“Companies rarely die by moving too fast and often die by moving too slowly.”
Reed Hastings, CEO of Netflix
Whether you’re watching a kid’s soccer game on a Saturday morning, tuning in to the Olympics, or ordering a sandwich for lunch, there’s nothing more captivating than the speed of the game. We noticed the fastest six-year-old football player running around the field, were in awe as Usain Bolt crossed the finish line to set a world record, and were greeted by the cashier at Jimmy John’s handing us the #7 Spicy Taste of East Coast Italian was incredible. Grab the mayonnaise and extra chili before we even paid. “Breaking fast” speed, guided in the right direction, defines speed. Applying speed to your business creates strategic direction and delivers competitive advantage.
Speed is a scalar value, meaning it is the time rate at which an object moves along a path. Velocity is a vector that contains the rate and direction of an object’s motion. In business, we observe velocity around us in various activities, some of which create value while others do not. “Direction” has become a key factor in corporate success. Gallup’s research of 10 million managers over the past 30 years shows that 78% of employees do not trust their leaders to set clear strategic direction for their organizations. This is surprising because more research finds strategic direction to be the most important factor in improving organizational health. A lack of speed equals a sick and troubled business in a downward spiral.
Over the past 20 years, in facilitating the exploration and strategic direction of executive-led teams, I have discovered that increasing speed improves team performance in three areas.
1. Insight speed. Insight is learning that brings new value. One of the reasons many organizations struggle to escape the gravitational pull of market mediocrity is that they use dead plans. A dead plan is one that has not been updated with new thinking and insights. Insight into speed is at the heart of Red Bull Racing’s recent dominance in the Formula One (F1) international racing series. They’ve won all six races this year, and a few years ago their pit crew set a world record for a pit stop time of changing all four tires, cleaning the driver’s helmet in the blink of an eye 1.82 seconds, cleaning the visors, and doing anything else. Necessary adjustments.
The high-stakes competition of F1 racing drives teams to increase the speed of insights in all areas. In the 1950s, pit stops took about 1 minute and 7 seconds, but now average 2.0 – 2.5 seconds. Efficiently completing the approximately 36 tasks involved in a pit stop in two seconds requires continuous learning and improvement.
Red Bull Racing’s recent success is also down to them gaining insights into other areas that others lack. For example, they designed an innovative spherical diffuser center section that helps reduce the pressure of the downstream airflow. In simple terms, this means the car has less drag, and its DRS (Drag Reduction System) performance has rivals like Ferrari trying to copy it in the hope of catching up. It’s important to remember that the speed of insight drives the speed of your evolution—your ability to understand, adapt, and thrive in your current environment.
On a scale of 1 to 5 (1 being a snail and 5 being an F1 car), how would you rate your team’s speed of insight (i.e. your ability to absorb new knowledge and turn it into actionable value to bring advantage)?
2. Decision-making speed. When we set strategic direction, the process of resource allocation will follow. A key component of the efficient allocation of resources into a unique system of activities (strategy) is decision-making. Speed of decision-making is critical to individual and organizational success. A study of 17,000 CEOs found that of those who scored low on decisiveness, 94% scored low because they were too slow to make decisions. Former Greyhound CEO Stephen Gorman said: “A wrong decision is better than a lack of direction. Most decisions can be undone, but you have to learn to move at the appropriate speed.
One reason senior executives are slow to make decisions is that they make too many decisions in the first place. Weighing decisions that are not your level robs you of time to focus on the truly important decisions that only you can make. Amazon founder Jeff Bezos said: “As an executive, what are you really paid to do? You are paid to make a small number of high-quality decisions. Your job is not to make thousands of them every day. Decisions. If I make three good decisions every day, that’s enough.
Elon Musk, who has been involved in the development of four companies (PayPal, Tesla, SpaceX and Solar City), all with revenues in excess of $1 billion, uses scientific methods to make decisions. Musk’s process consists of six steps:
1) Ask a question that summarizes the decision.
2) Collect relevant information and data for decision-making.
3) Develop principles based on the intelligence collected and assign a correct probability to each principle.
4) Work backwards to determine whether the principles are relevant, correct, and lead to decisions.
5) See if the decision holds up by trying to refute the basic principles.
6) If the decision actually works, make the decision.
At SpaceX, this speed of decision-making led to its successful entry into the complex rocket industry. Despite the complexity, Musk drives his team to make decisions and execute them at breakneck speed. As early as 2010, Musk said: “We are now steadily producing Falcon 9 and Dragon rockets, producing one F9/Dragon approximately every three months. In 2012, the production rate of F9 doubled to every six weeks Monday. When people realize that SpaceX can build a rocket in a matter of months, it infuriates people at the company because their decisions will slow them down and prevent them from moving faster. In fact, research shows that 86% of managers are dissatisfied with the speed of decision-making at their company. Are you?
Are decision-making rights clear when it comes to your business? Does everyone know who is responsible for what when?
3. Execution speed. One of the reasons it’s so important to clarify your strategic direction in a 2-3 page action plan is that people can’t read your mind. In order for people to develop strategies that achieve overall goals and objectives, there needs to be clear and consistent communication of the direction of the strategy. Another strong reason to share strategy in a short and intuitive way is that research has found that when teams believe their leadership is competent and capable of setting the direction of the strategy, their commitment to strategy execution increases by 40%.
To increase execution speed, it is important to understand the ecosystem in which tasks and actors operate. A useful exercise is to visually map your ecosystem. Start by identifying key players and representing them at large. The tasks and activities they are responsible for (represented by smaller spheres) are then attached to the spokes. Find ways to enhance or modify these relationships, activities, and tasks to make the ecosystem more effective and efficient.
Amazon does this brilliantly in its online retail business, laying a solid foundation for competitive advantage through speed of execution. One of the key enhancements they made to the ecosystem was the introduction of the fulfillment center concept. These centrally managed fulfillment centers enable Amazon to optimize its supply chain and speed up order fulfillment, allowing large quantities of goods to be ordered and received within hours. One Amazon fulfillment center can serve an area that may consist of one or two states, while a competitor may have only one warehouse for a handful of its stores. This allows Amazon to use its execution speed to stock more products and deliver products faster than other companies. Amazon’s execution speed has generally changed consumers’ perceptions of value, with more than 60% expecting anything they order to be delivered in two days or less.
How can you apply speed of execution to your business to add value and differentiate yourself from the competition?
At the peak of a successful company, you’ll likely find that at least one speed—insight, decision-making, or execution—drives success. While the adage “slow and steady wins the race” is a pleasant-sounding moral for a bestiary, in business it’s better to be fast as a rabbit than end up as turtle soup.
