Do You Pass The Pace Test?
The dynamic nature of modern markets mean that you can no longer see your business as a fortress to defend and expect to survive intact. You must, instead, leave your citadel and carry on attacking. You must, as an organization, feel the wind in your hair from your own acceleration, rather than from the breeze created by your rivals as they speed by.
Ten years or so ago, for example, the management of Nokia failed to build on its market leading position in mobile phones. A mixture of arrogance, defensiveness and organisational inertia within the business, which was created as a direct result of the company's previous success, has set Nokia back years, and possibly terminally.
As the new CEO, Stephen Elop, wrote in an email to the business soon after he joined the group in 2011, "We've lost market share, we've lost mindshare and we've lost time. If we continue like before, we will get further and further behind, while our competitors advance further and further ahead."
A key problem for many businesses is how they are organized. Most corporate organisations continue to be based, on the whole, on a 20th century model of control and hierarchy.
If you compare the way businesses are organised and run today, compared with 10, 20 or even 30 years ago, the only real difference, in many companies, is that managers have to travel more, run bigger teams, work longer hours and somehow find a way to deal with the explosion of email and mobile communication.
Take your own company, for example. How much faster is your business today than it was ten years ago? Has it delivered step-change improvements in its pace or is it still roughly going at the same pace it was at the turn of the century?
Let me be a bit more specific. For each of the following 10 indicators, over the past three years has your company (a) delivered at least a 50% improvement; (b) clearly improved, but less than 50%; (c) roughly stayed the same; or (d) seen a decline in performance?
- Percent of revenue from new products and services (launched in the previous two years);
- Average time to break even fro new products, services and initiatives;
- Time to launch a new product or service;
- Time to create and test an initial product or service prototype;
- Time to respond satisfactorily to a customer query;
- Average customer waiting time between your customers' purchase of a product or service, and its delivery;
- Time to make a major strategic decision (e.g. acquisition, divestment, IT infrastructure)
- Time from making a strategic decision to material action on the ground;
- Time period between major strategic reviews of the business; and
- Time taken to create annual budgets and operating plans.
Only if you are able to answer "a" or "b" to all these questions - with more than half the answers being "a" - can you be confident that your organisation is changing as quickly as your markets.
If your responses are scattered with "c's" and "d's" it's more than likely that you are losing ground to your more agile and fleet-footed competitors. And that means that you will be struggling to grow, struggling to deliver meaningful return and failing to feel the wind in your hair.
So, what can you do to increase your organisation's pace and agility? That will be the focus of next month's newsletter.