Wednesday, January 13, 2010

Speed is the Essence of Business

January 13, 2010
by Fred Victor

As Sun Tzu quoted, "Speed is the essence of war. Take advantage of the enemy's unpreparedness; travel by unexpected routes and strike him where has taken no precautions."[1]

In business reality, speed is essential. The nature of business competitive environment is ever-changing, and its pace continues to accelerate. To prosper and/or survive in such situation, a Company must move rapidly.

However, to move with such speed doesn't mean to do things recklessly. In truth, speed requires much planning before implementation. Execution of speed constructs competitive advantages for your Company, and the essence of speed is as follows:-

1. Speed is a Substitute for Resources

By moving quicker within the competition, your Company makes up for scarce resource. In production industry, for example, a worker of yours can produce a metric ton of goods in an hour while your competitor’s take two hours. Apparently, your Company may need only half of your HR budget to match them. In other words, greater speed is equivalent to lesser resource.

In mid-2007, a client of GE Consult who involves in waste management had successfully cut its production time for each metric ton by splitting a single production line into several mini-lines. Such action contributed to an increase in output of 40% while number of workers remained unchanged. Further, quality improved and unit costs dropped more than 16%.

2. Speed Exploits Fleeting Opportunities

By moving quicker within the competition, your Company exploits opportunities before your slower-moving competitors can respond even if your competitor possesses more equipments or greater facilities.

In 2004, a client of GE Consult who involves in retail industry had successfully captured 17% of the market in three months after the decision made to provide “fresh vegetables” concept. When competitors reacted and copied similar terminology, the client rapidly advanced by introducing another “fresh” concept, and had captured more than 19% of the market within weeks thereby.

3. Speed Surprises and Shocks the Competition

Speed is essential in surprising and shocking your competition particularly in combining deception with quick movements, your Company can keep the competitors from discerning your intentions until it’s too late. Then, as one of your attacks quickly follows another, your competitors become even more bewildered.

In June 2009, a client of GE Consult who involves in cosmetics industry had successfully sold out just about all of its stock on hands at a 2-day A&P campaign. One of the factors responsible for GE Consult team’s success for that was the ability to execute strategy quickly.

At the campaign, the client was selling its newly launched hair care product at its original prices while other competing well-known brands were offering slightly lower prices though formula differ. The sales result of the first day campaign was undoubtedly unsatisfied. However, the 2nd day campaign strategy was modified by changing promoters’ outfit, and “value-pack” package etc. Ultimately, the sales achieved as per target set. From conception of strategy to victory in the battle took only about a day including the 1st campaigning day.

4. Speed Builds Momentum

Speed is crucial in business success as it provides the ability to sustain and exploit market momentum once a breakthrough has been achieved, particularly the first breakthrough. For instance, a dilemma, your Company has two products; one is selling well but another is performing poorly. What would you do? Should you give more support to that poorly performed product by deploying resources gained from the good performing one? What if yes, then when?

The example of GE Consult’s client in cosmetics business is best to illustrate this. In 2008, the product sales as well as its A&P campaigns had created a breakthrough in Kelantan. At the critical moment, reserves were unavailable to expand further to Selangor as it required additional funding. Hence, strategy had been re-aligned to penetrate East Coast market for first three months. Market expansion to Selangor market was successful as hypermarket contract deals secured timely, in the fourth month.

The market expansion plan (to Selangor) had been actually procrastinated as it required huge capital investment while the need for funding in East Coast market. Thus, GE Consult team suggested maintaining momentum, expansion thereafter.

In sum, speed is the essence to your Company’s victory. The key is to move quickly and end it quickly before your competitors can react. No doubt, you must collect and analyze information quickly, making quick decisions steadily before any quick movement implemented.

[1] Dr. Foo C.T. & Peter H. Grinyer (2003), "Sun Tzu Business Warcraft: Organizing Strategy", Singapore: Horizon Books, 2003. ISBN 981-04-3112-0

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