Andy Grove, the former CEO of Intel, used to have a saying that "only the paranoid survive." It was his way of telling his team at Intel to expect competition from all quarters. Today, you still need to be paranoid, but more importantly you need to be fast. A new book title says it all: It's not the big that eat the small, it's the fast that eat the slow. Paranoia is good if you are worried about competition, but increasingly it's speed in every dimension that ensures growth and survivability.
Zara is a good example of a company using speed as a competitive weapon. Zara turns its merchandise more rapidly and more frequently than other fashion brands, driving higher sales and fewer returns. In an industry that often had one or two fashion introductions in a year, Zara may have several in a quarter. This speed to market swamps other fashion houses and retailers, causing them to play catch up and setting new expectations for customers.
Be Fast or Be Furious
In a hat tip to the Vin Diesel franchises The Fast and the Furious, we can examine what it takes to be fast, and why you'll be furious if you aren't. Being fast isn't a nice-to-have when you stop to consider the ever shrinking product life cycle. Consumers have become very accustomed to expecting new and more features and expecting them more frequently. Companies rise much more quickly, fueled by VC money and with very scalable business models based on the internet. The average lifespan of companies on the S&P 500 is now approximately 14 years, down from over 30 years on average in the past. Companies, like products, have lifecycles and these too are growing shorter.
You need to structure your business to start fast, build fast, test fast, and release products and services fast. This means you need to speed up your existing operations and shorten cycle times. For companies with proven business models, that's challenging but doable. Fast also means you need to innovate fast, which is a much bigger challenge, because few firms have good processes or much proven experience innovating successfully. Without experience, skills, and past performance, innovation is difficult periodically and very difficult to speed up.
Slow and Steady Leads to Disaster
But in this case the tortoise isn't going to beat the hare. Faster companies will cycle through small experiments, learning and revising as they go. These fast companies will complete several cycles--learning and improving--while slower firms gear up to complete one innovation cycle, which will result in products and services that solved problems that have already been solved, or have morphed and changed. If you can't speed up your innovation activities (exploration, discovery, insights gathering, idea generation and conversion to product requirements) then you'll be furious when your company implodes.
Zara has an advantage over its competitors: it's supply chains and distribution models were built with speed in mind. What about your business models, partners and channels? Can they work at higher speeds? If not, you better start making changes now.