How did Intel Corporation generate an average annual return to investors of 44% between the years 1987 and 1997? How did Intel’s impressive earnings in one year equal those of the top ten personal computer companies combined? Great management? Forward-thinking leadership? Business strategies that competitors couldn’t duplicate? The perfect markets? The perfect products?
All of the above, yes, but the answers aren’t that simple. What got them there can’t be dismissed with a "that doesn’t apply to us, our problems are different" attitude. Intel is only one example, but there are numerous industry leaders who have practiced the same strategy—Starbucks, Cisco Systems, 3M, Gillette, and Sony are among them. What is the business strategy that catapults these successful companies into double-digit growth and ensures their places in our future? Time pacing.
In a recent Harvard Business Review article called, "Time Pacing: Competing in Markets That Won’t Stand Still", the authors define time pacing as a strategy for competing in fast-changing, unpredictable markets by scheduling change at predictable time intervals. In rapidly shifting industries, time pacing helps managers anticipate change and, like Intel, perhaps set the pace for change. Imagine if law firms embraced this strategy that has worked so well for these leaders? Are the law firms that represent the companies named above conversational about this method and are these firms identifying ways they can likewise employ this methodology—just to keep up? What are the law firms doing to add value to these high velocity clients?
It may seem obvious to us that the computer industry would serve as the competitive prototype of this time pacing strategy. The authors, however, tested the relevance of their findings in other industries, as well. They found that "wherever managers were coping with changing business environments, time pacing was critical to their success, helping them resolve the fundamental dilemma of how often to change."
What is the opposite and more familiar approach to business growth? Event pacing. Organizations change in response to events—such as moves by the competition, decreasing revenues, a market shift, loss of customers or clients, creation of new products based upon new promising technology. In stable markets, event pacing is a predictable and effective way to manage change. By definition, however, it is also reactive and can be an erratic strategy.
Time pacing refers to creating new products and entering new markets according to the calendar. It is rhythmic, regular and proactive. The authors give the following examples: "3M dictates that 30% of revenues will come from new products every year; Netscape introduces a new product about every 6 months; British Airways refreshes its service classes every 5 years; and Starbucks opens 300 stores per year to hit the goal of 2,000 outlets by the year 2000." Michael Dell at Dell Computer uses time pacing—the pace has been coined, "Dell-ocity," which refers to the company’s focus on speed and timing.
One manager in a time-paced company compared it to running a marathon in 100-yard bursts. The tempo is fast, but it is predictable, so it gives people a sense of control in what would otherwise be chaotic markets. He said that performance is enhanced because people are more focused and efficient.
To determine if your firm is a candidate for time pacing, the authors suggest you respond to the following questions:
- Performance metrics. Most companies use performance metrics that measure costs, profits or innovation. Do your current metrics also include measures based on time, such as elapsed time, speed and rate? Every critical transition process should be tracked with some time-based measures.
- Transitions. What are the formal processes you have in place for managing critical transitions (entering new markets, hiring new talent, changing products and services, launching new strategic alliances)? Can you simplify or shorten the transition period? How?
- Rhythms. List your firm’s rhythms. Are they really attuned to your business and clients and are some of them merely habit? Are there important areas with no rhythms at all? What rhythms drive your clients’ and important vendors’ businesses? Would getting in sync with their rhythms create new opportunities for you?
There is room in the world for both time pacing and event pacing. However, law firms are missing a strategic business opportunity in today’s fast changing and unpredictable legal market if they ignore time pacing as part of their strategic arsenal.