|
As
the heat of global competition continues to rise, the ability to
operate in fast cycle time becomes increasingly important. Hewlett-Packard maintains leadership in the laser printer
market by rapidly introducing innovations such as the network
printer. General Electric’s appliance division cut
order-to-delivery from 18 weeks to just over 3 weeks and now targets
3 days. Wal-Mart became
our nation’s largest retailer using an action mindset that sends
employees to the nearest sister store to get merchandise for
restocking empty shelves rather than waiting for the next scheduled
delivery. Each example
clearly demonstrates that those who possess the capability to
identify, satisfy and be paid for meeting customer needs faster than
anyone else achieve market leadership, growth and profitability.
Traditionally,
entrepreneurs have had a competitive edge over large corporations by
their ability to move quickly.
Yet, as the above examples clearly illustrate, large
companies are learning how to move as quickly as small companies.
What frequently triggers that learning is crisis.
Crisis
suspends the difficult-to-change norms of large corporate cultures
with the same power that an earthquake suspends our unconscious
trust in the earth’s stability.
Under pressure, outdated attitudes and practices crack
enabling the large firm to dramatically increase speed and quality at
the same time. Once
the crisis passes, most large companies retreat to their pre-crisis
operating pace and procedures.
The crisis is framed as an exception, inappropriate for
ongoing operations.
An
increasing number of giants, such as Hewlett-Packard and Motorola
treat crisis differently. They
know the dangers of becoming slow and inflexible and look to crisis
as a way to teach them how to be flexible.
Thus, H-P and Motorola have successfully kept their
respective Japanese competitors at bay by using these competitive
threats as a crisis that stimulates them to rapidly introduce new
products, even at the expense of cannibalizing their existing
revenue stream. By
doing so, they challenge the traditional competitive advantage of
the small entrepreneur --- speed.
The
question then becomes, what can small companies learn from these
successful giants in order to stay ahead?
Can these lessons be leveraged through the innate advantage
small firms possess? Let’s
examine five characteristics that have enabled some of these large
companies to act small. As
you read, ask yourself if you could outpace them.
First,
large or small, fast cycle time competitors focus on defining,
creating and delivering value to their customers.
Several studies document that most tasks in any organization
do not add value to revenue paying customers.
Historically, smaller firms have been able to use their size
advantage to stay focused whereas large firms required a crisis of
some sort to re-focus.
How
crisply can you define for yourself and your customers the value
your products and service contribute?
Do you know the key activities within your firm that generate
that value? Have you targeted non-value activities for elimination.
Remember, every large competitor out there was small and
flexible before it got big and sluggish.
Anything you can do to eliminate the build-up of
organizational plaque from the veins of your small firm today, will
serve it well in the future.
In
that regard, are you leveraging the available technology as well as
the big boys are? Here’s
a trivial example. Their
computer networks can wisk a proposal from one employee to another
anywhere in the world in seconds.
Do you find yourself copying data onto floppies and carrying
them to each other? The point is that the vast majority of information
technologies can be appropriately sized and priced for use in any
size firm. The question
is how well you are prepared to do so.
Second,
the large fast cycle time competitors realize that communications on
multiple levels is essential. Thus
they have internal newsletters, television networks, computer
conferencing, etc. Each
of these facilitates creating strategic alignment by continually
informing everyone about what’s important for the business.
By
definition, smaller companies don’t need the same tools but they
still need to make sure people know what’s important.
The question for the entrepreneur is no different than it
would be for the corporate executive:
if you asked three people what are the most important things
that this company should be concentrating on?
-- would you get the same answer?
Too often, small firms mistakenly rely on their smallness and
underestimate the importance of communicating and testing priorities
with all employees.
Third,
the big boys use crisis as the time to demolish hierarchy. Be
it through re-sizing, re-structuring or re-engineering (the new
3-R’s of management!), crisis is used to flatten the organization.
The
obvious corollary for the entrepreneur is staying flat.
Young companies should measure revenue per employee from the
start and use this to gauge overall productivity.
Second, trash the traditional axioms about narrow span of
control. Instead, hire
bright, well-educated people, leverage their capabilities through
advanced technology and let them manage themselves.
Create non-hierarchical, work environments where people sit
near those with whom they have to work.
Let the work drive the organization structure; not the
reverse
Fourth,
the large companies use crisis to get the plague out of their
procedural arteries. The
crisis is a like a mild heart attack and due to their mass and
momentum, they often have a second change which the small
entrepreneur may not.
As
your company grows or merely grows older, has the percentage of time
spent on administrivia increased disproportionately to the time
spend adding value as defined by your customers?
Many small firms get so focused on serving customers that
they neglect creating a process infrastructure that keeps pace with
the business’ needs. The
entrepreneur's intention is to be customer focused but the lack of
attention to process efficiency means that simple administrative
tasks become inordinately difficult and painful.
Charge those who are handling these tasks to make them more
time effective for themselves and those they support.
Fifth,
when a crisis hits a big firm, it breaks down all the resistance to
“we don’t do that here,” and opens the door for learning. The crisis environment enables the large firms to
“unlearn” practices that have become inflexible barriers.
Speed
is much more dependent on learning faster than doing faster.
Doing faster simply takes what you already know and makes it
available for sale, whereas learning faster increases what you have
available to sell. Ask
yourself how well your firm learns.
Are you living off the original knowledge that’s still
housed in the heads of the founders?
Have incremental additions been shared and discussed?
Small firms provide an excellent context for learning yet
everyone’s always so busy they often don’t take advantage of it. Remember, leverage comes from synthesized, organizational
learning rather than simply aggregated, individual learning.
The
challenge facing today’s entrepreneur is quite formidable.
Larger companies are successfully becoming as fast as smaller ones.
The entrepreneur’s traditional edge of speed, flexibility
and customization is no longer guaranteed.
Appropriately used, the same technology that the large firms
are using to catch up, can also be used by the small firm to stay
ahead and nimble.
©2000 Christopher Meyer |
