Time Pacing: Competing in Markets The Won't Stand Still Flashcards
Event Pacing
Companies change in response to events
– moves by competition, shifts in technology, poor financial performance, new customer demands
Managers follow a plan and only deviate when performance weakens
Stable environment – opportunistic and effective way of dealing with change
Reactive and erratic strategy – opportunistic and effective way of dealing with change
- Businesses need it when there is an inevitable surprise in the market
- Reliant on external forces
- Passive strategy
- Companies become slow in transitions because they do not experience it enough
Works in a stable and predictable market
Time Pacing
Scheduling change at predictable time intervals
- New products, new launches, entering new business according to the calendar
- Regular, rhythmic and proactive
For competing in fast-changing, unpredictable markets
- Can help anticipate change and even set the pace for change
- Creates a high barrier to entry
- Helps companies “shape the future”
- Creates a sense of urgency around meeting deadlines and focuses an organization’s efforts toward common goals→ does away with complacency
- gets rid of the natural tendency to wait too long, move too slow and lose momentum
Predictable –sense of control in a chaotic market
Disciplines organizations to manage transitions with a plan (can sustain momentum)
- Can use rhythms to plan ahead and align cycles with other partners’ cycles. (Corporate espionage→ can pre-empt what the competitors are doing)
- Rhythmic – schedules change as a rule (need not be speedy! → must match company’s capabilities) e.g. Emerson Electric by cutting the size of product development portfolio, they actually performed better
- helps build momentum
Time pacing Examples
• 3M wants to have 30% of revenues come from new products every year
• Netscape introduces a new product every 6 months
• Starbucks wants to open 300 stores every year (goal of 2000 stores by 2000)
– Over saturation
– Company grew too fast – lost its roots and values
– Unable to be what it was
– Carried away with time pacing
Managing Transitions
• Transition: shifts from one activity to another, the hardest part of a relay race
– Often the weak link for companies in changing markets
(shift in product development project, advertising campaigns, entering/leaving markets)
– Typically involve a large number of people – usually not used to working with each other
– Occur less than other activities – less experience
(communication breaks down easily, misstep often turn into costly delays)
– Poor transition = lost position, stumble, fall behind
- Time paced companies learn to choreograph important transitions – shorten the time it takes to execute them
- Fast paced markets = more transitions and transitions are more critical
- The best transitions
- Offer opportunities for managers to learn, reflect, change direction and accomplish other goals
- Are opportunities for change
- Have processes that follow a plan
Gilette Example
• Executes about 20 new product transitions every year
• Does not release a new product prototype into production unless a mock-up of the next product is available.
– Benefits: when competitors copy its products, Gillette would have another new product ready. “We’re one step ahead of you”
- Is “not just reacting to competitors but orchestrating and commanding a business.”
- When entering new geographical market – they vary the process depending on the level of development in the country
- Have to take it to the consumers at the right time and at the right markets. Managing transitions to a large extent is about communication (internal or external), communicating it timely and clearly
Netscape Example
- Other companies in the industry had 12-month product development cycles, a beta site testing and product shipment
- Netscape slashed product intervals to double the number of transitions
- Forwent the beta testing and released the prototype on the Internet where people would refine the prototype into the finished product for free
Banc One’s M&A process Example
- Bought smaller banks at a measure pace – about 10 per year, 4 to 6 at a time
- Transition begins on the day the merger is announced
- Welcome staff of newly acquired bank into the family trough a videotape
- Marketing and retailing departments align the affiliate’s products onto Banc One’s profile
- Electronic banking department assesses ATM volume
- Assigns a “mentor” bank (who has recently undergone a similar conversion) to provide a model of how the bank will turn out (with the help provided, the pace of work will not stop)
- Reserve 180 days for these transitions before systems are switched over to Banc One’s system
Managing Rhythm
3 ways to manage rhythm
- Get in step with the market
- General management has its rhythm
- Choose manageable pace
- Get in step with the market
• Need the right rhythm for change – synchronise rhythm with the market
– Align with important rhythms in the market, e.g. changes in season, holiday or festive periods, and swings in customer spending (usually advertising campaigns will be crazy in December or festive seasons→ bonus are given)
• Need to synchronise with consumers, suppliers and complementers
– i.e. Intel – if Intel produces chips too fast then there aren’t enough complementary products to work with the chips. They give their complementers early access to their new products
• Sometimes the right rhythm means slowing down
– i.e. Silico matched the development cycle of their supplier – introduced fewer products but each new chip represented a more significant performance advance
Managing Rhythm Examples
• Launch of new drink in time for the summer (rather than when a new drink idea comes up)
• Appliance manufacturer aligns its new product launch with retailer’s schedule shelf-planning cycle
– Manufacturer wins more shelf space
• Computer manufacturer times it’s product releases just before the reviews on a computer magazine (PCWorld)
– Editors write about the company’s latest launches
- General management has its rhythm
• Managers begin to alter their planning and review process to match the rate of change in specific markets
– i.e. electronics companies have fast product life cycles = six-month review cycle, home appliances have a one to three year product life cycle = annual review, heavy industrial equipment have longer cycles = eighteen month review cycle
• In fast moving segments, executives set the pace extremely fast to use real-time information
- Companies like Dell and Cisco often deliberately choose a pace that competitors cannot sustain
- Believe their speed will give them a competitive advantage
- Choose manageable pace
- Companies can only time pace as fast as their internal capabilities allow them to move
- When the pace falls short of the management’s ambitions will ramp up their capabilities i.e. hire more staff
Changing often enough
- Some event driven companies in fast faced environments end up changing too much – starts changing all the time to keep up with the environment
- Time pacing prevents over-reacting to “noise” in new ventures – some products need time to mature and prove themselves (people might not have taken it on)
Modularity
• Definition: degree to which a system’s components maybe separated or combined
– i.e. Sony’s Walkman which had six basic platforms and variations in colour and styling and distinct components like batteries
• Best features of products shouldn’t be released at one go
– What new products can you come up with?
• Combined with time pacing→help companies time their release while ensuring products are developed and launched within the scheduled time
– i.e. Microsoft – develops applications in modules and prioritises them.
Incorporate the most critical features for the deadlines and roll over the lower priority features to the next deadline
Advantage of time pacing
- Creates a sense of urgency and focuses an organisation’s efforts
- Disciplines organisations to manage transitions with a plan
- Can use rhythms to plan ahead and align cycles with other partners’ cycles
