Clock Speed: Winning Industry Control in the Age of Temporary Advantage by Charles H. Fine
In order to conduct a scientific study, you set a baseline then introduce changes in order to understand the impact of the change. Unfortunately, the rate of change, or clock speed, in many studies (human evolution as an example) is too slow for one person to have time to introduce multiple changes and measure the results. Biologists have found by studying fruit flies (a rapid clock speed with a life span of days rather than years), they can reach conclusions faster by studying multiple life spans in a short amount of time. As with the fruit fly, some businesses also have a rapid cycle making them a prime target for study in application to business in general. By studying organizations with fast clock speeds, one can draw inferences to others. Essentially, studying fruit fly industries lets us understand all industries with the idea of implementing effective change in any company regardless of their individual clock speed. Analysis
Clock speed is defined as the rate an industry evolves based on product, process or organizational change. By looking across multiple industries, it is possible to find some with very rapid clock speeds and others with exceptionally slow ones. By taking lessons from industries such as entertainment and computers (very fast), one can draw conclusions for the automobile and aircraft industries (longest cycles noted).
In his analysis, Charles Fine goes on to note that as the speed of an industry accelerates, the advantage one company may gain shortens – advantages are temporary. This conclusion is somewhat intuitive since the research and development to production cycle gets shorter. Others can copy and move into a competitive state more quickly. In order to maintain the advantage, it becomes more critical to simultaneously develop products, processes and supply chains. The author describes this as three dimensional concurrent engineering (3-DCE). The third element (supply chain) is relatively new for many companies and is not fully developed within their business strategy.
In order to incorporate concurrent engineering into product and process and process design, it is important to understand the orientation of the industry. For an illustration, the author uses the genetic module of DNA – the double helix. Similar to DNA, organizations need to map their capabilities along with provider organizations regarding activities, subsystems provided, capabilities they bring to the value proposition and the technology contribution of each (Fine, 1998, p. 105). As organizations evolve and the industry changes, they “move” along the helix from vertical integration to horizontal and back. Many begin vertically aligned where they provide most all of the key elements. A classic example was IBM of the 1970’s. IBM had an integrated product design with an overall system and service package. As the industry evolved, it moved to a more horizontal structure using a modular design across multiple suppliers. As such, Compaq beat IBM to market with new products starting in the mid 1980’s; however, the modular structure may also lead to instability by allowing key providers the opportunity to displace the brand. The author references two classic examples with Intel’s advertisement campaign of “Intel Inside” and Microsoft’s “Powered by Windows” efforts. Both ultimately drove the PC market allowing Dell to displace Compaq as the top provider.
As companies move through the cycle of maturing, they can be defined by their chain of continually evolving capabilities plus the capabilities of everyone they are in business with (Fine, 1998, p. 71). This concept related to supply chain design becomes increasingly important as you look at the relationships in regard to the end customer. Fine introduces two “laws” of supply chain dynamics – volatility amplification and clock speed...