Presentation on "Trends and Strategies for Benchmarking and Best Practice Sharing" by Dr. Holger Kohl during the 6th International Benchmarking Conference organized by Dubai Quality Group from 6-7 March 2012 at Al Bustan Rotana Dubai

1. 6th International Benchmarking Conference
Trends and Strategies for Benchmarking
and Best Practice Sharing
Dubai, 06th March 2012
Dr.-Ing. Holger Kohl
Deputy Director Corporate Management
Head of Department Business Excellence Methods
Fraunhofer IPK
Berlin - Germany
 Fraunhofer IPK, Berlin

2. Agenda
1 The Fraunhofer Gesellschaft
2 Benchmarking Introduction
3 Framework Benchmarking
4 Diagnostic Benchmarking for SMEs
5 Benchmarking of Intellectual Capital
 Fraunhofer IPK, Berlin

3. The Fraunhofer-Gesellschaft
The Fraunhofer-Gesellschaft undertakes applied
research of direct utility to private and public
enterprise and of wide benefit to society.
Our Customers:
 Industry
 Service sector
 Public administration
 Fraunhofer IPK, Berlin

4. The Fraunhofer-Gesellschaft
in Germany Itzehoe Rostock
Lübeck
Bremerhaven
Bremen
Hannover Berlin
Potsdam
 60 Institutes Braunschweig
Magdeburg
Teltow
Cottbus
Oberhausen Halle
Dortmund Schkopau Leipzig
Duisburg
Schmallenberg Dresden
St. Augustin Jena
Aachen
Euskirchen Chemnitz
Wachtberg Ilmenau
Darmstadt
Würzburg
Erlangen
St. Ingbert
Kaiserslautern Fürth Nürnberg
Saarbrücken Karlsruhe
Pfinztal
Ettlingen
Stuttgart
Freising
Freiburg München
Holzen Holzkirchen
Efringen-
Kirchen
 Fraunhofer IPK, Berlin

5. From a small association to the leading organization for
applied research in Europe
17 150
Number of institutes 58 60
Staff
12 800
47 47
9 200
37
7 980
33
6 390
27 27
3 477
19 19
2 213
1 675
1 250
9
700
135
20
0 1
3
49 54 59 64 69 74 79 84 89 94 99 04 09 49 54 59 64 69 74 79 84 89 94 99 04 09
Budget
1617
in € (millions)
1069
710
580
350
180
0 0,2 2 8 17 52 95
49 54 59 64 69 74 79 84 89 94 99 04 09
© Fraunhofer

6. The Profile of the Fraunhofer-Gesellschaft
 60 Institutes 7 Groups:
 18.500 Employees • Information and Communication Technology
 ca. 1,9 billion Euro • Life Sciences
Budget • Microelectronics
• Light & Surfaces
• Production
• Materials and Components - MATERIALS
• Defense and Security
 Fraunhofer IPK, Berlin

7. Itzehoe Rostock
Lübeck
Fraunhofer IPK in Berlin
Bremerhaven
Oldenburg Bremen
Hannover Berlin
Potsdam
Teltow
Braunschweig
Magdeburg
Cottbus
Oberhausen Paderborn Halle
Dortmund Schkopau Leipzig
Duisburg Kassel
Schmallenberg Dresden
St. Augustin Erfurt Jena Freiberg
Aachen Euskirchen Gießen Chemnitz
Wachtberg Ilmenau
Corporate Management Darmstadt
Würzburg Bayreuth
Erlangen
 Management of Intellectual Capital St. Ingbert
Bronnbach
Kaiserslautern Fürth Nürnberg
 Management of Innovation Systems Saarbrücken Karlsruhe
Pfinztal
 Benchmarking Ettlingen
Stuttgart Straubing
 Balanced Scorecard Freiburg Augsburg
Freising
Garching
 Corporate Planning and Logistics Holzen
Oberpfaffenhofen
München
Prien
 Knowledge Management Efringen-
Kirchen
Holzkirchen
 Process Management
 Sustainability Management
 Fraunhofer IPK, Berlin

8. Fraunhofer Research Units Worldwide
 Fraunhofer IPK, Berlin

9. Fraunhofer USA Centers
Headquarters: Plymouth, Michigan
Sustainable Energy Systems (CSE) Boston,
MA
Manufacturing Innovation (CMI) East Lansing, MI
Plymouth, MI
Newark, DE
Coatings and Laser Applications (CCL)
Laser Technology (CLT) College Park,
MD
Molecular Biotechnology (CMB)
Experimental Software Engineering (CESE)
Digital Media Technologies
 Fraunhofer IPK, Berlin

10. Fraunhofer USA partners with
leading 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 of
Technology (MIT), Cambridge, MA
 Fraunhofer IPK, Berlin

11. Representative Office Middle East
 Since April 2007 in Dubai
Tasks:
 Building up business relations and
cooperations in the Middle East
 Strategic priority regions:
The United Arab Emirates and Egypt
 Fields of technology:
Energy, construction and logistics
 Fraunhofer IPK, Berlin

12. Selected References in MENA Countries
Country Project Name Customer
Development of the Dubai medium–term economic plan for Department of
Economic
the period 2011-2015 Development Dubai
(DED)
Strategic Planning for the Dubai Institute of Technology Dubai Institute of
Technology (DIT) /
(DIT) and Development of its Business Plan Dubai TechnoPark
(TP)
Implementation Plans and Concepts for the Dubai Institute Dubai Institute of
Technology (DIT) /
of Technology (DIT) Dubai TechnoPark
(TP)
Masdar is partnering with Fraunhofer, to build a facade test MASDAR City, Abu
Dhabi
centre within Masdar City, the low-carbon, low-energy city
based in Abu Dhabi
Evaluation and International Benchmarking of the Arabic Ministry of Higher
Education and
Republic of Egypt’s Innovation System Scientific Research
(MHESR)
Development of the long-term Innovation Plan for the Arabic Ministry of Higher
Education and
Republic of Egypt Scientific Research
(MHESR)
 Fraunhofer IPK, Berlin

13. Dubai Institute of Technology (DIT)
 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 of
ca. 1 sqkm²
 For the second phase (2015+) an
overall area of > 5 sqkm² is planned
 Overall Investment > 2 billion €
 Return on Investments < 10 years
 Fraunhofer IPK, Berlin

14. Dubai Institute of Technology (DIT)
Location
 Fraunhofer IPK, Berlin

15. Development of the Dubai Institute of
Technology (DIT)
DIT was founded in 2008 to support Dubai in becoming a leading place in the world
for R&D activities. Fraunhofer IPK supported DIT in creating an Ecosystem that
supports Science, Technology & Innovation to lead the region towards a value-based
sustainable knowledge economy.
Res earch Area M ajor Top ics
 W ater Desalination .
W W ater  W ater T reatm ent
 Integrated W ater M anagem ent
Research Institutes
 M edic al Technol ogi es
Universities
H H ealth  B iotechnology
 Health Management
 Renewable S ourc es of Energy
E E nergy  S ustainable Fossil Fuels
 E nergy Efficiency M anagem ent
 P roduction T echnol ogy
E E ngineering  S ustainable Manufacturing
 E ngineeri ng Managem ent
 Intell igent T ransport S ystem s
L Logistics/Mobility  G lobal Logistics
 Logistic Managem ent
 Fraunhofer IPK, Berlin

16. Agenda
1 The Fraunhofer Gesellschaft
2 Benchmarking Introduction
3 Framework Benchmarking
4 Diagnostic Benchmarking for SMEs
5 Benchmarking of Intellectual Capital
 Fraunhofer IPK, Berlin

17. Common Definition of Benchmarking
Benchmarking is a systematic and – frequently – continuous process
for measuring own performance against Best Practice
in order to identify improvement potential.
Potential for
=
improvement
Benchmark
Performance
Participant 1 P2 P3 P4
“Best Practice”
 Fraunhofer IPK, Berlin

18. Management Trends and Practices 2009
Source: Bain & Company: Management Tools and Trends 2009
 Fraunhofer IPK, Berlin

19. Historic milestones in Benchmarking
Early application First usage in Current BM
of the main idea other spheres Development
early 20th century 1950 - 1970 1979 - 1999
Xerox
Henry Ford Ohno Toyota
(BM as a mgmt
(assembly line) (JIT)
concept)
 Fraunhofer IPK, Berlin

20. Historic milestones in Benchmarking
Early application First usage in Current BM
of the main idea other spheres Development
early 20th century 1950 - 1970 1979 - 1999
Xerox
Henry Ford Ohno Toyota
(BM as a mgmt
(assembly line) (JIT)
concept)
 Fraunhofer IPK, Berlin

21. Agenda
1 The Fraunhofer Gesellschaft
2 Benchmarking Introduction
3 Framework Benchmarking
4 Diagnostic Benchmarking for SMEs
5 Benchmarking of Intellectual Capital
 Fraunhofer IPK, Berlin

22. Prices of selected Working Material and
Land within the GCC (2010 average prices)
 Fraunhofer IPK, Berlin

23. Prices of selected Working Material within
the GCC (2010 average prices)
 Fraunhofer IPK, Berlin

24. International Comparison of Change of
Container Traffic
 Fraunhofer IPK, Berlin

25. Logistics Performance Index
 Fraunhofer IPK, Berlin

26. LPI 2010 - Changes in the Logistics
Environment since 2005
 Fraunhofer IPK, Berlin

27. Logistics Global Infrastructure
Performance Index
 Fraunhofer IPK, Berlin

28. Agenda
1 The Fraunhofer Gesellschaft
2 Benchmarking Introduction
3 Framework Benchmarking
4 Diagnostic Benchmarking for SMEs
5 Benchmarking of Intellectual Capital
 Fraunhofer IPK, Berlin

29. 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 annually
be improved by € 200 billion
Source: Czipin & Proudfoot Consulting GmbH
 Fraunhofer IPK, Berlin

30. The BenchmarkIndex
Benchmarking for SMEs
Criteria for using the
Analysis of the overall enterprise
BenchmarkIndex
 max. 100 Mio. €
annual turnover
 max. 500 employees Finance- Customer- Process- Innovation-
perspective perspective perspective perspective
 all branches are
possible
Benchmarking-Criteria:
Validation of Data
 annual turnover
 number of employees
worldwide largest SME-Benchmarking-Database
 location (> 100.000 SMEs)
 standard industrial
classification code
(SIC-Code) Report and Plan for To do´s
 Fraunhofer IPK, Berlin

31. The balanced scorecard used in the
BenchmarkIndex
Financials
Business….
Current performance ?
Customers Vision & goals ? Processes
Strategy ?
Plans ?
Learning &
Growth
 Fraunhofer IPK, Berlin

32. Is the company innovative ?
Financials
Customers
Innovation
Processes
 Fraunhofer IPK, Berlin

33. BenchmarkIndex
Distribution Worldwide 2011
Germany
UK Netherlands Czech
Lithuania Republic
Ireland
Poland
USA Slovak Republic
South-Korea
> 80.000 Austria
Financial Data
China - Beijing
> 25.000 Portugal
Benchmarking-Data
Spain Malaysia
Italy Singapore
BiH
South-Africa
Greece
Australia
 Fraunhofer IPK, Berlin

34. Agenda
1 The Fraunhofer Gesellschaft
2 Benchmarking Introduction
3 Framework Benchmarking
4 Diagnostic Benchmarking for SMEs
5 Benchmarking of Intellectual Capital
 Fraunhofer IPK, Berlin

35. Why Measuring Intellectual Capital (IC)?
Would you have invested?
 The organizational value
consists of tangible and
intangible assets, which are
mostly undocumented in
traditional accounting
systems
 Investors (Rating according
to Basel II) demand plausible
evidence of corporate values.
Companies in knowledge-
intensive fields have
difficulties in proving their
value to investors.
 Legal regulations commit
organisations to legitimate
their intangible assets. Microsoft Corporation 1978
(Austrian UOG, IAS 38, DRS
12 and 5)
 Fraunhofer IPK, Berlin

36. What is an Intellectual Capital Statement?
Definition Intellectual Capital Statement (ICS):
An Intellectual Capital Statement is an instrument for
the focused description and development of the
D Intellectual Capital in an organisation.
It shows the interdependencies between the
organisational aims, the business processes, the
Intellectual Capital (IC) and the business success and
describes these elements by means of indicators.
Intellectual capital (IC) is defined as “existing
knowledge of an organisation that contributes to future
success” 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
 Fraunhofer IPK, Berlin

37. The InCaS Framework: ICS Structural Model
Business environment
(Possibilities & risks)
Organization
Intellectual capital
Initial Human Structural Relational Other External
situation capital capital capital resources impact
Business-
Measures Business
Vision Strategy Business processes success
knowledge
Knowledge processes
 Fraunhofer IPK, Berlin

38. 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
Patente
 Relationships to Co-operation Partners
 Fraunhofer IPK, Berlin

39. Main Results of the German ICS Pilot Project
www.akwissensbilanz.org  Efficient method to start IC Management in
SMEs.
 Intellectual Capital Statements (ICS) were
implemented in 50 SMEs from different
regions and sectors.
 Guideline for ICS implementation in
German and English language published,
more than 100.000 copies distributed.
 Software “Wissensbilanz-Toolbox”
available since July 2006, more than 50.000
copies distributed.
 Financial Times and Commerzbank
Award 2005 for one of the first 14 Pilot-
SME
 30 Roadshows for entrepreneurs with more
than 1.000 participants.
 More than 500 users and trainers trained
 Fraunhofer IPK, Berlin

40. Fields of Use and Benefits of ICS
 Diagnosis:
ICS as an instrument for analysing strengths
and weaknesses of strategic IC factors.
 Decision Support :
ICS as an instrument for prioritising fields of
improvement with highest impact.
 Optimisation & Innovation:
ICS as an instrument for implementing
actions for organisational development.
 Internal Communication:
ICS as an instrument for enhancing
transparency and employees’ involvement.
 Monitoring & Risk Management:
ICS as an instrument for controlling strategic
risks and measuring success of actions.
 Reporting:
ICS as an instrument for communicating
corporate value to stakeholders.
 Fraunhofer IPK, Berlin

41. Intellectual Capital Benchmarking
Finding Best in Class Performers
IC Management Portfolio (Sector Service, N=27)
Structural Capital
13%
develope stabilise Structural Capital
SC-1 Internal co-operation and knowledge
transfer
SC-2 Management instruments
SC-4B SC-3 Information technology and explicit
(Best in Class) knowledge
SC-4 Product innovation
SC-4A SC-5 Process optimisation and innovation
Relative Influence
SC-6 Corporate culture
SC-1A
SC-1SC-2 SC-4
7% SC-4
SC-4 Ø Sector Services
SC-6
SC-5
SC-4A
SC-4A Company A
SC-3
SC-6A SC-4B Company B (Best in
SC-4B (Best in Class)
Class)
SC-3A
SC-5A
analyse no need for action
0%
18% 56% 93%
Average Assessment
 Fraunhofer IPK, Berlin

42. Impact of ICS on Financial Analysts’
Assessment of Future Earnings Potential
Case A Case B
100%
Negative Negative Neutral Neutral
90%
80%
70%
60%
50%
40%
30% Neutral
20%
10%
Positive Neutral Positive Positive
0%
Without intellectual capital With intellectual capital Without intellectual capital With intellectual capital
report report report report
 Fraunhofer IPK, Berlin

43. Summary of Results in
IC Benchmarking Report
Structural Capital - View
Your assessment compared to your peer group based on standard IC Factors (N=42)
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
70,00
Internal co-operation and
Internal co-operation
knowledge transfer
and knowdege transfer
(SC-1)
Management Instruments
Management
instruments
(SC-2)
86,67
Information technology and
Information technology
innovation
and innovation
(SC-3)
23,33
Product innovation
Product innovation
(SC-4)
Process optimisation and 90,00
innovation
Process optimisation
and innovation
(SC-5)
82,50
Corporate culture
(SC-6)
Corporate culture
Chart SC-1 SC-2 SC-3 SC-4 SC-5 SC-6
Your Assessment 70,0 N.v. 86,6 23,3 90,0 82,5
Your Rank 10/37 N.v. 4/27 25/25  Fraunhofer IPK, Berlin
1/31 6/31
Upper result 86,67 90,00 91,67 92,50 90,00 95,00
Upper Quartile limit 70,00 70,75 84,17 76,67 73,33 70,00

44. Thanks for Attention
Dr.-Ing. Holger Kohl
Deputy Director Corporate Management
Head of Department Business Excellence
Benchmarking
Guideline for Best Practice
Methods
Comparisons Fraunhofer IPK
Eds.: Mertins, Kai; Kohl, Holger Pascalstraße 8-9
Mit Beiträgen namhafter
Experten! 10587 Berlin, Germany
Wissensbilanzen  holger.kohl@ipk.fraunhofer.de
Intellektuelles Kapital erfolgreich
nutzen  +49(0)30 / 390 06 168
und entwickeln
 +49(0)30 / 393 25 03
Hrsg.: Mertins, Alwert, Heisig
Beiträge von über 20 namhaften http://www.benchmarking.fhg.de
Experten!
http://www.um.ipk.fhg.de
 Fraunhofer IPK, Berlin