By Stephen C. Harper
Everything changes, but the new economic reality has everything changing at a more rapid pace. To survive, managers must revamp processes and products so that they can change in real time to respond to market speeds. In many ways, “survival of the fittest” has become “survival of the swiftest.”
“America is in a product war, and the management of innovation is a strategic weapon. ... Our ability to get better at the innovative process – to drive products from idea to market faster and with fewer mistakes – is the key to winning the war.” – Robert Cooper, developer of the Stage Gate product innovation system
As children we were told about the survival of the fittest. Charles Darwin and others stressed the need for organisms to evolve if they were to survive in times of change. Yet in today’s competitive marketplace, the term “fittest” has numerous dimensions. Not that long ago, being the biggest meant being the best. Yet in times of rapid change, being the biggest can be a disadvantage if the company cannot adjust with the times. In his classic book, Future Shock, Alvin Toffler noted that the rate of change is accelerating. He also noted that because the future is invading the present, many companies are not prepared to deal with new realities.
In times of rapid change, “survival of the fittest” may need to be reframed as “survival of the swiftest.” Companies that cannot sense rapid change and change quickly to deal with new opportunities or threats will not fare well. It used to be change or die. Now, it is change quickly or die. According to Major League Baseball Hall of Fame manager Sparky Anderson, “If you have to choose between power and speed, and it often turns out you have to make that choice, you’ve got to go for speed.” That aphorism applies to business as well.
The need for executives to focus on speed did not begin with the launch of Fast Company magazine years ago. Speed always has played a role in competitive strategy. The accelerating rate of change, however, has placed a premium on speed. The Internet and the latest technology have changed how quickly things can be done. But doing things more quickly and doing things that previously could not be done have come at a price. Consumers now expect things faster and, in some cases, instantly. Fast customers require fast companies. To be analog in a digital world is certain death.
The concept of speed is not one-dimensional. Speed can be absolute, as in miles per hour. Speed can be relative in terms of whether your business is faster than your competitors in launching new products. Speed can apply to how quickly you respond to something. In times of change, speed can be viewed as adapt ability or agility.
Speed can be applied to distances. How fast you have to run to win a 100-meter dash is entirely different from how fast you need to run to win a marathon. In short, speed is contextual. How fast you do something needs to factor into the context and specifics of the situation. Speed can be a competitive weapon only if it is used properly. Raw and unbridled speed can spell disaster. It is like driving beyond your headlights. By the time you see an object in front of you, it is too late to stop. You either swerve out of control or hit the object. In today’s world, slowing down is not an option, and companies must learn how to travel in the fast lane. This will be possible only if they are designed for such travel by jettisoning the bureaucratic practices, legacy mindsets and other organizational processes that keep them from competing in real time.
While almost everything in our world has speeded up, the formula for business success remains being in the right place at the right time with the right capabilities. If you do the wrong things, then doing them faster than your competitors merely quickens your demise. A similar situation applies to timing. Launching an innovative product well before the market’s window of opportunity opens will waste valuable resources and give your competitors time to imitate or improve on it.
Each market has its own speed. Some change so quickly that companies don’t have time to catch their breath. You have to get it right the first time because you will not get a second chance. Troy Tyler, co-founder of SmartRay Network, captured the need for speed in the dot-com world in a Fast Company article when he compared it to video games. “The race-car games are made that if your pedal isn’t to the floor the whole time you lose. If you want to finish in the top 10, you have to be on the red line. ... You can’t even place if you’re not willing to blow up the engine, to go into all corners like you’re going to die.”
While most markets do not require the near-endless pedal to the floor efforts – at least not yet – more executives in more industries are recognizing they are in high-speed races. They must become faster and more agile without blowing up. They need to focus on smart speed, or knowing when to push the pedal and when to ease up a bit so you can be in sync with the world and improve what you are doing while developing your competitiveness in other dimensions, including quality, innovation, convenience and efficiency.
Smart speed starts with knowing what should be done and what should not be done. The question, “Should it be done?” should take precedence over “How can it be done faster?” Companies must speed up on the things that truly bring value to targeted customers and profit to the business. If a business is faster on one or more dimensions that targeted customers do not value, especially if these dimensions increase the price, the company’s only fast lane is toward bankruptcy.
Three situations demonstrate how being faster in delivering a product that the customer does not need right away may backfire. First, if you deliver the product right away, then the customer may question the product’s quality. A bicycle manufacturer found that some of its customers questioned the quality of its custom-made bicycles when they delivered in just a few days.
Second, delivering a product sooner may move up the payment timeline for the customer. If the customer does not need it for three weeks, and it is delivered in a week, then the customer may be put into a cash bind. Third, computers have become so fast that a computer that is 10 percent faster may not be noticeable. Instead, they may be more concerned about how user-friendly the software is. Apple recognized this years ago. Apple focused on user-friendliness to the point that its software and electronics are so intuitive that they do not need a manual. If you have not seen the video on the Internet of the 2-year-old using an iPad without any instructions, then it is worth a look.
Years ago Intuit started filming consumers in its facilities to see how they went about opening its shrink-wrapped boxes and booting up its software. Intuit paid particular attention to when consumers stopped to figure something out. Intuit realized that every time a customer stopped, it indicated that the overall process was not as seamless and user-friendly as it should be. Pauses were considered pain points. While the world has changed a lot since consumers actually bought their software in boxes, the question remains, “What are the things that cause your customers to pause or slow in the overall purchase-use process?”
While some people may focus on finding ways to increase the speed for various facets of their jobs, if you truly want a fast company, you must view the enterprise’s processes and activities holistically. The holistic perspective is essential from both a decision-to-action perspective and from a processes perspective.
The decision-to-action perspective applies to how quickly the company senses something all the way to where it analyzes its success in addressing it. Figure 1 profiles the awareness-to-results cycle. It illustrates some of the steps that may be streamlined to increase the company’s speed.
The awareness-to-results cycle is a simplified version of what needs to take place, but it demonstrates the need to sense and seize opportunities as well as to sense and minimize or prevent threats. You have to be aware of something before you can do something about it.
Part of the speed equation is being able to get a head start on your competition. This is where anticipatory management comes in. A head start makes speed less critical and allows your company to avoid being rushed too much. The company stays cool under fire while less anticipatory companies must operate under a red alert in their often futile efforts to catch up.
Anticipatory management incorporates environmental scanning and running scenarios to gain insight into what may be just over the horizon. It reduces the likelihood of being blindsided. By looking for early indications of trends, events or even discontinuities, companies may be able to sense opportunities and keep from being surprised. “If …, then …?” scenarios can give the company more insight into possibilities and probabilities than its competitors.
This may enable the company to develop contingency plans, allowing for quicker adjustments when things do not go as expected or planned. Years ago, a Merrill Lynch ad noted, “It’s not what you know that matters, it’s when you know it that matters.” Having an early warning system also applies to the company’s internal environment. Cypress Semiconductor was one of the leaders in developing an information system that monitors thousands of performance factors on an ongoing basis. CEO T.J. Rogers noted that having crucial information on a real-time basis permits real-time adjustments. State-of-the-art management information systems resemble the radar-interfaced control systems that enable jet fighters to fly closer to the ground and under the radar of competitors at even faster speeds.
The awareness-to-results cycle also demonstrates the role that making decisions plays in positioning the company to make good things happen. The model’s final stage is becoming even more important today. Even when something has been completed, management needs to do a debriefing of what was learned and how certain aspects, including speed, can be improved.
Businesses can learn from the Army’s opposing forces (OPFOR) program, which requires units to do an after-action review before moving to the next project. The OPFOR program thereby builds learning and improvement into the process. This step can play an integral role in identifying ways certain actions or the overall project can be speeded up. Businesses also can learn from what Context Integration did to enhance the speed and quality of decisions. It set up a knowledge management system called IAN, which stands for intellectual assets network, so people could share what they learned with others in the company as well as access information before starting projects. This knowledge kept workers from re-creating the wheel, so to speak.
The best managers recognize the role each step plays in the process. They know the importance timing plays in each role and the overall awareness-to-results cycle process. The best managers know there is a time to analyze, a time to decide and a time to act. They do not fall prey to paralysis by analysis. The best managers know the market is changing too fast and too much for them to analyze everything to the last detail. They decide quickly and go from decision to action with minimal delay. They also recognize when things are not going as planned and don’t hesitate to make the necessary changes.
When US Airways Flight 1549 lost power in both of its main engines at 3,000 feet right after taking off from LaGuardia Airport in 2009, Capt. “Sully” Sullenberger quickly realized he could not return to LaGuardia or land at Teterboro Airport in New Jersey. With no power, he decided to glide the plane into a water landing in the frigid Hudson River. To do this with no loss of life is truly amazing. Sullenberger said that his whole professional life prepared him for the challenge. His years of experience as a fighter pilot, a commercial airline pilot, safety instructor and accident investigator gave him the confidence and ability to do what he never had done. Please pardon the pun, but Sullenberger’s “Miracle on the Hudson” gave new meaning to making decisions “on the fly.”
Some managers have adopted the 70 percent rule from the U.S. Marines in their decision processes. Other managers use the match test rule. Marines who have 70 percent of the information they need, who have done 70 percent of the analysis and are 70 percent confident of the outcome make their move. Granted, some situations warrant more deliberation, but this rule – which relies on intuition and experience to fill in the blanks – keeps Marines from the “ready, aim, aim, aim, aim” syndrome where people do not fire or fire when it is too late.
The match test – which hopefully is used figuratively – forces people to light a match and make the decision before they get burned. Both approaches may have drawbacks, but they make it clear that few companies have the luxury of taking their time or calling a timeout. The market shows no mercy for companies and managers that cannot pull the trigger and commit the needed resources to make things happen.
As Jack Welch, former CEO of General Electric, said: “I learned in a hundred ways that I rarely regretted acting but often regretted not acting fast enough. I could scarcely remember a time when I said, ‘I wish I’d taken six more months to study something before making a decision.’”
Sometimes companies may need to take a more radical approach to compress the overall cycle time. Re-engineering has been the target of criticism, especially from employees who have been laid off. Yet, when it is approached and implemented properly, it can spur hiring because the company is positioned to be more competitive. Focusing on an individual part of the awareness-to-results cycle has merit, but looking at the whole cycle may have greater value. Re-engineering encourages managers to look for ways to eliminate unnecessary activities, speeding up the process by shortening the steps. Asking, “What does the customer truly value?” lets managers start with a fresh slate, fostering innovation.
Starbucks and Mobil (before it merged with Exxon) recognized the need to speed up the purchasing process so it could enhance the overall customer experience. Starbucks introduced the Starbucks card to reduce lines at the register. Mobil eliminated the need to go inside the convenience store by introducing its Speedpass card that is scanned at the pump.
Progressive Insurance developed a system for compressing the “accident to check” cycle by transforming the way it handles auto accidents. By providing comprehensive training and an information system that provided a wealth of information to its people in the field, it gave them the authority to make decisions on the spot. Often, Progressive employees can write a check in real time for repairs at the scene of the accident. How’s that for taking the waiting game out of the equation?
In the last decade, the time spent in the idea-concept-design-build-test-launch cycle has been compressed greatly. In many instances, a product concept moves electronically through the whole process, reducing costs and change orders. Experiments in the “virtual” world are easier. Cycle time compression is particularly evident in rapid prototyping. What used to take months can be done in days or minutes. Rapid prototyping allows for multiple iterations of prototype testing, fast feedback, fast learning and fast modifications. With rapid prototyping, products not only get to the market quicker, they get to the market better.
Becoming a fast company involves a two-step process. Before focusing on speed, you need to deal with the things that slow the company down. In traffic terms, the first step involves eliminating red light factors that act like stop signs, speed bumps, congestion and excess weight. These include unclear goals, poor communication, out-of-date information systems, the stream of endless – and in many cases pointless – meetings, the avalanche of emails – especially when people hit “respond to all” – and the almost unbounded bureaucracy that, like quicksand, causes companies to sink into nothingness. These factors slow the company to the point that it is like a sloth trying to cross the Autobahn.
The second step involves providing the green lights. Eliminating red lights alone merely takes the company from being deathly slow to where it is not as slow. Without green lights, the company is like a commodity without any real competitive advantage.
Take Southwest Airlines, which quickened various operational aspects to give it a competitive edge. Having one type of aircraft speeded the service and repair cycle. Streamlining activities at the gate cut turnaround time by a significant margin. Adopting electronic ticketing before other airlines saved considerable time and money. Not having assigned seats speeded up the boarding process.
While the airline received flak from some travelers who wanted more pampering, Southwest recognized that the goal of an airline is to get from Point A to Point B in the least amount of time, with the least risk and at an attractive price. In the last decade, Southwest has been profitable in more quarters than any other major U.S.-based airline.
Other companies found ways to compress the cycle time. Dell computer’s “made to order and be delivered in a couple of days” system enabled it to leapfrog its competitors. The ability to stream movies over the Internet enabled cable companies and other providers to leave retail stores in their dust. The list of “faster companies” is growing each day. Organizations that want to be faster should study the fast practices of these companies and conduct “speedstorming” sessions to reduce the red lights and develop the green lights.
Two sayings put the need for speed in perspective. The first is, “You are either fast or last.” The second is, “If you are second, then you are the first of the losers.” The role speed plays in competitiveness is also captured in an Intel publication that cautioned its competitors, “You’d better run as fast as we are, because we’re destroying the pavement behind us as we move along.”
Speed can give a company a decided advantage in the race to win customers. Companies that have fast and flexible product and process development processes will be able to hit the market quicker and better than their competitors. Companies that operate with an 8 to 5 clock and a “We’ll get to that when we have time to get to it” mentality in a 24/7 world are on the fast track to bankruptcy.
To compete in the fast lane, companies need to have fast leaders. Lee Iacocca observed, “I’ve always found that the speed of the leader is the speed of the team.” Companies also need to have fast teams, fast people, fast systems and so forth. Tweaking operations can go only so far – everything needs to be streamlined so the company can operate at even faster speeds. At some point, industries and markets change so much that the company may need to be more revolutionary than evolutionary. Just as a plane designed to travel at 300 mph may never fly at 500 mph, companies designed for certain conditions may never operate in markedly faster competitive arenas.
Companies must recognize when modifying products and processes will not be enough, when they need to develop new product and process platforms, and maybe even a new business model, to deal with new market realities. Smart speed will play a role in enhancing the company’s competitiveness. If companies approach speed and the corresponding need for agility as they have approached enhancing quality from various vantage points, then they will be able to thrive in the fast lane.
Stephen C. Harper is Progress Energy/Betty Cameron Distinguished Professor of Entrepreneurship at the University of North Carolina Wilmington. He is the author of numerous books on leadership and entrepreneurship. His latest book is The Ever-Evolving Enterprise: Guidelines for Creating Your Company’s Future. Harper has conducted hundreds of seminars on how to create exceptional enterprises.