Q 31Q 31
Amgen Corporation: Using Benchmarking as a Means of Coping with Rapid Growth
American Productivity and Quality Center: www.apqc.org
Amgen Corporation is the largest biotechnology company in the world. Founded in Thousand Oaks, California, the company produces lifesaving pharmaceutical products based on advances in cellular and molecular biology. One of the company's products, EPOGEN, is a product used for the treatment of anemia associated with chronic renal failure and is one of the top-selling pharmaceutical products in the world.
Although Amgen is very good at developing cutting-edge pharmaceutical products, the company has struggled at times with the demands of managing a rapidly growing workforce. In the past 20 years, the company has grown from a workforce of 400 employees to 7,500. In particular, Amgen has faced challenges in terms of making the transition from a single-product company to a multiproduct company and in staffing and training its growing divisions. To deal with these challenges, Amgen decided to turn to benchmarking. The first department involved with the benchmarking initiative was sales training and development because the company's employees believed that improvement was needed in that area. There also was recognition within Amgen that training and development needed to be strengthened. Commenting on the merits of the first benchmarking study, Ellen Nichols, the director of the sales training and development department, said, "We'd been clearly focused on our products and customers, but perhaps we haven't had as focused an effort on developing our people." 1
To conduct its first benchmarking study, Amgen solicited help from the American Productivity and Quality Center (APQC) in Houston, Texas. APQC is a nonprofit organization that provides benchmarking training, maintains a best-practice database, and helps firms locate businesses to benchmark against. APQC helped Amgen develop a list of 40 potential benchmark targets, based on Amgen's criteria for selection. Amgen wanted to benchmark against companies that were high-growth, hightech, successful, and had a geographically dispersed sales force. Eventually, Amgen narrowed the list to seven companies and benchmarked its sales training and development department against similar departments at Dow Chemical, Lexus, Lucent Technologies, Motorola, Anheuser-Busch, Eastman Chemical, and IBM. Four of the companies invited Amgen personnel to visit their facilities, and the other three participants were interviewed over the phone. The study was successful, and Amgen redesigned its sales training and development department as a result of the benchmarking initiative.
Amgen has found other opportunities to use benchmarking to help cope with the challenges of rapid growth in a high-technology industry. For example, the company used benchmarking to study the way it moves its products from production to the end user, and it conducted a benchmarking study that examined its marketing practices. Through its experiences, Amgen has learned some of the barriers to effective benchmarking and some of the global benefits. In terms of barriers, Amgen learned that a benchmarking study is only as good as its implementation. If the implementation stage is lengthy or is not taken seriously by the people involved, the study will not be useful. Another potential barrier is finding companies that are similar enough to your company to benchmark against and that are willing to participate. Having a partner like the American Productivity and Quality Center that maintains a best-practice database to draw from helps address this concern. Amgen has learned there are also global benefits to benchmarking, beyond the specific ideas and techniques that are gleaned from a particular benchmarking study. Benchmarking helps a firm gain visibility and sends a clear message to its stakeholders that the firm is interested in continuous improvement. In addition, benchmarking helps a firm determine whether its best-in-class activities are truly best in class. Often, it is difficult for a firm to know just how good (or poor) it is at some activity until it measures its activity against a similar firm.
Amgen has been successful in its early experiences with benchmarking and serves as a model for how to initiate a benchmarking program. Although Amgen excels in the development of high-potential pharmaceutical products, it recognizes that it has a lot to learn about other management issues. Benchmarking has been a useful tool for the company in its learning efforts.
Why was benchmarking so important for Amgen at the point in the company's history when benchmarking was initiated? Do you believe that benchmarking will contribute to Amgen's longterm success?
1 Powers, V. J., "Amgen Succeeds with Benchmarking through Outside Facilitation, Hard-Working Teams," American Productivity and Quality Center 8 (October 1997): 1.