Wednesday, February 21, 2007

Strategic Planning - the power of speed

This is the fifth in a series of short articles about how to get more out of your strategic planning.

5. Respond Faster

"Time is money". We've all heard that, right? But does your company operate that way? Many times, I've seen companies succeed wildly simply because they do things faster than their competitors - usually, a LOT faster. This works simply because all of us, as consumers, would prefer to have whatever we want whenever we want it. In many cases, we are prepared to pay a huge premium to someone who can save us just a little time - sometimes even paying this premium for a product or service on inferior quality.

How can you use this? First, in your strategic planning, you need to understand the time performance standards of your industry. Do 90% of your competitors turn around a customer order in a week? A day? An hour? Obviously, this can vary a lot, depending on the business you are in. But whatever that standard is, you need to ask the question "Are there many customers who would find it valuable to be served in half the time?". Usually - but not always - the answer is yes. In many cases, customers will be willing to pay a premium of 10-20% to get the same product or service in half the time.

Knowing that your customers will pay a premium for faster service is only half the battle. Naturally, you actually have to deliver on this - and make sure the customer knows you deliver. A simple time-flowchart can help you to identify where your customers' time is spent in your operation, and give you some ideas about how to cut that time down. This analysis should be done in the strategic issues section of the strategic planning process (page 5.2). Here are the top five time wasting places I've found in various industries over the years:

1. Credit approval
2. Waiting for engineering
3. Communicating the order slowly
4. Packaging for delivery
5. Waiting to be delivered

Granted, these are more applicable to products than services, but service examples tend to be very industry-centric (ie. an airline wastes time in different places from a restaurant). Anyway, try doing a little flowchart of your own operation and see if you can't find some treasure for your customers - chances are, they will be glad to pay you for it!

1 comment:

Gerald Nanninga said...

I just discovered your blog. It appears that you and I are writing very similar types of blogs. I thought you might enjoy discovering my blog: Keep up the good work. I've only been doing this blogging for a few weeks. You've been at it for years. You have my great respect for that longevity. Let's keep the discipline of strategic planning alive and well!