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.

Copyright 2003, RAN ONE Inc. All rights reserved. Reprinted with permission from www.ranone.com.