Just Managing: Not So Fast
Aesop's fable about the tortoise and the hare applies to the
dot-com age. Finding the right niche and business plan take time
- and patience.
Mar 23 2001 02:05 PM PST
How fast can you read this column? How quickly can you apply these
thoughts to your business model? How soon does it take for your
jaw to clench when business pundits hammer home the idea that you
have to go faster, faster, faster?
I often wonder whether anyone else is fed up with the plank in
the new-economy platform that screams that speed has become the
most important force in business today. It's become a truism that
the spoils in our wired economy go to the hyperactive, rapidly adapting,
and fast-moving gazelles. You hear this in books such as "It's not
the big that eat the small, but the fast that eat the slow," or
even in recent articles that posit the coming of the "disposable
corporation." To all of this I'd like to reply: Hold on a minute
- or even two.
Isn't the recent dot-com carnage the result of scores of companies
that aspired to get big fast or exploit first-mover advantage -
and failed? Aren't there plenty of companies that have prospered
by getting big relatively fast? I'm not arguing for lethargy or
complacency here, nor would I praise the benefits of procrastination
(though I do plan to write that column, um, real soon.) Rather,
I'd like to make a finer distinction in the notion of speed as the
premium force in the Internet Economy.
There's a better question than: How fast can we go? How about:
What business functions and processes can we accelerate? And which
ones should we not force? I'd like to propose that we refine the
concept of business speed by adding the idea of business metabolism
- the rate at which companies consume and process information, goods
and other resources - to the equation.
The wired economy certainly has ramped up the speed and even the
simultaneity at which companies share data, find customers or monitor
production cycles and supply chains. And yet, while these changes
are certainly speeding mechanical processes, there are certain corporate
functions that resist hyper-speed.
The elements that often matter most in a business are human ones,
and those are often the least resistant to acceleration. Can you
learn, develop trust and establish relationships faster? Does wisdom
scale? Can you manufacture epiphanies? Can you listen to customers
quicker? I don't think so. The rate at which individuals and organizations
learn, build trust and discover sources of value will always contain
natural speed bumps. Ignoring those obstacles will have serious
Pure speed can be counterproductive. Having to start at 100 mph
can force promising companies out of business before they find their
niches. No less a sage than Peter Drucker, one of the world's most
noted authorities on corporate management, argues that many entrepreneurial
companies succeed in very different markets, with very different
customers, than their original plans. "One can't do market research
for something genuinely new," he said in his book Innovation
Most high-tech, high-growth companies need time in their early
days to discover their unique values. They often cast about with
different technologies, customers and business models before finding
the one that delivers high value and high margins to a healthy audience
of needy customers. Business models predicated on finding the market's
sweet spot on first try are futile, as they leave no room for marginal
improvements that respond to market feedback, and they force the
company's founders to try to change the world rather than respond
to actual market changes. The most successful companies are always
customer-driven rather than producer-defined.
When the companies do land in the right zone, they should direct
everything possible into an effort to dominate the space they're
in. Consultant and author Geoffrey Moore, whose book Inside the
Tornado has helped scores of leading technology companies grow
implausibly fast by exploiting their market niche, agrees that the
time of frantically throwing all available resources at growth matters
is but a brief window of opportunity. When a company has successfully
commercialized a technology that a groundswell of customers are
actively adapting, it is at that point that they should be doing
everything possible to dominate that growth, Moore said. Like fisherman
throwing bait to sharks in a feeding frenzy, they should exploit
that market by working feverishly and frantically to dominate the
"There's a limited time when people do adopt a new technology
and if you don't get them your competitor will," he said.
The notion of speeding up selectively is reinforced by the research
of Harvard Business School assistant professor Tom Eisenmann, who
is working on a book concerning the relative merits of Internet
time. Eisenmann refines the time question by distinguishing between
strategic choices and organizational practices. In terms of strategy,
he argues that there are a few specific conditions that create powerful
incentives for companies to be the first movers in their respective
spaces. Markets characterized by network economics, scalability
and sticky customers, he said, call for getting big fast.
But Eisenmann distinguishes between getting big fast and getting
it right first. He said some companies are spending time up-front
listening to customers, developing infrastructure and working with
players in the industry to develop the trust and relationships that
help them grow and prosper.
Yet these insights can't be extrapolated to define every business
and every businessperson. In the digital economy, competition isn't
a quantitative matter, but rather a qualitative one. You can't accelerate
excellence. You either have it or you don't. So while fast growth
might be better than slow growth, manageable growth is best of all.
Every company has its own metabolism, and the race goes to the companies
that find - and live by - their appropriate grooves.
Read or print the Intro
and Chapter 1.
Read the book reviews at Inc
Read the publisher's press
this book from Amazon.com.
the companies that Tom discusses in the book
Hear a recent lecture by Tom on the Startup Garden
Buy my book and I will send you a worksheet and list of local
and industry resources for your startup. Simply send me an email
with your zip code and type of company and I will email you the free kit. Thanks!
Managing – articles that Tom wrote for The Industry Standard and some
written for Inc., Fortune Small Business, Harvard Management Update, and other
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books and web sites about starting your own business.