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Fast-cycle Capability for Competitive Power


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Joseph Bower and Thomas Hout wrote in the Harvest Business Review that executives are achieving sustained competitive advantage by making radical changes in how they manage time within their companies. These companies make decisions faster, develop new products earlier, and convert customer orders into deliveries sooner than their competitors. As a result, they provide unique value in the markets they service, value that can translate into faster growth and higher profits.

In these top-performing companies, fast-cycle time plays two important roles. First, it is an organizational capability, a level of performance that management shapes and builds into the company's operating systems and the attitudes of its employees. The basic idea is to design an organization that performs without the bottlenecks, delays, errors, and inventories most companies live with. The faster information, decisions, and materials can flow through a large organization, the faster it can respond to customer orders or adjust to changes in market demand and competitive conditions. Less time is spent fighting fires and coordinating. More time is available for planning, for initiating competitive activity. 

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Second, fast-cycle time is a management paradigm, a way of thinking about how to organize and lead a company and how to gain real advantage over competitors. It is a powerful organizing message because its basic premise is so simple. It's also extremely effective since compressing time reinforces and supports what capable managers are already trying to do.

Analysis of competitive developments in a wide range of industries indicates that fast-cycle capability contributes to better performance across the board. Costs drop because production materials and information collect less overhead and do not accumulate as work-in-process inventory. Customer service improves because the lead-time from receipt of order to shipment diminishes. Quality is higher because you cannot speed up the production cycle overall unless everything is done right the first time. Innovation becomes a characteristic behavior pattern because rapid new-product development cycles keep the company in close touch with customers and their needs.

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Developing fast-cycle capability isn't easy nor can it be done overnight. It requires fundamental rethinking of how a company's goods or services are delivered to customers and it means that various parts of the organization will have to work together in new and different ways. But these days, the penalty for standing still is far higher than the cost of change.

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