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Creating Competitive Advantage in a Fast Moving World

Steve Spear, 12/1/2016

[This is a first of two posts on this topic by Steve. In the second, he discusses not just what success looks like, but how an organization can achieve the gracefulness that leads to gratitude among customers and workers.]


Creating Competitive Advantage in a Fast Moving World Remarks at Naval Warfare Development Command May 5, 2016

Steven J Spear DBA MS MS[1]

A select few organizations expend less exertion, consumer fewer resources, and need less time than their rivals and counterparts, but deliver so much more value as to be in a league of their own. The difference? Their superior performance reflects a depth of skill and knowledge others lack. That depth is the result of high speed, broad based, deeply rooted, long standing learning dynamics whereby the ‘routine’ doing of work has the regular byproduct of improved understanding of what to do and how to do it. This learning dynamic depends on fostering an environment in which people regularly:

-declare what they expect to happen,

-quickly recognize that what is actually happening is a ‘surprise,’ a contraction to those expectations

-swarm on these problems or surprises to understand their cause and consequence correct the underlying conditions

-sustain/spread what was learned from the experience.

Accomplishing this depends on creating the norms and values that allow people in all ranks, rates, and roles to challenge approaches and purposes safely.

Introduction: The better apples paradox

In the commercial/industrial world there are those organizations that are the “better apples,” generating more value in less time and reap outsize rewards for doing so.

The gaps are enormous, but their sources are not special materials, unique equipment, or privileged access to customers and suppliers. It’s rooted in managing __everyone__ as a knowledge worker, capable of generating new, useful insights about what to do and how to do it.

As for the gaps in autos, for instance, Toyota goes head to head with Ford and all of its other major rivals, competing in every model, brand, and region. Yet, when the results are tabulated, Toyota enjoys a 27-hundred dollar profit per unit sold, where as Ford is less than half that and GM and Fiat-Chrysler trail farther behind.

While Toyota’s hybrid drive systems go head to head with Chevy’s Volt, the Toyota line beat Chevy to market by 10 years and has outsold it nearly 80:1, 90,000 units on the road versus 7 million.

Consumer electronics is similarly skewed. Apple may sell one-fifth the world’s smartphones, but it enjoys 92% of that market’s profit.

What Success Looks Like

When asked what they would look for in an organization able to out earn its rivals by 2X or 3X, people typically talk in terms of efficiency, productivity, yield, and quality.

Those are all measures on which great can be distinguished from good, but none of those can be seen. They are all delayed, aggregated, measures of something more fundamental: ‘gracefulness,’ an elegant, coordinated flow in getting work done compared to what must be a ‘spaz out’ experience for those who work a lot harder to be less productive.

And in terms of looking at the buyer (or beneficiary) side, most people first volunteer that they would see affordability, reliability, and all that. But, in fact, when you’re talking about a substantial purchase (a car can be 1/3 to 1⁄2 someone’s annual earnings, a house can be a lifelong financial obligation), people have choices and if they choose one model over another they’re anticipating being grateful for the experience of having that possession. “Those designers ‘get’ me!” “I’ll look good cruising these wheels.” “My kids will be safe in the back on an icy night.” “I’ll never have to worry about being on time to an early client meeting because the car will start flawlessly.”

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[1]Steven Spear DBA MS MS is principal of the HVE LLC, a senior lecturer at MIT and a senior fellow at the Institute for Healthcare Improvement. Has a doctorate from Harvard, masters in science degrees from MIT in mechanical engineering and in management, and a bachelors degree from Princeton. Remarks at NWDC May 5 2016 - 1 - © S. Spear 2016

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