A noted business adviser explains why it is so important to understand the effects of time and speed on the marketplace.
A sense of time speeded up has become pervasive as we close out the century. Our appetite for speed is insatiable. Those of us in business must keep reminding ourselves that this supercharged world is the marketplace, a marketplace in which the ticking of "real time" technologies is teaching the consumer to expect and demand immediate satisfaction.
Originally, real time meant enormous computer power capable of instantaneous input and output response. In my use of the term, real time applies not to any device but to the technologically transformed context of everything we do. Real time is characterized by the shortest possible lapse between idea and action, between initiation and result.
The change in our sense of time has been brought about by technology that produces results at the click of a mouse or the touch of a button or key. We experience real time while watching live TV coverage of an event on the other side of the globe or while withdrawing money at an ATM. Such instances of instant satisfaction change our frame of reference, altering our expectations and the way we judge what reality is, what good or bad service is, and what satisfaction is.
Companies large and small are playing to classic American strengths when they do not embrace the technologies of speed as ends in themselves but work to comprehend the wide and often subtle consequences of their adoption. One of those consequences, I believe, is an even greater orientation toward the short term. Never mind if it has become a clichÉ to accuse American business and Wall Street of too much short-term thinking. The positive side of this trait is a hair-trigger responsiveness as measured against the standards of European or Japanese companies.
The pressure for short-term results goes hand in hand with an attitude prized in American industry: pragmatism. That attitude is encapsulated in the saying "The best is the enemy of the good." In analyzing the reasons for the huge lead that U.S. companies have over the Japanese in software, for example, Stanford University researchers mentioned this cultural bias, among other factors. "Good enough" quality, they said, is acceptable in the United States. In an industry in which time to market is critical, Japanese companies are handicapped by a culture that exalts perfectionism. U.S. companies believe in getting a new product out the door as fast and as cheaply as possible, opting to back it up with a variety of technical and support services. Japanese companies delay product introductions for the sake of extensive quality-assurance and testing procedures. The Stanford team's overall conclusion? "The U.S. economic, organizational, and cultural context fosters adaptation during periods of extremely rapid change in technology."
Top managers monotonously repeat, as if intoning a mantra, that this is the age of customer service or the age of the consumer. Yet few of those managers realize what they must do for that customer to earn his or her complete approval. Today's consumers expect to be asked about their individual preferences and to be treated--to the most extreme degree possible--as if those preferences are respected.
That represents a radical shift in approach, a change whose magnitude I'm struck by whenever I look back at an incident that happened in the mid-1960s, when I bought a defective RCA television set. Tired of the local RCA dealer's inadequate explanations for the cause of the trouble and of weeks of procrastination for repairs, I called the head of the company's consumer-products division and talked my way past his telephone sentries to get him on the line. I introduced myself and gave him a concise account of my difficulties. In response, he had only one question for me, asked in a tone of icy outrage: "How did you get through?" His reply now seems to me the perfect emblem of what companies' attitudes toward customers were in the industrial age of marketing.
My definition of perfection in service is customers' serving themselves so effortlessly--through "transparent" technological intermediaries--that they are hardly aware of doing so. The telephone industry made that switch many years ago. For 50 years telephone operators sat at switchboards, waiting on callers. In the 1930s relay switching systems transferred that task to the person making the phone call. In the 1960s push-button phones turned the caller into a computer operator by providing a keypad on the phone that allows calls and data to be directed to millions of possible receivers. To my knowledge, no one complained about having to become his or her own telephone operator. Today computers, software, and the networks turn everyone into a researcher, publisher, order clerk, and bank teller.
The companies best equipped for the 21st century consider investment in real-time systems to be essential to maintaining their competitive edge and keeping their customers. By that I mean that they use information and telecommunications technology to respond to changing circumstances and, even more important, customer expectations within the smallest possible time lapse. They understand that customers' expectations are being reset for a hyperaccelerated, if not an immediate, company response, no matter what they happen to be buying.
Such speed does not allow for much planning--or for the leisurely deployment of such decision-making tools as opinion polls, surveys, and focus groups, which managers once relied on for security and a sense of direction. In Silicon Valley, growth forecasts, like 5- and 10-year projections for product sales, are routinely ignored because they are seen as mere extrapolations from history. The improvisational Silicon Valley style of management is perfectly adapted to the chaotic changes of transitional eras like this one.
Because there are neither signposts nor established paths to real-time management, organizations can really do no more than grope their way toward it. Every day, they grapple with the unknown--what is yet to be--much like an artist facing a blank canvas. That groping is ground zero for all creative enterprises, and as the psychologist Rollo May has observed, artists discover what they can and should be doing only by encountering or immersing themselves in their subjects. Leaders of real-time organizations learn by doing. They take a calculated risk and act on what they do know, even when that is far outweighed by all they don't know about the appropriateness or consequences of their actions. They learn to gauge what they should try next from the smallest shift in the wind.
For roughly the past 20 years, popular business theories have been based on corporate self-improvement. Organizations and their performance have been scrutinized, evaluated, and reshaped into leaner and more effective structures. Trends such as "managing by walking around," focusing on "core competencies," developing "value propositions," "entrepreneuring," "reengineering," and "downsizing" all encourage a certain self-centered perspective in organizations. I do not want to imply that those approaches are necessarily wrong. I believe, however, that most business theories of the last quarter century direct too much attention inward and too little toward external forces of change. Knowing what makes an industry tick in a real-time marketplace means keeping track of all the forces affecting it in real time.
Reprinted by permission of Harvard Business School Press. Excerpt of Real Time: Preparing for the Age of the Never Satisfied Customer , by Regis McKenna. Copyright © 1997 by Regis McKenna. All rights reserved. Regis McKenna is the chairman of the McKenna Group, in Palo Alto, Calif. He has worked with more than 300 start-ups, including Intel, Apple, and Microsoft.
Regis McKenna's Real Time: Preparing for the Age of the Never Satisfied Customer (Harvard Business School Press, 888-338-3987, $19.95) is available in bookstores. You can also order a copy directly from the publisher.