Wednesday, June 03, 2020

Operational Tempo and Speed as a Competitive Advantage

The concept of speed as an advantage is not new. Over the course of 700 years, the Romans built and maintained a system of roads extending over 55,000 miles to enable speedy communications and the quick movement of troops and supplies across the vast expanse of the empire. 

Today digital technologies have altered our perception of time and space while expanding our expectations of what can be accomplished in a given time. We expect to accomplish one hour's worth of shopping in a brick and mortar supermarket, in seconds shopping online. These expectations significantly impact the way businesses must operate in a digital era to compete and remain relevant. 

A few years ago Amazon's CEO Jeff Bezos identified one of his key strategic advantages: high-velocity decision-making, or the ability to act quickly on limited information to stay ahead.  In one research project I was involved in executives listed the following as requirements to stay competitive:
  1. Speed of innovation to attract new customers. 
  2. Speed and time to market with new products and services. 
  3. Fast reactions to competitive and customer pressures. 
  4. Fast technology adoption. 
When asked about their biggest challenges executives mentioned a number of speed related issues:
  • Legacy systems (too slow)
  • Iterative development (too slow)
  • Adopting new technologies (too slow)
  • Responding to competition with new strategies (too slow)
Robert Leonard writes in the book The Principles of War for the Information Age, "If I can develop and pursue my plan to defeat you faster than you can execute your plan to defeat me, then your plan is unimportant."  As I wrote in this article, Innovator's Forumula for Success,  innovators have significant competitive advantages because they can see, analyze and respond to data not yet available to laggards (slower responding competitors).

Speed has competitive implications.  Many executives I have spoken to identify legacy IT environments as reasons they have not moved faster to adapt and innovate.  In fact, many identify their existing IT infrastructure as a competitive disadvantage.  These limitations prevent a business from being agile and changing at the speeds required to remain relevant. 

Many of the executives I spoke with are taking the following steps to increase speed:
  • Consolidate IT Systems for Speed - reduce the number of applications and systems they have to reduce complexity and costs, speed up the ability to upgrade and adapt to changes, and increase data visibility and analytics across the entire operation. 
  • Architect for Speed - adopt API Driven Architecture so legacy systems can be integrated quickly with new systems into one single unified platform. Implement a "container system strategy" so applications can be optimized for agility. 
  • Outsource Systems for Speed -when implementing new systems or upgrading legacy systems to increase speed are cost prohibitive, executives are considering SaaS based models or ways to outsource an increasing number of their systems to achieve the operational speed improvements.
  • Improve organizational agility - the speed an organization can change directions.
Executives I spoke with shared the following steps they are taking to increase the speed of operations within their organizations: 

Implementing an integrated ecosystem framework and supply chain to increase the speed of operations, consolidate manufacturing locations, distribution centers, find common manufacturing processes that can be shared and standardized on, make replenishment faster, receive cash faster, manage financing smarter. 

I believe it is critical to educate your organization on the importance of operational speed.  I believe it is important to continuously educate leaders and teams to recognize that digital transformation, and conducting business in digital markets is a race, and that bits move faster than bricks and mortar. Educate on emerging digital technologies and their impact on businesses and competition. Introduce outside experts to help objectively evaluate your organization for digital maturity and to learn how other companies and industries are addressing change. 

Give decision-making leaders super-powers by removing minor decisions and automating them utilizing AI.  Support major decision-making with real-time access to data and machine learning.  Recognize that in today's and tomorrow's digital world, competitive decision-making is a game you must win.

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Kevin Benedict
Partner | Futurist | Leadership Strategies at TCS
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***Full Disclosure: These are my personal opinions. No company is silly enough to claim them. I work with and have worked with many of the companies mentioned in my articles.