Time—The Next Source of Competitive Advantage

The ways leading companies manage time—in production, in new product development and introduction, in sales and distribution—represent the most powerful new sources of competitive advantage.

Editor’s Note: This is a classic HBR article that was assigned reading when I was a student. It has held up pretty well 35 years on.

George Stalk, Jr.

At most companies, strategic choices are limited to three options:

  1. Seeking coexistence with competitors. This choice is seldom stable, since competitors refuse to cooperate and stay put.
  2. Retreating in the face of competitors. Many companies choose this course; the business press fills its pages with accounts of companies retreating by consolidating plants, focusing their operations, out-sourcing, divesting businesses, pulling out of markets, or moving upscale.
  3. Attacking, either

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George Stalk, Jr.

In manufacturing, costs fall into two categories: those that respond to volume or scale and those that are driven by variety. Scale-related costs decline as volume increases, usually falling 15% to 25% per unit each time volume doubles. Variety-related costs, on the other hand, reflect the costs of complexity in manufacturing: setup, materials handling, inventory, and many of the overhead costs of a factory. In … [ Read more ]

George Stalk, Jr.

Today’s new-generation companies compete with flexible manufacturing and rapid-response systems, expanding variety and increasing innovation. A company that builds its strategy on this cycle is a more powerful competitor than one with a traditional strategy based on low wages, scale, or focus. These older, cost-based strategies require managers to do whatever is necessary to drive down costs: move production to or source from a low-wage … [ Read more ]

George Stalk, Jr.

While time is a basic business performance variable, management seldom monitors its consumption explicitly—almost never with the same precision accorded sales and costs. Yet time is a more critical competitive yardstick than traditional financial measurements.

George Stalk, Jr.

Avoiding price competition by moving into higher margin products is called margin retreat—a common response to stepped-up competition that eventually leads to corporate suicide. As a company retreats, its costs rise as do its prices, thus “subsidizing” an aggressive competitor’s expansion into the vacated position. The retreating company’s revenue base stops growing and may eventually shrink to the point where it can no longer support … [ Read more ]

Hardball: Are You Playing to Play or Playing to Win

Great companies stumble and fall when they lose it. Highfliers crash when a competitor notices they don’t have it. Start-ups shut down if they can’t develop it.

“It” is a strategy so powerful and an execution-driven mind-set so relentless that companies use it to gain more than just competitive advantage– they achieve an industry dominance that is virtually unassailable and that competitors often try to explain … [ Read more ]

Off With the Gloves: The Hardball Approach to Business

Wharton’s Michael Useem, director of the school’s Center for Leadership and Change Management, recently spoke with George Stalk, a senior vice president in The Boston Consulting Group’s Toronto office, about why companies that play the toughest often deliver the most value to their shareholders.

Avoiding China’s Rip Tide: Navigating Volatile Supply Chains

Companies that rush overseas in search of low production costs may be walking into a strategic trap, as gridlock hits ports and railways in the United States and Europe. It’s easy to underestimate the hidden costs in long supply chains and their impact on profitability. The authors demonstrate how companies can get a handle on costs by comparing the economics of a typical North American … [ Read more ]

The Turnaround Man’s Last Speech

It’s hard enough to turn around a failing company. Try steering a successful one into the headwind of elective change. Naysayers and obstructionists will land all around you. Yet companies that don’t understand how fragile their success is will lose it soon enough. In a constantly changing world, a turnaround strategy must always be in play. This article spells out the five rules of … [ Read more ]

Rules of Response

Corporate operations – their value-delivery systems – are subject to a challenging set of rules. These are the rules of response.

The Time Paradigm

Time is the secret weapon of business. Advantages in response time provide leverage for all the other competitive differences that make up a company’s overall competitive advantage.

In Harm’s Way: Getting It Right in China

Global players aren’t in China just to pursue growth. They are also there to compete head-on with the Chinese. But the biggest challenges multinationals encounter in China are often self-generated, because they fail to commit themselves fully to the effort. To keep from getting sidelined, China-bound companies must prepare to do business outside the big cities, make sure the home organization is motivated to support … [ Read more ]

Playing Hardball: Why Strategy Still Matters

The need to focus on soft issues has forced managers to take their eye off the ball and lose sight of the fact that strategy matters more than ever. But these same managers must not only realize that strategy matters, they must develop and deploy tough strategies that will defeat the competition. Today, managers must play to win.

Pricing Myopia

Executives often suffer from pricing myopia. They don’t see the freedom they have to use pricing to enhance the performance of their businesses and even create competitive advantage. Because of their distorted or limited vision, they underestimate their power to manage pricing, mistakenly believe that their customers are paying the amounts stipulated by their pricing guidelines, passively accept the prevailing approaches to pricing in their … [ Read more ]