Time-based
competition is a demonstration of the power of time management, and how
companies can use it to gain a competitive advantage. For companies that make
best use of time as they respond and adapt to changes in the market and other
possible conditions and obstacles, they will gain an adaptive advantage. But
time-based competition is about more than just viewing time as a critical
resource, it’s about time as the basis of strategy.

George Stalk
and Thomas Hout, both of The Boston Consulting Group, wrote, Competing Against
Time: How Time-Based Competition Is Reshaping the Global Economy in 1990.  This book was one of the first to identify
the importance of time as a competitive advantage.

Based on their
research, they outline four rules of responsiveness that the value-delivery
systems of corporations are subject to:

The .05 to 5
Rule
Most products and many services are actually receiving value for only 0.05 to 5
percent of the time they are in the value-delivery systems of their companies.

The 3/3 Rule
The waiting time has 3 components, which are the time lost while waiting for:
– Completion of the batch a particular product or service is part of
– Completion of the batch ahead of the batch a particular product or
service is part of
– Management to get around to making and executing the decision to send the
batch on to the next step of the value added process

The ¼-2-20 Rule
For every quartering of the time interval required to provide a service or
product, the productivity of labor and of working capital can often double,
resulting is as much as a 20% reduction in costs.

The 3 x 2 Rule
Companies that cut the time consumption of their value-delivery systems
experience growth rates of 3 times the industry average and 2 times the profit
margins.

The golden rule
of time based competitiveness is to never delay a customer value adding step by
a non-value adding step.  Instead, seek
to do such steps in parallel.

Competition
expressed in response time is known as time-based competition. Companies
engaged in time-based competition seek to reduce the amount of time devoted
during each stage of the general cycle by eliminating non-value-adding from
activities, shortening time, and efficiently coordinating value-adding
activities.

When response
time to consumer needs is shorter than the one demonstrated by rivals, the
company can achieve a greater competitive advantage and, frequently, tends to
be dominant and is expressed in speed, which contributes to short delivery
time, lower costs, higher quality, flexibility, and credible delivery.