Friday, June 1, 2007

Understanding the Need for Speed

Our everyday lives revolve around the need for speed. We want everything done faster. Photo developing and dry cleaning in an hour. Microwave meals. FedEx®. We even use abbreviated names to save time. We fidget waiting the 10 seconds for our word processing application to open — wishing we had a faster computer.

In the business world, the need for speed also prevails. The concept has been around for decades: getting to market first. Manufacturers rush to develop, create, and distribute products before the competition. However, “speed to market” has taken on a whole new meaning with the rise of the Internet.

There’s no doubt that the Internet has changed the definition of fast. Both traditional brick-and-mortar companies and pure-plays have discovered that the definition of fast is now shaped by the Internet. Companies are created and disbanded in record time on the Internet. In some cases, being first with a great idea has paid off. Ebay’s ability to build a customer base of buyers and sellers has given it a competitive edge that late arriving competitors have not been able to duplicate.

Some Internet pure-plays have even been able to give longstanding companies a run for their money. has held its own and is expanding. America Online has been around since the mid-1980s.

To keep up with today’s need for speed, many companies — and even industries — are changing the way they do business. For instance, the insurance industry is responding to market conditions. To meet consumer demand, state insurance regulators are searching for ways to reduce the time it takes to approve new insurance products. Banks and security firms are making it to market first because of the lengthy approval process currently in place for insurance companies.

So, what are the benefits of being fast? Let’s start with what is to be gained by getting a product to market quickly.

Beat the competition.
When you’re first in the marketplace, you gain a competitive advantage
by building stronger brand recognition. For instance, SwifferTM was the first to introduce dry, disposable cleaning cloths and was able to build its brand before the competition came onto the market.

But, second may be better.
Sometimes you can be a close second and do better than whoever was first. You can learn from the competition — what’s working and what’s not — and make minor modifications that will make your product even better.

Customers are waiting - impatiently.
Another reason for speed is that your customers may be waiting for a product or service. And, you need to get it to them first. Once again, if you don’t put it in customers’ hands, the competition will.

Increase your cash flow.
You may also want to get a product or service to market quickly in order to optimize your capital investment and increase cash flow. You need to see a return on your investment before funds are depleted. Many Internet pure plays are learning this valuable lesson. Many Internet start-ups are closing their virtual doors because they didn’t successfully get their product to market before their cash flow ran out.

One last tip. The key to successfully focusing on speed to market is meeting a new demand. Make sure your product or service is something that people want. It won't really matter who is first to market — if nobody wants the product or service.

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