"Trends and Strategies for Benchmarking and Best Practice Sharing" by Dr. Holger Kohl

Fraunhofer IPK, Berlin

6th International Benchmarking Conference

Trends and Strategies for Benchmarkingand Best Practice Sharing

Dubai, 06th March 2012

Dr.-Ing. Holger KohlDeputy Director Corporate ManagementHead of Department Business Excellence MethodsFraunhofer IPKBerlin - Germany


Agenda

3 Framework Benchmarking

The Fraunhofer Gesellschaft1

4 Diagnostic Benchmarking for SMEs

5 Benchmarking of Intellectual Capital

Benchmarking Introduction2


The Fraunhofer-Gesellschaft

The Fraunhofer-Gesellschaft undertakes appliedresearch of direct utility to private and publicenterprise and of wide benefit to society.

Our Customers:

Industry

Service sector

Public administration


The Fraunhofer-Gesellschaftin Germany

60 Institutes

München

Holzkirchen

Freiburg

Efringen-Kirchen

FreisingStuttgart

PfinztalKarlsruheSaarbrücken

St. Ingbert Kaiserslautern

DarmstadtWürzburg

Erlangen

Nürnberg

Ilmenau

Schkopau

Teltow

Oberhausen

Duisburg

EuskirchenAachen St. AugustinSchmallenberg

Dortmund

PotsdamBerlin

RostockLübeck

Itzehoe

Braunschweig

Hannover

Bremen

Bremerhaven

Jena

Leipzig

Chemnitz

Dresden

CottbusMagdeburg

Halle

Fürth

Wachtberg

Ettlingen

Holzen

© Fraunhofer

From a small association to the leading organization forapplied research in Europe

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49 54 59 64 69 74 79 84 89 94 99 04 09

3 20

135 700 1 25

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3

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0 19

19 1927 27

3337

47 47

58 60

49 54 59 64 69 74 79 84 89 94 99 04 09

Budgetin € (millions)

Number of institutes Staff


7 Groups:• Information and Communication Technology• Life Sciences• Microelectronics• Light & Surfaces• Production• Materials and Components - MATERIALS• Defense and Security

The Profile of the Fraunhofer-Gesellschaft

60 Institutes

18.500 Employees

ca. 1,9 billion EuroBudget


Fraunhofer IPK in Berlin

München

Holzkirchen

Freiburg

Efringen-Kirchen

FreisingStuttgart

PfinztalKarlsruheSaarbrücken

St. IngbertKaiserslautern

DarmstadtWürzburg

Erlangen

Nürnberg

Ilmenau

Schkopau

Teltow

Oberhausen

Duisburg

EuskirchenAachen St. AugustinSchmallenberg

Dortmund

PotsdamBerlin

RostockLübeck

Itzehoe

Braunschweig

Hannover

BremenBremerhaven

Jena

Leipzig

Chemnitz

Dresden

CottbusMagdeburg

Halle

Fürth

Wachtberg

Ettlingen

Holzen

Oldenburg

Freiberg

Paderborn

Kassel

GießenErfurt

Augsburg

Oberpfaffenhofen

Garching

Straubing

Bayreuth

Bronnbach

Prien Corporate Planning and Logistics

Sustainability Management

Management of Innovation Systems

Balanced Scorecard

Process Management Knowledge Management

Benchmarking

Corporate Management Management of Intellectual Capital


Fraunhofer Research Units Worldwide


Fraunhofer USA CentersHeadquarters: Plymouth, Michigan

Laser Technology (CLT)

Coatings and Laser Applications (CCL)

Experimental Software Engineering (CESE)

Manufacturing Innovation (CMI)

Molecular Biotechnology (CMB)

Plymouth, MINewark, DE

Digital Media Technologies

Sustainable Energy Systems (CSE) Boston,MA

College Park,MD

East Lansing, MI


Fraunhofer USA partners withleading Academic Institutions

Center for Coatings and Laser Applications Michigan State University,East Lansing, MI

Center for Experimental Software Engineering University of Maryland,College Park, MD

Center for Laser Technology University of Michigan,Ann Arbor, MI

Center for Manufacturing Innovation Boston University,Boston, MA

Center for Molecular Biotechnology University of Delaware,Newark, DE

Center for Sustainable Energy Systems Massachusetts Institute ofTechnology (MIT), Cambridge, MA


Representative Office Middle East

Since April 2007 in Dubai

Tasks:

Building up business relations andcooperations in the Middle East

Strategic priority regions:The United Arab Emirates and Egypt

Fields of technology:Energy, construction and logistics


Selected References in MENA CountriesCountry Project Name Customer

Development of the Dubai medium–term economic plan forthe period 2011-2015

Department ofEconomicDevelopment Dubai(DED)

Strategic Planning for the Dubai Institute of Technology(DIT) and Development of its Business Plan

Dubai Institute ofTechnology (DIT) /Dubai TechnoPark(TP)

Implementation Plans and Concepts for the Dubai Instituteof Technology (DIT)

Dubai Institute ofTechnology (DIT) /Dubai TechnoPark(TP)

Masdar is partnering with Fraunhofer, to build a facade testcentre within Masdar City, the low-carbon, low-energy citybased in Abu Dhabi

MASDAR City, AbuDhabi

Evaluation and International Benchmarking of the ArabicRepublic of Egypt’s Innovation System

Ministry of HigherEducation andScientific Research(MHESR)

Development of the long-term Innovation Plan for the ArabicRepublic of Egypt

Ministry of HigherEducation andScientific Research(MHESR)


Planning and Implementation of self-financing research eco-system in Dubai(> 100 Research Institutes)

In the first phase of establishment(2009-2015) , DIT will cover an area ofca. 1 sqkm²

For the second phase (2015+) anoverall area of > 5 sqkm² is planned

Overall Investment > 2 billion € Return on Investments < 10 years

Dubai Institute of Technology (DIT)


Dubai Institute of Technology (DIT)Location


Development of the Dubai Institute ofTechnology (DIT)

W ater

Logistics/Mobility Intell igent Transport Systems Global Logistics Logistic Management

Energy

Engineering Production Technology Sustainable Manufacturing Engineering Management

Renewable Sources of Energy Sustainable Fossil Fuels Energy Efficiency Management

Health Medical Technologies Biotechnology Health Management

Research Area M ajor Topics

W ater Desalination . W ater Treatment Integrated W ater Management

W

L

E

E

H

Univ

ersi

ties

Rese

arch

Inst

itute

s

DIT was founded in 2008 to support Dubai in becoming a leading place in the worldfor R&D activities. Fraunhofer IPK supported DIT in creating an Ecosystem thatsupports Science, Technology & Innovation to lead the region towards a value-basedsustainable knowledge economy.


Agenda







Benchmark

Participant 1“Best Practice”

P 3

Perf

orm

ance

P 2 P 4

Benchmarking is a systematic and – frequently – continuous processfor measuring own performance against Best Practicein order to identify improvement potential.

Potential forimprovement=

Common Definition of Benchmarking


Management Trends and Practices 2009

Source: Bain & Company: Management Tools and Trends 2009


Early applicationof the main idea

early 20th century

Henry Ford(assembly line)

First usage inother spheres1950 - 1970

Ohno Toyota(JIT)

Current BMDevelopment1979 - 1999

Xerox(BM as a mgmtconcept)

Historic milestones in Benchmarking


Early applicationof the main idea

early 20th century

Henry Ford(assembly line)

First usage inother spheres1950 - 1970

Ohno Toyota(JIT)

Current BMDevelopment1979 - 1999

Xerox(BM as a mgmtconcept)

Historic milestones in Benchmarking


Agenda







Prices of selected Working Material andLand within the GCC (2010 average prices)


Prices of selected Working Material withinthe GCC (2010 average prices)


International Comparison of Change ofContainer Traffic


Logistics Performance Index


LPI 2010 - Changes in the LogisticsEnvironment since 2005


Logistics Global InfrastructurePerformance Index


Agenda







Productivity Crisis at SMEs

Main Productivity-Problems in Germany

74% management failure

- 45% deficient planning and control

- 17% deficient surveillance and leadership

- 12% deficient communication

as well as

- deficient qualification

- IT problems

- deficient working moral

The Added Value at German SMEs could annuallybe improved by € 200 billion

Source: Czipin & Proudfoot Consulting GmbH


The BenchmarkIndexBenchmarking for SMEs

Analysis of the overall enterprise

worldwide largest SME-Benchmarking-Database(> 100.000 SMEs)

Validation of Data

Report and Plan for To do´s

Criteria for using theBenchmarkIndex

max. 100 Mio. €annual turnover

max. 500 employees all branches are

possible

Benchmarking-Criteria:

annual turnover number of employees location standard industrial

classification code(SIC-Code)

Finance-perspective

Innovation-perspective

Customer-perspective

Process-perspective


The balanced scorecard used in theBenchmarkIndex

Financials

Customers Processes

Learning &Growth

Business….Current performance ?Vision & goals ?Strategy ?Plans ?

Business….Current performance ?Vision & goals ?Strategy ?Plans ?


Is the company innovative ?

Customers

Financials

Innovation

Processes


UK

Ireland

GermanyNetherlands

Poland

CzechRepublic

Slovak Republic

PortugalSpainItaly

Greece

Austria

AustraliaSouth-Africa

USA

Singapore

South-Korea

BenchmarkIndexDistribution Worldwide 2011

Malaysia

China - Beijing

BiH

Lithuania

> 80.000 Financial Data> 25.000 Benchmarking-Data


Agenda







Why Measuring Intellectual Capital (IC)?

Microsoft Corporation 1978

Would you have invested? The organizational value

consists of tangible andintangible assets, which aremostly undocumented intraditional accountingsystems

Investors (Rating accordingto Basel II) demand plausibleevidence of corporate values.Companies in knowledge-intensive fields havedifficulties in proving theirvalue to investors.

Legal regulations commitorganisations to legitimatetheir intangible assets.(Austrian UOG, IAS 38, DRS12 and 5)


What is an Intellectual Capital Statement?

Definition Intellectual Capital Statement (ICS):An Intellectual Capital Statement is an instrument forthe focused description and development of theIntellectual Capital in an organisation.

It shows the interdependencies between theorganisational aims, the business processes, theIntellectual Capital (IC) and the business success anddescribes these elements by means of indicators.

Intellectual capital (IC) is defined as “existingknowledge of an organisation that contributes to futuresuccess” and is subdivided into three categories: Human Capital (HC), e.g. qualification, leadership, motivation

Structural Capital (SC), e.g. innovation, knowledge transfer

Relational Capital (RC), e.g. relations to customers, partners

D


The InCaS Framework: ICS Structural Model

Business environment(Possibilities & risks)

Business processesBusiness-

Strategyknowledge

Vision Businesssuccess

Knowledge processes

Otherresources

Initialsituation

Humancapital

Structuralcapital

Relationalcapital

Intellectual capitalExternal

impact

Measures

Organization


Standard IC Factors

Human Capital Professional Competence Social Competence Employee Motivation Leadership Ability

Structural Capital Internal Co-operation and Knowledge Transfer Management Instruments IT and Explicit Knowledge Product Innovation Process Optimisation and Innovation Corporate Culture

Relational Capital Customer Relationships Supplier Relationships Public Relationships Investor Relationships Relationships to Co-operation PartnersPatente


Main Results of the German ICS Pilot Project

Efficient method to start IC Management inSMEs.

Intellectual Capital Statements (ICS) wereimplemented in 50 SMEs from differentregions and sectors.

Guideline for ICS implementation inGerman and English language published,more than 100.000 copies distributed.

Software “Wissensbilanz-Toolbox”available since July 2006, more than 50.000copies distributed.

Financial Times and CommerzbankAward 2005 for one of the first 14 Pilot-SME

30 Roadshows for entrepreneurs with morethan 1.000 participants.

More than 500 users and trainers trained

www.akwissensbilanz.org


Fields of Use and Benefits of ICS

Diagnosis:ICS as an instrument for analysing strengthsand weaknesses of strategic IC factors.

Decision Support :ICS as an instrument for prioritising fields ofimprovement with highest impact.

Optimisation & Innovation:ICS as an instrument for implementingactions for organisational development.

Internal Communication:ICS as an instrument for enhancingtransparency and employees’ involvement.

Monitoring & Risk Management:ICS as an instrument for controlling strategicrisks and measuring success of actions.

Reporting:ICS as an instrument for communicatingcorporate value to stakeholders.


SC-4A

SC-1SC-2

SC-3

SC-4

SC-5SC-6

SC-1A

SC-3ASC-5A

SC-6A

SC-4B(Best in Class)

0%

7%

13%

18% 56% 93%

Average Assessment

Rel

ativ

e In

fluen

ce

SC-4

SC-4A

SC-4B (Best in Class)

no need for action

develope

analyse

stabilise

IC Management Portfolio (Sector Service, N=27)Structural Capital

SC-1 Internal co-operation and knowledge transferSC-2 Management instrumentsSC-3 Information technology and explicit knowledgeSC-4 Product innovationSC-5 Process optimisation and innovationSC-6 Corporate culture

Structural Capital

Intellectual Capital BenchmarkingFinding Best in Class Performers

SC-4A Company A

SC-4B Company B (Best inClass)

SC-4 Ø Sector Services


Impact of ICS on Financial Analysts’Assessment of Future Earnings Potential

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Positive Neutral

Neutral

Neutral NeutralNegative

Case A Case B

With intellectual capitalreport

Without intellectual capitalreport

With intellectual capitalreport

Without intellectual capitalreport

Positive Positive

Negative


Summary of Results inIC Benchmarking Report

Structural Capital - ViewYour assessment compared to your peer group based on standard IC Factors (N=42)

82,50

70,00

86,67

23,33

90,00

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Internal co-operationand knowdege transfer

Managementinstruments

Information technologyand innovation

Product innovation

Process optimisationand innovation

Corporate culture

Chart SC-1 SC-2 SC-3 SC-4 SC-5 SC-6Your Assessment 70,0 N.v. 86,6 23,3 90,0 82,5Your Rank 10/37 N.v. 4/27 25/25 1/31 6/31Upper result 86,67 90,00 91,67 92,50 90,00 95,00Upper Quartile limit 70,00 70,75 84,17 76,67 73,33 70,00Median 58,33 64,17 63,33 65,83 58,33 60,00Lower Quartile limit 46,67 50,42 55,83 52,50 43,33 55,00Lower result 23,33 25,00 30,00 23,33 23,33 34,50

Internal co-operation andknowledge transfer

(SC-1)

Management Instruments(SC-2)

Information technology andinnovation

(SC-3)

Product innovation(SC-4)

Process optimisation andinnovation

(SC-5)

Corporate culture(SC-6)


WissensbilanzenIntellektuelles Kapital erfolgreichnutzenund entwickeln

Hrsg.: Mertins, Alwert, HeisigBeiträge von über 20 namhaftenExperten!

BenchmarkingGuideline for Best PracticeComparisons

Eds.: Mertins, Kai; Kohl, HolgerMit Beiträgen namhafterExperten!

Thanks for Attention

Dr.-Ing. Holger KohlDeputy Director Corporate ManagementHead of Department Business ExcellenceMethodsFraunhofer IPKPascalstraße 8-910587 Berlin, Germany

[email protected] +49(0)30 / 390 06 168 +49(0)30 / 393 25 03http://www.benchmarking.fhg.dehttp://www.um.ipk.fhg.de

"Trends and Strategies for Benchmarking and Best Practice Sharing" by Dr. Holger Kohl

Education

logistics fraunhofer

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