Concepts, Austin, TX.
Jensen, W. (2000) Simplicity, Perseus,
Cambridge, Mass.
Jick, T. (1991a) Implementing Change, Note
9-191-114, Harvard Business School Press,
Boston.
Jick, T. (1991b) Note on the Recipients of
Change, Note 9-491-039, Harvard Business
School Press, Boston.
Katzenbach, J. R. and Smith, D. K. (1993)
The Wisdom of Teams, Harvard Business
School Press, Boston.
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Learning in Action: A Guide to Putting the
Learning Organization to Work, Harvard
Business School Press, Boston, 131.
Kleiner, A. and Roth, G. (1997) ‘How to
Make Experience your Company’s Best
Teacher’, Harvard Business Review, 75(5)
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Kotter, J. P. (1995) ‘Why Transformation
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‘Choosing Strategies for Change’, Harvard
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Lewin, K. (1947) ‘Group Decision and Social
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and E. Hartley (eds) Readings in Social
Psychology, Holt, Rinehart & Winston,
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(1999) ‘Mind Mapping in Executive
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390–407.
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Interview with Jack Welch’, Harvard
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Journal of Change Management
59
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individual use.
International Journal of Managing Public Sector Information and Communication Technologies (IJMPICT)
Vol. 1, No. 2, December 2010
The Adoption of Benchmarking Principles for
Project Management Performance Improvement.
Ifeoluwa Ajelabi and Yinshang Tang
Informatics Research Centre, Henley Business School,
University of Reading, United Kingdom.
i.k.ajelabi@reading.ac.uk, y.tang@henley.reading.ac.uk
ABSTRACT
Effective management of projects is increasingly becoming important for organisations to remain
competitive in today’s dynamic business environment. The use of benchmarking is widening as a
technique for supporting project management. Benchmarking is the search of best practices that will lead
to superior performance in some business activity. Benchmarking has been recognised as one of the most
responsive evaluation tool for performance improvement within organisations by creating a culture of
continuous improvement from learning best management practices. This paper presents how
benchmarking principles can be applied to improve project management process and performance. The
benefits and challenges of benchmarking management of projects are also discussed.
KEYWORDS
Project management, Benchmarking, Evaluation
1. Introduction
Project management over the years has been a successful tool for implementing change in
organisations.
Organisations have reported the benefits derived from using project
management tools and methodologies to implement change. So much so, opportunities are
constantly being explored to make it a more effective tool [10]. One of such opportunities is the
ability to transform or improve project’s performance using the management lessons learnt
from project to project. Benchmarking has been argued to be an efficient tool which makes
significant improvement to performance. Past research, has shown the difference in
performance between leading organizations and average ones in performing particular activities
[11]. Benchmarking against leading companies has resulted in significant success for average
organizations in improving their performance [21]. This paper continues this inference and
suggests that similar improvements in performance of managing companies that occur from
benchmarking can also be achieved by benchmarking projects. This paper explores this in four
sections. First, existing definition of benchmarking and the general purpose of benchmarking
are reviewed, indicating benchmarking process. The second section of the paper, will explain
the different types of benchmarking and how it can be applied to the management of projects.
Next, will discuss what to benchmark and the competencies to look out for and how these
competences are measured and evaluated. Finally, the challenges of benchmarking management
of projects will be discussed.
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International Journal of Managing Public Sector Information and Communication Technologies (IJMPICT)
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2. What is Benchmarking?
Benchmarking is a technical core of Total Quality Management (TQM), a subject characterized
by the culture of continuous improvement. It is a process of identifying superior performance
or practices of other organizations or projects (to keep in the context of this paper) and to
internalize such knowledge for competitive advantages [1]. Benchmarking is a learning
process to find better ways of doing things. It is a management process that requires constant
updating whereby performance is regularly compared with the best performers that can be
found. The key philosophy of benchmarking is the ability to recognise one’s shortcomings and
acknowledge that someone is doing a better job, learn how is it being done and implement it in
one’s field of business[2]. Benchmarking is not about copying or imitating, rather it is about
adapting lessons learnt from the best for the development of an improved organizational or
project performance [5].
Benchmarking , has endued many different definitions since it was first pursued by Xerox
Corporation, the International Benchmarking Clearinghouse (IBC) Design Steering Committee
concluded and represented the consensus after consulting about 100 companies in 1992. They
defined benchmarking as: “A systematic and continuous measurement process; a process of
continuously measuring and comparing an organisation’s business processes against business
process leaders anywhere in the world to gain information which will help the organisation take
action to improve its performance [3].”
The definition of benchmarking reveals that benchmarking is not only a measurement process
that results in comparative performance measure, it also describes how exceptional
performance is attained. The exceptional performance is identified by measures of performance
indicators, which are called benchmarks and the activities that facilitate the exceptional
performance called enablers [4]. Enablers explain the reasons for the superior performance,
therefore benchmarking studies are conducted with the support of the two components when
they are practically connected. That is, benchmarks can be achieved by attaining enablers.
In order to transform benchmarking analysis requirement to the above two types of output,
many models and methods have been evolved from the original ten-step four-phase model
developed by Xerox, to explain and guide the benchmarking process. Most of the approaches
are valid and they all take their root in an iterative benchmarking process proposed by W.E
Deming. The model of benchmarking process is famously referred to as the “Deming cycle”
and it includes a minimum of four phases “Plan –Do-Action-Check” as illustrated in Figure 1
below.
IV
I
Adapting, Improving,
and Implementing
Findings
III
ACT
PLAN
CHECK
DO
Analyzing the Data
Planning the Study
II
Conducting the Research
Figure 1: Deming’s Benchmarking Cycle
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International Journal of Managing Public Sector Information and Communication Technologies (IJMPICT)
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3. Types of Benchmarking
Benchmarking is about comparing processes, practices or procedures. Processes may be
compared within an organisation against internal operation or with partners outside the
organisation. There are several ways to classify types of benchmarking, depending on the focus
of the benchmarking process. The types of benchmarking reflect “what is compared” and “what
the comparison is being made against”. The former involves comparisons of performance,
process and strategic benchmarking; while the latter involves internal, competitive, functional
and generic comparisons [5].
Type
Performance
Benchmarking
Process Benchmarking
Strategic Benchmarking
Internal Benchmarking
Competitive Benchmarking
Functional Benchmarking
Generic Benchmarking
Definition
It is the comparison of performance measures for the purpose of
determining how good an organisation is in comparison to others
It is the comparison of methods and processes in an effort to
improve the processes in an organization
It is the comparison of an organisation’s strategy with successful
strategies from other organisations to help improve capability to
deal with a changing external environment.
It is the comparisons of performance made between department/
divisions of the same organisation solely to find and apply best
practice information.
This is the comparison made against the “best” competition in
the same market to compare performance and results.
It is comparisons of a particular function in an industry. The
purpose of this type of benchmarking is to become the best in the
function.
It is the comparison of processes against best process operators
regardless of industry.
Table 1: Types of Benchmarking
Types of benchmarking are rather complementary than being mutually exclusive. They can be
chosen and combined for a specific purpose [7]. Their combination is based on the relevance
of the type of benchmarking to a specific context. Table 2 below, shows the combination of the
types of benchmarking designed by Bhutta and Huq [7] to yield better results.
As can be seen from the combinations, some types of benchmarking are more relevant than
others in particular contexts. For instance, an internal benchmarking is given a low relevance
in relation to strategic benchmarking, as a comparison of strategy with oneself would give little
or no improvement. However, competitive benchmarking is given a high relevance in relation
to strategic benchmarking, as it would reveal a lot of information and provide many ways for
improvement.
What
is
what to benchmark
Benchmarked
Against
Competitive
Functional
Internal
Performance
Medium
High
Medium
Process
Medium
Low
High
Strategic
Low
High
Low
Table 2: The matrix of different forms of benchmarking [15]
Generic
Low
High
Low
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International Journal of Managing Public Sector Information and Communication Technologies (IJMPICT)
Vol. 1, No. 2, December 2010
Watson [9] also discusses benchmarking as a developing science [9]. Figure 2 shows how the
first generation of benchmarking evolved following from Camp [4]. This generation of
benchmarking called “Reverse Benchmarking” was product oriented, and focused solely on the
comparison of products characteristics, functionality and performance with similar products.
The second generation “Competitive Benchmarking” involved the comparisons of processes
with those of competitors. Third “Process Benchmarking” allowed for information sharing
from companies outside their industry. Evaluations targeted companies with recognised strong
practices independent of the industry and competitors. The fourth generation “Strategic
Benchmarking”, involves a systematic process of evaluating alternatives, implementing
strategies and improving performance by understanding and adapting successful strategies from
external partners who partners who participate in an ongoing business alliance. The fifth
generation “Global Benchmarking” is an emergence of a global application of benchmarking,
thus dealing with globalization of industries themselves [1]. Some extensions of the model are
beginning to emerge as Kyro [8] claims to foresee a sixth and seventh generation called
“benchlearning” and “network benchmarking” respectively.
Figure 2: Benchmarking as a developing evaluation tool [23].
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4. Benchmarking in Project Management
The primary driver behind any benchmarking initiative including that of project management is
improvement. Maylor[12] described the process for project management as having four phases
as illustrated in Figure 3 below. The concept behind the “Develop the process” phase is of
continuous learning and improvement, by evaluating project progress, learning from its
experience and using the information to improve the management process of future projects.
The improvement process is divided into two parts 1) learn by doing and learn before doing.
Tools such audit reviews, lesson learnt and scorecards are used to evaluate the project progress.
Benchmarking on the other hand bridges “Learn by doing” and “Learn before doing” with the
objective of learning and improving the management process of future projects.
Figure 3: Four phases of project lifecycle [12].
4.1 What to Benchmark?
As mentioned earlier, benchmarking is a method of assessing the quality of a project’s
management and learning from it for the management of future projects. Based on literature,
the project manager is responsible for orchestrating the management progress of a project [5,
13]. The project manager therefore should posses certain skills and competency to achieve
excellence in managing projects. These excellence skills and competency are measured for
classification as best practice. Competence is defined as the knowledge, skills and personal
attributes that lead to superior results or meet performance standards [16].
The two well known project management bodies of knowledge (APM and PMI) identify the
primary competencies an effective project manager should possess. Although more explicitly
stated by PMI[22], the core competencies include, scope, schedule management, cost
management, human resources, communication management, risk management, quality and
contract management.
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4.2 How is the competency measured?
The management of a project process is mostly measured by the success of the project. The
success criteria used to measure the management of a projects has been studied by various
researchers over the years. Primal success criteria have been an integrated part of project
management theory given that early definitions of project management includes the “Iron
triangle” success criteria- cost, time and quality [14]. Atkinson in his paper stated that “as a
discipline project management has not really changed or developed the success measurement
criteria for project management in almost 50 years”. He argues that the “Iron triangle” does not
indicate how excellent or otherwise the management of a project has been. He further argues,
the iron triangle is trying to match two best guesses (time and cost) and a phenomenon (quality)
correctly [14]. Therefore evaluating against these criteria is flawed. To meet the urgent need of
modernizing the out of date success criteria to measure project management success, Atkinson
suggested the “Square root”, which he believed would create a more realistic view of the
management of projects [5]. The square root is a combination of quantitative and qualitative
objectives. He combines the “Iron triangle” into one criterion and added three other criteria,
Information systems, Organisational Benefits and Stakeholders Benefits. Belout [20] in his
attempt to measure project management success suggested the achievement of project goals
(effectiveness) and the maximisation of output for a given output (efficiency) as the success
criteria to judge the management of a project.
5. Challenges of Benchmarking in Project Management.
Benchmarking the management of projects has its own challenges. First is, projects by
definition are unique entities with a stipulated lifecycle. Therefore, there is little commonality
between projects or the differences between projects are so great that separating between
differences from the similarities is almost impossible. The unique difference between projects
is reflected in the way they are managed, making it difficult to translate the best management
practices between one another.
Second, the lack of an objective way to measure the subjective metrics of project management
success. For example, Atkinson’s project management success criteria [14], the success
criterion “benefit to organisation” includes some subjective attributes, such as increased profits,
organisational learning, reduced waste and improved effectiveness. Logical as these success
criterion attributes are, the lack of an objective way to evaluate them remains a challenge.
Third, is the difficulty in determining the true causes of project performance. Even if successful
project managers are asked what they have learned, do we really believe that they can identify
what has worked and what has not, what works under what project conditions but not others.
Fourth, project success factors have a significant effect on the management of a project. These
project success factors have being researched and numerated by various authors [17, 18, 19].
These factors are critical to the success of a project and form the basis of the management
evaluation criteria. This poses a challenge for project management benchmarking as the
underlying influences of comparable projects must be similar.
Benchmarking of project management most times highlights the difference in performance
without giving the reasons for the difference. Barber [5] in her paper highlighted that the
difference in performance identified by benchmarking has more to do with the difference in
methods of measuring and tracking project performances, rather than the difference in
management of projects.
Furthermore, benchmarking is learning from external sources and then applying the knowledge
“before doing”. Benchmarking therefore, can only address problems that have previously been
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International Journal of Managing Public Sector Information and Communication Technologies (IJMPICT)
Vol. 1, No. 2, December 2010
encountered by the compared project partner. It is quite difficult for benchmarking to provide
feedback to assist current project experiencing difficult management problems because
benchmarking can be a time consuming effort and unlikely to provide any solution at the latter
stages of the project.
Despite these challenges, benchmarking management of project has its benefits. It is a
continuous process that allows for management of projects to measure their performance
against the best practice and identify areas for improvement.
6. Conclusion
This paper has examined how benchmarking principles can be applied to evaluate and improve
project management performance. Benchmarking an outward looking evaluation tool, compares
the performance of project management activities against the performance of project
management conducted by leading benchmark partners. By benchmarking projects, maximum
benefits are derived from projects. Not only from the outcome of the project but information
gained from measuring the effectiveness of the project management process against best
practice can be used to identify areas of improvement for managing future projects. In
addition, project management best practice across an organisation can be identified, providing
an opportunity for corporate learning.
REFERENCES
[1]Ramabadron R., James W. Dean Jr and
James R.Evans.(1997), Benchmarking and Project
Management: a review and organizational model. Benchmarking: An international Journal, 4(1), 47-58.
[2]American Productivity & Quality Center (APQC) (1996), Emerging Best Practices in Knowledge
Management, American Productivity & Quality Centre, Houston, TX.
[3]American Productivity & Quality(APQC) (1992)Planning, Organizing, and Managing Benchmarking
Activities: A User’s Guide, APQC, Houston, TX.
[4]Camp, R.(1989) Benchmarking: The search for industry best practices that lead to superior
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8
The TQM Magazine
The process of benchmarking, benchlearning and benchaction
Per V. Freytag, Svend Hollensen,
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Techniques
The process of
benchmarking,
benchlearning and
benchaction
Introduction
Per V. Freytag and
Svend Hollensen
To meet this challenge many firms have
launched a variety of initiatives to improve
their strategic and operational performance.
One such strategic management technique is
``benchmarking''.
This article discusses the process of
benchmarking, potentials, and limitations of
the technique. A seven stages model will be
introduced and discussed.
Altogether benchmarking, benchlearning
and benchaction is a strategy for
implementing changes in organizations. It is a
way of measuring operations against similar
operations in order to improve business
processes. The purpose of benchmarking is to
improve products and processes in order to
meet customer needs better. The linkage of
the business process to customer needs is
critical to effective benchmarking.
Benchmarking is also a way of measuring
your firm's strategies and performance against
``best-in-class'' firms, both inside and outside
your own industry. The aim is to identify best
practices that can be adopted and
implemented by the organization with the
purpose of improving company performance.
This is the benchlearning-process. The actual
implementation is taking place in the
benchaction process.
Usually, benchmarking is carried out within
the same industry. However, benchmarking is
often carried out between organizations that
have a similar process but belong to different
industries. By benchmarking the process
across industries, the organization sometimes
achieves greater results than by sticking to its
own industry. Benchmarking a process across
industries causes people to challenge some of
the assumptions that are part of the problem.
Benchmarking as a tactical planning tool
originated with Xerox Business Systems in the
late 1970s. Japanese affiliates were selling
better quality copiers for less than the
manufacturing costs of similar products in
the USA. One of the first experiments on
benchmarking took place in the production
Many firms face still fiercer competition in
global markets. The declining
competitiveness of these firms is reflected in
decreasing market shares and poorer business
performance. But as General Sun Tzu wrote:
If you know your enemy and know yourself, you
need not fear the result of hundred battles.
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The authors
Per V. Freytag and Svend Hollensen are at the
University of Southern Denmark, Sùnderborg, Department
of Marketing, Denmark.
Keywords
Benchmarking, TQM, Improvement,
Organizational change
Abstract
Benchmarking is more than giving marks. It is a way of
measuring a firm's strategies and performance against
"best-in-class'' firms, both inside and outside the industry.
The aim is to identify best practices that can be adopted
and implemented by the organization with the purpose of
improving a company's performance. The process of
benchmarking is divided into seven phases: which
functions to benchmark; importance of each subject area;
whom to benchmark against; gather the benchmarking
information; identify performance gaps; how to learn from
the ``best-in-class'' (benchlearning); and implementation
of the changes (benchaction). Benchmarking,
benchlearning and benchaction is not a one-time project.
It is a continuous improvement strategy and a change
management process. Thus benchmarking is a part of the
total quality management (TQM) system, and it relates
well to other TQM initiatives.
Electronic access
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The current issue and full text archive of this journal is
available at http://www.emerald-library.com/ft
The TQM Magazine
Volume 13 . Number 1 . 2001 . pp. 25±33
# MCB University Press . ISSN 0954-478X
25
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Per V. Freytag and Svend Hollensen
logistics area (warehousing, packing, and
shipping).
We define the three keywords as:
(1) Benchmarking. Benchmarking is an
independent efficiency raising process
based on:
.
analysis of the existing performance
levels of the company unit or object
under examination and comparison
with other organizational levels; and
.
identification of the causes for
performance ``gaps'' as the basis for
optimum reconfiguration of
corporate activities (adapted from:
Krutten, 1999).
(2) Benchlearning. The process of learning
from the ``best in class'' with the purpose
of integrating these best practices in all
organizational levels of the company.
(3) Benchaction. The actual implementation
of the planned changes in the organization,
e.g. in the form of upgrading personal
skills through training and development
activities.
usually share some common technological
and market characteristics. Often, they also
concentrate on specific functions. Because
there are no direct competitors involved, the
benchmarking partners are more willing to
contribute and share. Disadvantages can be
scheduling companies that are already
overflowed by benchmarking and therefore
reluctant to participate in benchmarking.
Competitive benchmarking
This type of benchmarking is used against
direct competitors. Performed externally, its
objective is to compare companies offering
competing products, services or processes in
the same markets. With direct competitors,
information is not easy to obtain. Public
domain information is the most accessible. If
some key customers in the market have
experience with more suppliers (competitors)
they may be willing to give their evaluation of
these suppliers. But this method often
involves high costs.
Process (generic) benchmarking
Here, similar procedures at dissimilar
companies are benchmarked. Although it is
considered relatively effective it is difficult to
implement. Process benchmarking requires a
broad conceptualisation of the entire process
and a thorough understanding of procedures.
As indicated above, the concept has also
been referred to as generic benchmarking
because it is not restricted to any industrial
structure or market. As a contrast to process
benchmarking, data benchmarking is a way of
comparing quantitative measures (key
figures) with competitors or with members of
an industry group (key average figures). In
data benchmarking the team is not interested
in the underlying processes.
Types of benchmarking
There are different types of benchmarking
depending on what the company wants to
benchmark.
Internal benchmarking
Benchmarking against internal operations is
one of the simplest forms of benchmarking
since most companies have similar functions
inside their business units. The immediate
benefit comes from identifying the best
internal procedures, and subsequently
transferring them to other parts of the
organization. Companies which implement
internal benchmarking alone often retain an
introverted view, unless they use internal
benchmarking as a baseline for external
benchmarking at a later time.
The process
Benchmarking and the following
benchlearning/benchaction usually involve
seven main stages:
(1) Decide what functions of the business to
benchmark by evaluating the KSFs (key
success factors).
(2) Evaluate the importance of each subject
area (KSF).
(3) Identify against whom to benchmark
(determine benchmarking partners).
(4) Gather the benchmarking information.
Industry (functional) benchmarking
Industry (functional) benchmarking is the
measurement of various facets of the
company's functional operations and
comparison of these to similar measurements
from other companies (often industry leaders)
within the industry group. Many industry
groups publish comparative data either
privately (for members of the group) or
publicly or both. The benchmarking partners
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(5) Compare ``best-in-class'' with the firm's
own performance (identify performance
gaps).
(6) Implications of benchmarking-results,
benchlearning: how can the firm's skills/
processes be improved by learning from
the ``best-in-class''?
(7) Benchaction: implementation of the
changes.
performance can be reduced to two basic
factors: the value that customers perceive in
the product/service offered, and the costs of
creating this value. The term KSF is,
therefore, reserved for the skills and resources
that have a direct impact on customers'
perceived value and/or relative costs
compared to the competitors.
The KSFs cover a wide range of very
different factors (production factors,
organizational factors, managerial factors,
marketing factors, etc.), but some of them are
more critical to the firm's performance than
others. A few key functions demand that
``things must go right'' for the management
goals to be attained. Therefore, these
functions must be given greater importance in
the overall quantitative measurement of
business performance.
Another reason for a different weighting is
that KSFs are not the same for all firms. They
are market- and firm-specific. Hence, the
weights of the different factors (KSFs) must
reflect these different conditions.
How do we find the KSFs?
Brainstorming is one method of generating
a number of ideas for KSFs.
Another possibility is to ask customers
about their criteria when choosing suppliers.
The respondent could start specifying some
success criteria and describing how main
competitors differ with regard to these
criteria. The interviewer could keep asking
``what is the reason for . . .'' or ``why do you
prefer . . .''. This technique may provide a list
of potential KSFs, and an estimate of the
subjective strengths of a causal relationship.
An important question is to what extent such
a general model can be used, and to what
degree the model needs refinement for use in
all companies operating under different
market conditions. Some markets are
characterized by being very international and
others by being more local with regard to the
actors' operation on the markets. The markets
also differ regarding the type of goods and
services sold in the markets. On some markets
the items are very standardized, and on others
they are customized. A benchmarking model
should be able to cope with such differences
in a manner that offers useful guidance to the
companies.
In the following we will further develop the
six steps involved in the benchmarking
process.
Decide what functions of the business to
benchmark by evaluating the KSF
Key success factors (KSFs) are the limited
number of the firm's subject areas in which
results, if they are satisfactory, will ensure
successful competitive performance for the
organization.
In benchmarking projects the starting point
is identification of subject areas within which
improvements are critical. The criteria for
selecting the subject areas are:
.
they should be of strategic importance to
the business; and
.
improvements in the areas will make a
significant contribution to overall
business results.
Evaluate the importance of each subject
area (KSF)
Here, the purpose is to narrow down the
number of subject areas (from the
brainstorming stage) to a few areas in which
benchmarking might have a considerable
impact. After this screening the subject areas
are prioritised and may be given importance.
It is wise to direct attention to a small number
of areas, particularly in the early stages of
benchmarking when knowledge of the
technique needs to be developed concurrently
with the process itself. One must always bear
in mind whether the subject area is really
important to the success of the company.
Difficulties in agreeing on this might signal a
too narrow focus. Then, a more strategic
First, one must identify the strategic intent of
the business or process which is to be
benchmarked. Many times the source of this
information is the company's mission
statement.
Several writers have argued that a key
success factor is a statement on a causal
relationship between actual success in
business performance and causes of success
(Grunert and Ellegaard, 1992). The
immediate cause of differences in
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Per V. Freytag and Svend Hollensen
overview could extend the focus to include
suppliers, employees and customers.
entirely new perspective will be found (Sheth
and Sharma, 1997). The partner could be
found:
.
within your industry at the same location;
.
at other locations but in the same
industry;
.
in a different industry and the same type
of company;
.
in a different type of company within the
same industry; or
.
completely outside the industry.
Identify against whom to benchmark
(determine benchmarking partners)
The following two questions provide the
starting point in the search for suitable
partners:
(1) Who/what is better (at a particular
process) than us?
(2) To whom is this process a key to survival?
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Essentially, benchmarking partners might be
found in two locations:
(1) internally; and
(2) externally.
Some of the criteria in selecting external
partners are:
.
The partner should be measurably better
than ``our'' company.
.
Avoid direct competitors where possible,
unless markets are exclusive or processes
are general and affect the whole industry.
Internal partners
Most organizations start with internal
comparisons wherever possible. This makes a
great deal of sense since there are relatively
few hurdles to overcome in terms of language,
culture and data availability. Hierarchies are
understood and communication channels
generally exist which makes it easier to visit
someone. The benchmarking teams can
develop familiarity with their own work
process before they look at what others are
doing. In addition, internal benchmarking can
produce some relatively quick returns.
However, there comes a point when it is no
longer possible or desirable to improve against
internal performance because more drastic
changes are needed. Although external
comparisons may seem more threatening they
have a higher probability of producing
significant returns, discovering innovations or
changing paradigms. Typically, it may also
take longer to identify and implement
improvements to existing processes if external
comparisons are sought.
When seeking ``best'' practice it should be
clearly defined what is understood by ``best''
for the company.
The task of identifying data sources for
selecting possible external benchmarking
partners is a challenging one. These data
sources could include:
.
business newspapers and magazine
articles;
.
trade journal articles;
.
industry and professional associations;
.
books on well-run companies; and
.
consultant accounting firms who work in
your industry.
When likely candidates are found, some
preliminary research should be performed to
help narrow the list.
Some potential partners may not have
much information available. In these cases,
they are normally dropped from the list. The
ones remaining will have sufficient public data
so that the benchmarking team can make a
final decision as to which organization they
want to approach as their external
benchmarking partner.
External partners
Identifying potential external benchmarking
partners is another step in the research phase.
The best is always to develop a list of potential
benchmarking partners. Some potential
partners may not be interested, have not got
the time, or do not wish to share information.
Although benchmarking practice stresses
using the ``best in class'' for our benchmark, it
often has to be tempered with other factors,
such as co-operation, costs, time, location,
and established relationships.
To find a likely external benchmarking
partner is not easy. The broader the horizon
of search the greater the likelihood that an
Gather the benchmarking information
The data collection team needs to have
uniform collection methods (the same forms
seeking the same data in the same way). Be
sure to specify the data at the proper
aggregation level: specify the data in terms of
units and intervals to make the comparison
and the analysis phase easier. It is good
practice to mail any questionnaires prior to
your visit in order to provide time for the
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Per V. Freytag and Svend Hollensen
benchmarking partner to prepare the data in
the format requested.
As pointed out earlier, the purpose of
benchmarking is to improve operations. The
same purpose also applies to the
benchmarking project itself. Use the site visits
as a way of improving the data collection
design and method. Also realize that the
world is not standing still during this exercise.
Build in robustness in the questionnaire and
the benchmarking plan because things will
change before the project is complete.
Almost everything requires give and take.
Information on companies' internal and
external relations is usually considered
confidential. Often, giving information to
others, especially competitors, is considered
disloyal and often results in dismissals. Thus,
most companies have the deep-rooted
attitude that information about them must be
withheld. However, when it comes to
information about other companies, with
whom one has a co-operative or even a
competitive relation, things are quite
different. Here, the interest in gathering
information about others is large.
Sometimes, it may be better for the
company to hide its own intentions or
behaviour, as it is usually impossible to be
entirely invisible in a market, and hiding one's
intentions may facilitate the company's
competitive opportunities.
In a way benchmarking to a certain degree
contrasts with the idea that discretion is of the
utmost importance. Thus, a high degree of
openness is basically required, even if the
demands vary depending on the chosen
benchmarking approach.
When choosing a benchmarking approach
where you benchmark yourself against another
company, which is more effective at a certain
process, a high degree of willingness and
openness towards co-operation is required if
such a project shall succeed in getting any
further than the problems of collecting valid
and reliable information.
Another type of benchmarking is used when
collecting certain information about
companies in a certain industry and across
industries in order to be able to analyse both
within and across industries. Here, the
benchmarking depends on how well chosen,
how extensive, and how reliable the pieces of
information are.
Compare ``best-in-class'' with the firm's
own performance (identify performance
gaps)
The specific company's competitive position is
always unique. The company's internal
make-up of the resources, competencies, etc. is
special, customer demands and requests vary
and competitors act differently. Of course,
these and other factors create the need to
compare the results of a benchmarking process
with one's own unique company situation.
On the other hand, companies more or less
tend to compete in selling comparable
products and services. Detailed knowledge of
other companies' actions and successes may,
therefore, be of the utmost importance for
your own company's competitiveness.
In benchmarking where the starting point is
a wide spectre of variables it is most important
to choose an expedient basis of the evaluation
of your own situation in relation to the other
parties in the database.
Thus, comparisons within and across the
industries are said to have their own strengths
and weaknesses (see Table I).
Within a data benchmarking concept it is
easier, ceteris paribus, to diagnose relevant
benchmarks within industries than across
industries because of the concept's general
application. However, at a superior level it is
perhaps possible to study who is overall best
in class, although maybe the comparison is
not to be used directly. Specific competitive
conditions such as patents, dominating
market positions, special relations, etc. may
make comparisons difficult.
In order to reduce the risk of carrying out
irrelevant benchmarks, one must, however,
study not only the industrial differences.
Basically, your problem is to define your
competitive arena (Day, 1984) or when you
try to define expedient segments (Bonoma
Table I Advantages and disadvantages of benchmarking within and
across industries
Benchmarking within the industry Benchmarking across industries
Advantages: similarity of the
competitive situation eases the
transfer of experience
Drawbacks: the perception of the
competitive situation is too narrow
which makes it difficult to catch up
with other companies as regards
competition
29
Advantages: inspiration to improve
processes, etc. In which areas are
the advantages best and/or easy to
realize
Drawbacks: it is difficult to transfer
experience across industries.
Perhaps eliminate focus from the
obvious problems in the company
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and Shapiro, 1984) where the industry
appears not to have the best basis for
understanding the situation.
Therefore, in order to assess whether other
companies are successful or not it may be a
good idea to characterize their competitive
position.
A company's competitive position can be
described in several ways depending on the
aspects one wants to expound. Within the
industry, the most well known model for
this is Porter's five-forces (Porter, 1985).
Across industries there are more approaches
where Jackson (1985) differentiates between
always-a-share and lost-for-good markets,
the first being characterized by the parties'
poor co-operation, isolated transactions
and primary price competition, the latter
being characterized by the parties' close
co-operation, repeated transactions and the
fact that the price is not the only decisive
factor.
In addition to this, companies' competitive
relations may be more or less internationally
influenced. This may have consequences as to
how comprehensive the competition is, and as
to the type of management and tools used,
etc.
Thus, in order to evaluate who did best in
the competition, one cannot only compare
within and across industries but must also
study the companies' competitive position
more generally. Therefore, if a competitor's
competitive position is fundamentally
different (see Table II) you can ask yourself if
you really compete with the competitor and if
so, there is a need of trying to change your
own competitive position. Table II also makes
sure that you do not make too extensive
conclusions based on analyses across
industries.
Thus, performance rating is very much
based on the same starting point, and you
make sure that the one you compare yourself
with does not have a total different starting
point (as in, for example, an allowance of 10m
in a 100m race, etc.).
In other words, the idea of involving the
competitive parameters, which are considered
to dominate the market and its
internationalization, is, at the early stage of
diagnosis, to try to avoid one of the most
important benchmarking inadequacies.
Dealing with a gap in the competitor's
performance level, as shown in the gapanalysis (Figure 1), the chance of the
comparison being valid is greater.
All in all, this means that we are dealing
with a process of more stages. The starting
point is taken in the business excellence
model (http://www.efqm.org/), which forms
the overall framework for the understanding
of the company and its processes. However,
the fact being that the companies' competitive
position may differ fundamentally, it can
be inconvenient to study best in class
performance within the industry or across
industries alone.
Therefore, when starting up a benchmark
project it is important that you ensure that
you do not choose inappropriate companies
to benchmark against. However, if at a
later time you discover that you have chosen
a bad starting point it may be an extensive
process to reverse the development to the
better.
Implications of benchmarking results,
benchlearning: how can the firm's
skills/processes be improved by learning
from ``best in class''?
Despite the many pitfalls in the
implementation of the benchmark itself, this
is only the first step towards an improvement
of the company's performance. Companies
can be considered as being a set of routines
and practices. It is characteristic that the
routines and practices have been developed
Figure 1 Gap analysis
Table II Powers in the market: degree of internationalization and type of
competitive parameters
Degree of
internationalization
Competitive parameters
Price dominating
More parameters
Low
High
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Per V. Freytag and Svend Hollensen
and acquired throughout a longer period of
time and that the awareness of their
importance often is limited.
A central challenge is trying to understand
the link between individual and organizational
learning better.
Companies consist of individuals. The
individuals are meant to carry out specific
tasks. This performance, however, is not
independent of the individuals. Hence, an
individual can strongly influence how specific
tasks are carried out. Thus, the performance
varies indefinitely and may cause innovation.
A way of understanding the individual's
task performance can be to distinguish
between a task-based and a non-task-based
behaviour (Webster and Wind, 1972). The
first only relates to the way the individual
carries out the tasks assigned to him due to
his/her position in the company, i.e. what
kind of fractional functions and operations are
immediately related to the performance of a
certain task. However, other things than the
task itself influence the performance. Due to
his/her educational level, his/her experience,
his/her role perception, etc., the individual
will define the specific fractional function and
operation in his/her own characteristic way.
One could say that the type of task and the
individual's perception of it determine how
the task is carried out.
Usually, one distinguishes between
different types of learning processes by
dividing into double- and single-loop
learning. The latter is about learning routines,
which within the given frameworks can be
refined to the last decimal. Double-loop
learning, however, also deals with tasks to be
carried out, but with the individual being
open towards new ways of doing this. In other
words, the individual does not hold in
advance a specific procedure as to the task
performance.
Therefore, when you transfer experience
from other companies you must understand
two processes that are closely related. First,
the task itself and the functions and
operations in question. The individual who
carries out the task will, however, influence
the specific performance. In addition to this,
one must consider the aspects regarding
learning in connection with the task
performance. Some tasks are held to a specific
procedure where the power lies in the ability
to obtain a high degree of performance
perfection without bringing any innovative
31
elements to the performance. Such
procedures are relatively easy to transfer, the
fact being that the biggest problem often is to
be permitted to observe the performance.
On the other hand, it can be most difficult
to see which elements are attached to a
certain process or the like which can be
altered or re-combined. Double-loop learning
is certainly about the ability to learn new
things. You do not ensure a successful
implementation by trying to transfer a certain
process. One must seek the key to
understanding creative processes as such in
the non-task-based behaviour and, therefore,
in the individual's personality. Thus, focus on
understanding other companies' ability to
carry out tasks is transferred to the company
itself, to the human resources in the company
and the ability to use these.
Benchaction: implementation of the
changes
The actual implementation of the planned
changes could take place through developing
skills of the employees, training and
organizational development. A workforce
with superior skills is a primary force of
sustainable competitive advantage (Olian
et al., 1998). Hence, training and
development become the critical means for
creating readiness and flexibility for change
across all organizational levels.
Implementation often takes time to be
successful. It is crucial for the benchmark
concept that the company sees the results of
the benchmarking process only as a snapshot
of the situation. It is up to the management
and the employees to change it.
Changes are not always easy to undertake.
In particular, changes of habits and routines
are often time consuming and complicated.
In an organization these habits and routines
have developed over a long period of time.
Therefore, n...
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