Accelerate decision cycles to increase competitive advantage

The pace at which your organization makes decisions may outrank the quality of your choices.

Geoff Wilson

Imagine you and I are playing a game. The type of game doesn’t matter, but assume it requires taking turns or possessing a ball. It could be innings in baseball, possessions in soccer, or even turns in a basic game like checkers.

Now, imagine there’s a wrinkle: I get two turns for each one of yours. I get to make two moves in checkers for your one move. I get six outs per inning in baseball against your three. I get the ball twice for every possession you have in soccer. Here’s the question: Can you win?

I don’t think so—at least not consistently. If I get two chances for each move you make, and if I get to work from basically the same information you have, my probability of winning is greatly enhanced. This example may seem absurd, as you’d likely scoff if I dared propose such an unfair contest. But it’s analogous to how some companies handicap (or, conversely, advantage) themselves.

Strategic decision cycles are too often internally driven

Companies the world over operate as if their internal decision processes are all that matter. They do annual strategic planning, quarterly account planning (if they’re lucky), and maybe monthly resource planning. For many of these companies, big decisions—such as introducing a new product line or building a new plant—can take years, while seemingly small decisions—hiring a new salesperson, for instance—can take months.

Their decision cycles are internally driven—even when managers know that the outside world is moving faster than their own company’s internal cycle. This pace lagging restrains opportunity in the best cases, and paves the road to ruin in the worst cases. The worst cases are when the world is rapidly changing, or a shifty attacker emerges in the market.

Fast decision cycles are advantageous

We all want to make good decisions, and doing so requires reasonable deliberation time. However, if you are caught in a scenario where your competition is able to make decisions faster than you can, your slower-paced good decisions eventually won’t matter.

Why? Because the organization that can multiply its capability via a faster decision cycle will have a substantial advantage in avoiding risks and capturing opportunities. The company that moves through decision cycles faster than its competition—the one that can make multiple decisions while the competition makes just one—is an advantaged organization.

For decades, Toyota has been constantly lauded for its production system, but its product development system is only occasionally celebrated. Toyota captured substantial share in the 1980s by introducing products and product refinements on a development cycle that was significantly faster than its competition. This system gave Toyota a major advantage over the slower pack.

One could argue that Tesla is doing the same thing in today’s market with its “platform and upgrade” approach to auto ownership. In some ways, Tesla is able to operate inside of its competition’s decision cycles.

So what? Cycle faster!

Companies with faster cycles are advantaged. Such advantage doesn’t eliminate failure, but it increases the probability of success (and of killing off failures quickly) to overwhelm missteps. Would you rather be a baseball player with a .500 batting average who gets two at-bats per game, or a player with a .300 batting average who gets to the plate six times a game? If you’re playing for hits, you want to be the latter, not the former.

Fast cycling allows you to multiply your force. It enables you to disrupt and dismember the competition. Done well, it allows you to lead—even with less talent, capital, and “perfection” than larger, slower competition.

But beware the alternative: When your competition is inside your decision cycle, you are going to lose—eventually. If you drive at a tempo slower than your competition, you might find yourself on the slow road to oblivion.

What do you think?

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