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From Real Time to Zero Time
TBC Research chief executive Jyoti Banerjee sees time-based competition as the next driver of the new economy.
Posted Aug 16, 2000
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When George stalk described time as the next source of competitive advantage, he was thinking primarily of the manufacturing industry. The possibility that Toyota could take on Europe by making cars in hours rather than days; or how Honda et al almost wiped out major European motorcycle manufacturers by compressing the time taken to introduce new products.

By stalk's calculations, it was worth being a time-based competitor. Such companies can respond to customers 66 per cent faster, grow up to four times faster, and have at least double the profit advantage of their competitors.

But stalk wrote before the dawn of the New Economy. Today, we live in an age where customer expectations have been transformed by the Internet. Free, Perfect and Now is the insightful title of a book by Robert Rodin, president of Marshall Industries, on what today's customer expects. And the "now" part is critical to competitive advantage for all companies, not just the manufacturing ones.

For example, the U.S. firm Progressive Insurance offers instant settlement. Each customer has a device fitted to their car that gets a Progressive agent to the scene of an accident, often before the police. The agent then has the authority to make an instant settlement by writing a cheque to the customer on the spot.

The Zero Time Factor

The ability to react instantly has been captured in the concept of Zero Time, described by creators Raymond Yeh and Keri Pearlson as a conceptual architecture for 21st century enterprises. Yeh and Pearlson are professors at the business school at the University of Texas, and have studied how companies compete in the New Economy using Zero Time.

To be a successful exponent of Zero Time, a company has to master five disciplines. The Zero value gap is about custom fitting products and services for customers, to maximise the value each receives. In effect, this discipline is about one-to-one marketing, where the key parameter is not market share, but share of the customer's spend. To extend the concept further, it is possible to work out what a customer wants by knowing what the customer's customer wants. Intel inverts that thinking by helping its customer's customers to know what to expect in terms of technology direction, thus driving the sale of its own products.

The second discipline, zero learning lag, concerns the ability to convert knowledge into customer value. For example, Progressive's intelligent device helps the company learn about a customer's accident (data), but also lets it respond at once, offering instant help (real customer value).

Zero management is where every person in the company has permission and the ability to do whatever is necessary to produce value for the customer. At a manufacturing line at NEC's mobile division in Tokyo, each worker has a storage box containing a day's supply of parts, and is part of a spider production line. Every worker in the spider has what they need to do their job for the day. If they need help, they know who to ask, and are empowered to seek out whatever they need immediately.

Zero resistance is concerned with making it easier for customers to do what they want. Customers using electronic storefronts can locate an item, order it, pay for it and receive it without the usual impediments and delays associated with non-electronic shopping.

Finally, Zero Time companies must grasp zero exclusion, where all people and organisations are involved automatically. Boeing's 777 design team involved such customers as United Airlines and Cathay Pacific in design, production and product introduction, so that they got what they wanted from the aircraft.

Yeh and Pearlson aren't always right. They point to Compaq's use of just-in-time inventory management and build-to-order manufacturing. Compaq's former CEO Eckhard Pfeiffer captured the thinking in an optimised distribution model, which let Compaq see its business from the customer's perspective. By waiting Zero Time before announcing their findings, Yeh and Pearlson missed the fact that the customer did not like what it saw, because it deserted Compaq for Dell, an even better exponent of time-based competition. Today, Pfeiffer is on the scrap heap of history and Dell is the company to beat.

Yeh and Pearlson do have one thing in their favour: no one disagrees that time is now the critical variable. Instead of taking decades to reach billion-dollar valuations, companies today can do so in a matter of months. The compression of time involved in such rapid evolution is now the stuff of competition.

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