Kellogg World Alumni Magazine, Spring 2003Kellogg School of Management
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  Prof. Phil Kotler
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Prof. Phil Kotler
Theory & Practice
The need for speed: Business strategy in a “nanosecond culture”

By Philip Kotler, the SC Johnson and Son Distinguished Professor of International Marketing

Business firms in the 1990s were exhorted to make their decisions carefully: the mantra was “Ready, Aim, Fire.” As events speeded up, we modified our advice to “Ready, Fire, Aim.” Today, our advice is “Fire, Aim, Fire, Aim.” Tomorrow it will be “Fire, Fire, Fire.”

In such a “nanosecond culture,” can any meaningful strategy endure? Yes, in the limited sense that a company should approach its market with some fixed principles, such as “Never sacrifice quality,” “Always think of the customer first,” and a few others.

What can a company do to make faster — but still good — decisions?

The first answer involves marketing automation. A computer can make some decisions better than a person can. Remember that IBM’s Deep Blue computer beat Gary Kasparov in chess. Remember that airline price changes occur automatically under yield pricing that calculates the number of available seats, time left to the flight, price elasticity, and other factors. Marketing decisions that are ripe for automation include selecting names for a direct mail campaign, allocating product lines to shelf spaces, media selection, message customization, and so on. True, most of these are highly tactical decisions. For more complex decisions, a hybrid system of 50 percent manager, 50 percent model may be best. In these cases, companies need to use decision support models, such as Callplan, Mediac and Brandaid.

The second approach to speeding up decision making is to set up a “war gaming room.” Airlines operate a large control center where personnel sit at computers and watch minute-by-minute changes in weather, airplane problems and other factors that might call for revised schedules. We can imagine large consumer goods marketers sitting in a similar room and observing product and sales movements in each of dozens of key markets. They can detect competitive moves, weather patterns and other factors impacting supply and demand to make quick price, promotion and supply changes.

The third approach is to invest in appropriate technologies. Telematics involves putting sensor chips in products, homes, cars, and offices to trigger desired performances. Travel companies use database marketing to send customers last-minute deep discount offers on available hotel rooms and airline seats. A company’s customer contact center provides a structure of communication links to customers, prospects, dealers and salespeople to facilitate message flow quickly by phone, fax, or email.

The bottom line is that companies can achieve a strong competitive advantage by performing faster. They must become turbomarketers, learning the art of cycle-time compression and speed-to-market. Today’s customers increasingly expect delivery speed: pizza delivered in a half-hour; film developed in an hour, eyeglasses made in an hour, car lubrication in 15 minutes.

Consider the following pioneers of speed:

Deluxe Check Printers Inc., has built an impressive reputation for shipping its checks one day after receiving an order — without being late once in 18 years.

Levi Strauss, Benetton, and The Limited have adopted computerized quick response systems that link the information systems of their suppliers, manufacturing plants, distribution centers, and retailing outlets to enable faster resupply of fast-moving merchandise.

Krones, the world leader in bottle labeling machines, deploys 250 service and installation technicians around the world. The company stores data for each machine, totaling 20,000, in its central computer. Parts ordered before 7 a.m. are sent in the afternoon, by truck, to Frankfurt Airport; from there they are air freighted the same evening to their country of destination.

Cemex, Mexico’s giant cement company, has transformed the cement business by promising to deliver cement almost as quickly as pizza. Cemex equips every truck with a global positioning system. Cemex can promise cement delivery within an agreed-upon 20 minute window. If your cement is more than 10 minutes late, the buyer gets a 20 percent discount.

Clearly, in a nanosecond culture, companies that can innovate faster, manufacture faster, and supply faster are going to be tomorrow’s winners.

©2002 Kellogg School of Management, Northwestern University