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The Internet Speed-To-Market Trap
Entrepreneurs are generally
known for being in a hurry, and many could not resist the urge to move
as quickly as possible when the advent of the Internet dramatically
compressed business and product development cycles.
In the years before the Internet, the phrase "Ready. Fire. Aim." was
often touted as the way to go - with any necessary refinements being
made along the way after the other guy had been beaten to market.
In the aftermath of the dot-com tech-wreck, this speed has been blamed
for many of the casualties - the information highway is littered with
the wreckage of those who cut the corners too fast.
Many companies are now aware, some painfully, that there are limits as
to how much these cycles can be accelerated.
They are now asking themselves questions about the speed made possible
by the Internet, including the most basic of all -
is speed necessary to gain a
competitive advantage?
In response to this, the consulting firm McKinsey and Company studied 80
Internet companies, including business-to-consumer (B2C) companies,
business-to-business (B2B) companies and infrastructure providers.
The researchers found that although in some cases being fast to market
was essential for company's success (for example, in eBay's domination
of the on-line auction market) speed gave an advantage to only 10
percent of the companies studied.
These 10 percent had three factors in common - they were the first
movers in large markets; they then erected entry barriers against
competitors; and the survival of their business was not dependent upon
factors outside its control.
The Internet has not only sped up the time to market for dot-coms - some
of the old economy companies are using it too.
General Electric (GE) was founded in 1892 but has used its intranet to
establish collaborative design teams in its GE Appliances division,
bringing together colleagues in different countries and time zones.
A GE dishwasher that used to take up to 24 months to design and build
can now take as little as nine months.
Intelligent use of the speed offered by the Internet can therefore give
companies a definite lead over their rivals, but only if the management
is sound.
At the end of the day, there is only good management and bad management
- groundbreaking as the speed offered by the Internet is, it is only
another tool.
A bad process sped up will still be a bad process, the only difference
is that its faults will become evident much quicker.
However despite its dangers, speed is one of the most comprehensive
measures we have to measure overall development performance.
In the same way as an athlete's speed will reflect any weaknesses in his
or her ability, training or equipment, so too in business development.
The secret in harnessing the speed offered by the Internet is not to
neglect sound business practice, and not be frightened that competitors
will get to market first, because even if they do it is unlikely to give
them a lasting advantage. |
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