Chapter 2 What Fruit Flies Teach Us About Business
Submetricsto Measure Clockspeed Each industry evolves at a different rate depending on the following: Process: measured by capital equipment obsolescence rates Product: measured by rates of new product introduction or intervals between new product generations Organizational: measured by rates of change in organizational structures
Submetricsto Measure Clockspeed Assets that are not explicitly process, product, or organizational distribution channels film industry – from small local theatres to regional megaplexes, broadcast networks were augmenented by cable, satellite, and internet Hypermarkets – combination of department store and supermarket brand names – some brands (Coca-Cola, Tide) developed over decades and may be quite durable, while some established a strong brand image in a fairly short period of time.
as a Fruitfly getting a brand name first has tremendous value to it as soon as Amazon got a brand name, it began to focus on supply chain management for business-to-consumer e-commerce companies, figuring out how to do the back ends of supply chain design and supply chain management is absolutely critical
How ClockspeedAffects Decision Making Boeing and Airbus plan for a super jumbo jet slow industry clockspeed, can afford to procrastinate AOL’s choice for an exclusive browser IE vs Netscape Navigator in 1995 Fast industry clockspeed, have to make quick decisions has since attempted to reposition itself as a content provider similar to companies such as Yahoo & MSN, as opposed to an Internet service provider.
Commerce at the Speed of Light MICE industries have one of the fastest clockspeeds. high clockspeed and high uncertainty environments lead to hedging strategies Competitors become collaborators by entering into alliances and joint ventures to reduce the risks and control the industry standards Disney’s purchase of ABC broadcasting, Microsoft’s partnership with NBC (MSNBC)
Clockspeed Drivers:Technology and Competition technological innovation - Even slow-clockspeed industries today, in fact, will tell you that their underlying technologies are speeding things up for them because they rely on information communication technologies like everyone else competitive intensity - Today's trade regime and partly because Internet-based commerce basically allows any supplier in the world to reach any customer segment in the world. So no matter what business you're in, there are more suppliers who can get to your customers today than in the past (e.g. steel industry)
Clockspeed Drivers:Technology and Competition This results in the marginalization of the concept of sustainable advantage The faster the clockspeed, the more temporary the advantage This idea that you can develop a set of capabilities that will sustain you for a long period of time is now obsolete. You have to think of advantage as being temporary. The goal today is to find your way from one temporary advantage to the next one