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Wednesday, May 02, 2012

Execution Speed As Competitive Advantage

11:11 PM Posted by Deepak Nayal , No comments
For years we have known that various factors - such as market share, (hard or soft) assets and brand - can contribute towards competitive advantage of companies. We have now also understood that execution (including some of its finer aspects) can add towards competitive advantage of companies. These execution aspects include design, quality and operations. In addition to these, speed of execution can also prove to be a very tangible source of long term competitive advantage.

Successful entrepreneurs and companies have shown us time and again how execution speed (considering product/service quality obviously) can be leveraged as a long term competitive advantage. Successful entrepreneurs are known to be impatient when it comes to delivering projects, and for good reason. Donald Trump used execution speed to his advantage for delivering quality infrastructure projects within time - ahead and better than his competitors. Jeff Bezos got the entire Amazon technology landscape transformed with service-oriented architecture, which led to birth of Amazon Web Services and revolutionized cloud computing. As per one of the articles (more of a rant) by ex-Amazon employees, this transformation just took a couple of years or so in Amazon. Similar enterprise-wide initiatives in normal companies can take at least five years to get implemented and that too get done in shoddy patches. Dhirubhai Ambani, the late Indian billionaire, founder of Reliance Industries, was known for implementing large [industrial] projects with amazing speed that his rivals could not imitate. Speed of execution was one of Dhirubhai's key operational advantages, which also helped him in his rags to riches transformation. 

We have also recently seen some companies take advantage of execution speed in the one of the hottest markets in the world - mobile. Samsung was able to leverage Google Android by quickly releasing mobile phones and tablets in the market, and gaining market and mind share to the extent that it has now surpassed Nokia as the top mobile phone seller. HTC is another vendor that was able to quickly take advantage of this upheaval in mobile market and jump to the front stage, from being phone supplier to other companies for many years. All this happened, while Nokia and RIM were still contemplating their next moves.

I am not saying that in all these examples quoted above - and for many other similar ones - speed was the only factor involved. There obviously were multiple factors present. However, most companies are not able to roll out changes and execute fast enough. They get stuck in meetings, presentations and bureaucracy, because of which many initiatives either get dropped off the radar or take much longer than they should have. In addition to that, this affects employee moral negatively as well. Companies miss out on huge opportunities by not identifying speed as a source of competitive advantage and taking the required steps to speed up decision making and project execution. 

There are a few things that organizations can do to incorporate speed in their DNA. All of these are known commonly known management mantras and revolve around soft issues. 

  • Smaller and Co-located teams - Small teams work effectively. Research has shown that teams of around five members are the most efficient ones. In addition to that, no matter how much advanced technology has become and no matter how web and mobile have changed the way we communicate, the fact of the matter is that these technologies cannot beat the effectiveness and efficiency of a team sitting around a table and working together in the same room. 
  • Direct reporting into a top manager - Bureaucracy kills innovation. If a project manager has to go through loops and bounds to get approvals and agreements for things that are important for a crucial initiative, then you can pretty much count on delay or failure of that project. So one of the most important things required for fast execution of your crucial initiatives is to ensure that the project team and its project manager directly reports into someone from top management. 
  • Agile project management - The field of software has not just given cool and useful applications to this world, but has also contributed to management studies. The complexity and uncertainty associated many software projects cannot be managed with traditional project management principles and requires agile project management. Leading management thinkers have realized the relevance of agile project management in the context of bigger organizational management and have been pushing for adopting agile management on corporate level. Agile management ensures that the project team is quickly and iteratively working on the idea and implementing it, instead of working in a silo, trying to finalize the product and then showing up the completed product after months of effort, only to get it turned down. 
  • Fail fast, fail often - With brainstorming, fast execution and multiple iterations, you are bound to have failures and problems showing up much more often than usual. But the good thing here is that because you are trying out things in small steps and in an iterative fashion, the cost of these failures and mistakes is not going to be that high. But for this to work properly, people have to get rid of that fear of failure, which is off course easier said than done, after all, we are all humans and we all want everyone to love and admire us. Failing fast and failing often, as scary as it sounds, actually does makes a lot of sense economically, as failures down the line end up costing exponentially higher than the ones at the early stages, which might lead to not just slowing down the project but eventually leading to its cancellation as well. 
  • Strong leadership - While all these factors are important to incorporate speed into an organization's ethos, the bleeding obvious fact is that none of this is possible without courageous and strong leadership. And this is probably the least common denominator amongst all companies that have been able to leverage speed as their sustainable competitive advantage. 

While speed just in itself cannot be a source of competitive advantage, when put in together with other factors, it can prove to be the deciding factor. Entrepreneurs and companies that realize this have not just been able to get ahead but also stay ahead of the competition.


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