Al Davis, the colorful, iconoclastic owner of the NFL’s Oakland Raiders was one of the first to appreciate the importance of speed in football. And the teams he built around this principle were consistently among the best in the league—until the rest of the teams were able to catch up.
“Speed kills” was more than just a memorable quote, it was a truism about the game of football: faster teams usually beat slower teams, and slow teams didn’t have a chance.
The same is true in business. And if you’re not taking steps to win the speed game you’re probably putting your business at risk.
Recently my wife moved the family’s prescriptions from one grocery pharmacy to another. She did it for one simple reason—they filled prescriptions in 15 minutes vs. 1 hour. Poof just like that the old pharmacy lost our business. And they probably don’t have a clue why.
Sure my family’s business wasn’t keeping the pharmacy afloat, but it’s not hard to see lots of other people doing the same.
Think about it—drop of the prescription, do some shopping at the grocery, takes about 15-20 minutes. Pick up the prescription and go home to the give it to the sick child.
Versus…
Drop it off shop for an hour?? Hmm, I don’t think so. Drop it off, go home come back later if and when you can. Extra trip, child waits for the meds. Not so good.
Poof just like that somebody else gets your customer.
Speed as a business model
“The 30 minute pizza delivery”
“Overnight delivery, guaranteed”
Instant music downloads
“15 minute oil change”
2:30 to build a car on Ford’s assembly line
We all remember these slogans and how they created businesses and entire industries. The critical thing to recognize though, that too many businesses forget, is what speed did for the “fast” company and what it did to the slower ones.
The 30 minute pizza made Domino’s tops in the pizza business and put plenty of small pizzerias and other chains out of business. FedEx built a multi-billion dollar business solely on the concept of fast, reliable overnight delivery—while charging something like 25 times what the Post Office did to send the same letter!
Whole industries have been born out of finding ways to do, produce, deliver or make something much faster than the competition. And in so doing the slower incumbents not only saw their sales and profits evaporate, many of them simply became dinosaurs and went out of business.
Still too many businesses fail to heed these lessons. More often than not companies tell me that their industry is “different,” that doing it faster isn’t what their customers are asking for, or it isn’t worth the trouble or the cost, or it won’t really get them more business.
I can imagine the local pizza guy probably said the same thing—“no one cares about fast, my pizza’s taste better and my customer’s are loyal to me”—right up until he shuttered his restaurant.
Why Speed Matters to EVERY business
It would be untrue and unwise to claim that delivering your products or services much faster will always create a dominant competitive advantage for every business. It certainly won’t. But just because you aren’t going to become McDonald’s or FedEx or iTunes doesn’t mean that accelerating your delivery times won’t have a profound impact on your results. Here are a few key benefits to keep in mind:
- Better matching of supply to customer demand-
For businesses who produce products that are sold off the shelf by retail, through distributors or on-line channels getting faster to market is vital to matching what they produce with what the market is buying. A clothing company that has to order its spring line 9 months ahead of time must guess what the fashion trends will be and what products will and won’t sell far ahead of time. They are at a significant disadvantage against the company that can bring their products to stores in 30 days.
The fast company can wait longer to decide what to produce and it can react to what’s actually selling by producing more of those items and less of what isn’t selling. The slow company is left with shortages and lost sales on the popular items, and stuck holding and discounting unwanted goods. The fast company will not only increase its sales but it will build its brand, because it is in better step with its customers.
- Faster almost always results in lower costs
One of the arguments managers make against increasing speed is that it will cost them more to be faster. Sure that’s true if the only way to speed things up is with costly equipment, new technology or lots of extra labor. But rarely is this the case. Methodologies like Theory of Constraints, Lean, and Kanban have shown over and over again that the key to accelerating processes is not by adding cost and investment, but by improving coordination and efficiency.
Re-thinking your processes to eliminate unnecessary steps, or reduce downtime on your bottleneck immediately increases your speed while lowering your production/ delivery costs. It also adds flexibility to smooth out the natural variability of work loads. The fast company is in a much better position to absorb a spike in demand without driving up costs than the slow company. Being faster reduces many secondary costs that slower companies incur like: inventory carrying costs, depreciation, premium shipping costs, and overtime.
- Some segments of your market will always care about speed
No matter what business you are in there will always be a segment of the market that for whatever reason needs or wants your product or service faster than the market standard. Don’t be too quick to brush this off as an inconsequentially small group of customers. For starters being able to deliverer quicker than the other guy when someone really needs “fast!” is a great way to win all of the business of a new client. Often times you can charge more for such services because no one else can do it and the value to the customer might be very high.
Moreover, most companies almost universally underestimate the size of the market for faster delivery. Back when I first needed eye glasses, Lenscrafters had just launched its business based on “glasses in 1 hour.” The normal method of purchasing glasses at that time was through the optometrist who performed the eye exam, and it took 3-6 weeks or more to get your glasses made.
Now I didn’t NEED my glasses that day I could just as easily have waited a month for them. But why? Why not get them today? It was only going to cost me a few bucks more and I could start using them right away. So the optometrist lost my business in spite of the fact that I wouldn’t have told him that getting my glasses fast was important to me.
When customers are conditioned to a certain delivery speed, very few will ask to get it faster. But most of the time, as soon as someone raises the bar and delivers quicker, there is a flood of customers who want it.
There’s little doubt that in business, as in football, “speed kills.” The real question is whether you and your business will be the predator or the prey?
Now I’d love to hear from you. What is your experience with the impact of speed in your business or industry. What examples and lessons would you share with us? I’d love to hear your thoughts.