How do you know if you're doing a good job?

Let's say you're a runner training for a 5K. The first time you run the distance, it takes you an hour. The next time you do it, it takes 45 minutes. You must be doing great, right? With such a huge improvement, you think you're ready to win a big race! Not so fast...(pun intended!)

You may think you're a fast runner, but what does fast mean without comparing your results to someone else's? If you're training to win a 5K, it would be helpful to know how fast the other runners will be. You might be disappointed to learn that 45 minutes – while a significant improvement from your previous trial – will barely put you in the top 50% of runners. In fact, if you want to win, you need to be doing it in about 15 minutes!

This is benchmarking. The term has become a buzzword recently, so while everyone is throwing it around, let's get down to the nitty-gritty. What exactly does it mean and why is it so important?