The comment was so contrary to the conventional wisdom of the day that it bordered on heresy. The time was January 1992, the height of the Quality movement in U.S. business, and I was interviewing a rising star in the consulting world. The conversation had turned to competition—specifically, how companies could use their logistics operations to achieve a competitive advantage—which led me to ask him where logisticians should focus their energies. I half expected him to launch into a discussion of quality assurance or process improvement techniques, but he came back with something entirely different. "Quality is dead," he told me. "Speed is king."
The consultant was George Stalk, a principal with the Boston Consulting Group, who also happens to be profiled in this month's DC VELOCITY Thought Leader series (see page 28). As I learned, Stalk had given a lot of thought to competition and competitive advantage in the preceding years. In fact, he had spent the better part of a decade studying Japanese manufacturing and distribution operations to find out what was driving their success. He had concluded that while quality and cost were a big part of it, the real secret was time—the ability to leverage speed in manufacturing, product development, and distribution to get a jump on the competition.
But the gospel of time was proving a tough one to spread in an America still in thrall to Quality. The Quality movement had emerged in the '80s after U.S. businesses began to realize that, as a competitive differentiator, price had run its course. It was no longer enough to be the low-cost producer. Quality—craftsmanship, performance, durability—mattered as well. In fact, it mattered a lot. Think of how quickly Americans turned their back on domestic auto makers when Japanese companies like Honda, Toyota, and Nissan (which then sold cars under the Datsun nameplate) first brought their well-made, reliable cars to the U.S. market.
It almost took the demise of the U.S. auto industry to bring the Quality point home. But eventually Detroit got on board (who doesn't remember the Ford Motors slogan: "Quality is Job 1"?), and other sectors followed. Once it took root on American soil, the Quality movement flourished. At the height of the movement, virtually every large corporation had joined in, instituting quality circles or training workers on various process improvement techniques.
And that, as Stalk saw it, was precisely the problem. "Like competition itself, competitive advantage is a constantly moving target," he had written in a 1988 Harvard Business Review article. If everybody was catching up on quality, companies would soon need a new source of competitive advantage. In Stalk's view, that new source was speed to market, or time.
Though some dismissed Stalk's message, there were many who paid heed and found ways to exploit speed to devastating effect on the competition. And many companies are still competing on the basis of their supply chain speed today. Stalk points to Spanish apparel retailer Zara as an example. Year after year, he reports, Zara continues to "clean up" in Europe's department store and specialty store business because it can whisk items to store shelves faster than any of its competitors can.
A side note: Stalk's comments from 15 years ago had an influential role on the founding and development of the magazine you're now reading, which concludes its fifth year of publication with this issue. When he commented in 1992 that "speed is king," a seed was planted. It took more than a decade for that seed to germinate, but in January 2003, it sprouted, blossomed, and bore fruit. The result was a new logistics publication, DC VELOCITY. The fact that the word "velocity" was included in the title is no coincidence.
Thank you, George. We appreciate your insight.
Loxo/Planzer