Business strategy is directly related to time and speed. Expressions such as time-based strategy, time-based organization, just in time, response time, and so on have become an inseparable part of the terms of the world of business strategy. In such a dynamic business world, business management obligates the rapid execution of strategic decisions. For example, Andrew Grove, the legendary CEO of the INTEL Corporation said, “Speed has become everything in the world of business” (Fortune, 1992) or Jeff Bezos, the founder of Amazon.com, calls it, “business at the speed of thought” (Spector, 2008).
We act in a world that does not rest for a moment and more than a few companies today operate without stop ‘around the clock’ – 24/7 – every year in a great number of time regions around the globe. This means that companies needs to make more decisions in a shorter period of time, at a higher level of uncertainty or lack of information, and at a more aggressive level of competition, which immediately punishes every delay in the schedule. For example, in the field of fashion a delay of few weeks in a new line of products reaching the market is critical(Gilbert, 1993), and in the airplane manufacture industry a delay of few months can cause a lot of damage as we saw when the
European airplane manufacturer Airbus, pospone few times its new superjumbo A-380 launch date. That caused a crisis that eventually led to the resigns of Gustav Humbert, the President and CEO of Airbus (Airbus press release, 2 July 2006), to the payment of high penalties to the aviation companies that had ordered the plane due the delay in the delivery date, and eventually to the cancellation of orders and the transfer of clients to its main competitor, the American Boeing company.
Time can be expressed in a variety of ways in the company day-to-day life like: cycle time, time to market, new product development time, time elapsed between order replacement and payment and real-time customer responsiveness (Helms – Ettkin, 2000). Concepts of time vary dramatically across individuals and cultures. Work is drawn from anthropology, psychology, sociology, and management to identify five dimensions of time that guide the review and discussion of dynamic strategic management research. The five time dimensions are: nature of time, Real or epiphenomenal, experience of time – Objective or subjective, time flow – novel, cyclical, or punctuated, time structure – discrete time, continuous time, or epochal time and temporal referent point – past, present, or future.
Therefore, the perception of time of the company’s management influences the behavior related to the resource of time in the context of the decisions related to the speed of performance of the firm’s strategic courses of action (Mosakowski – Earley, 2000).
The development of information and communication systems allow us to live at a steadily increasing pace of life that pushes us to perform more activities at a given time and at a more rapid speed. Our expectation of ourselves and of others is for a faster response time and thus companies act in regards to changes in the market, changes that related to regulation, competitors’ activity, clients’ needs, etc.
The new generations of managers was born and adjusted to a rapid, shifting world that changes without stop and their expectations are to perform rapid processes, even instant ones. They sometimes lack the patience for long-term processes that do not bear fruit in the short term (Contrel, 2000).
The intensiveness of the management work steadily increases in aspects of load and time. These developments explain the rise in the attention dedicated to the topic of the execution time of strategic processes. Therefore, managers are required to make more decisions on a higher level of uncertainty or lack of information and at a more aggressive level of competition (Eisenhardt, 1992).
The execution speed of strategic processes is one of the key variables that influence the companies’ success. The advantages of the first mover, such as increase in the sales and profits, improvement in the image in the clients’ opinion, and achievement of a competitive advantage, tempt many managers but require a high speed (Forbes, 2005).
The speed at which a company performs strategic processes is comprised of the speed of decision making, the time that passes from the beginning of the examination of the alternatives to the decision to the time at which the commitment to the decision execution is announced, and the speed of execution, until the decision is implemented in actuality (Mintzberg, 1987).
The indicators of time are related to four areas of the company’s performances: the process of development of new products, the processes of the making of strategic decisions, the processes of manufacturing, and the processes of customer services (Stalk – Hout, 1990). In every such realm, many researches have been conducted intended to examine the impact of the shortening of the time (the increase of the speed) on the performances. According to the researchers, the time (speed), expenses, and quality are inter-related and the analysis of the time has greater importance than the analysis of the expenses. It is necessary to ask the right questions related to time such as why do we repeat the same stage or process twice? Why do we perform a certain activity in sequence and not in parallel? Why does a certain process occur in only half the time? Why are there too long waiting times between processes? These questions and others enable, in addition to the shortening of the time, the reduction of expenses, since ‘time is money’, and the improvement of quality. The conclusion that speed and performances are interrelated was proved by the experience of a steadily increasing number of companies (Judge – Miller, 1991).
Most managers acknowledge the fact that speed influences. A slow strategy is not effective, just like a mistaken strategy. One of the senior managers summarizes the importance of speed as follows, “No competitive advantage lasts in the long term and the field is not static; the only competitive advantage is to move rapidly” (Eisenhardt, 1990).
The implications of the process of the speed acceleration on the strategic management of the companies that do not adjust themselves to the pace of the 21st century, that do not develop new abilities and products quickly, and that act in lengthy and awkward processes of the making and implementing of decisions will not survive in the long-term since other companies will always be ahead of them. The ‘graveyards’ for companies are filled with such companies. Slowness in the making and implementation of strategic decisions can cause a company to miss its window of technological or marketing opportunity to reach a market with new technologies and products.
The average life span of Fortune 500 firms is only forty to fifty years, and this time is steadily growing shorter (Gandossy, 2003). Therefore, only companies that will intelligently develop quick response time to the consumers’ changing requirements can survive.
Stalk and Hout (1991) researched the impact of time based strategies on the competitive advantage of technological companies. The researchers maintain that the way in which leading companies manage their time constitutes a source of competitive advantage. Firms with a rapid innovative cycle of products and services can move from the situation of ‘follower’ of the market leaders in their field to the situation of ‘leader’ in the field in only ten years. These companies do not wait for the ‘next great innovation’; rather, continuously and incrementally they renew their products every time, small step after small step forward, and this allows customers to enjoy each time improvements in relatively short time periods.