Fast companies compete on speed. They are literally that — fast companies. The world moves just unbelievably fast today — faster than it ever has before — and if you can’t keep up, you’re going to fall behind.
So what we see is that in fast companies, time itself — not short-term profits, not margins — time itself is becoming a more important metric for business performance. Companies are treating time as just as important a resource as money. Because it is. And if you do that, lots of interesting changes take place.
Now, I spend a lot of time in Silicon Valley. You go out there and people like to say they work in Internet Time. Its the business equivalent of dog years. Three months in Internet time, they’ll tell you, is the same as a year in more traditional businesses — in terms of the number of products that get launched, the number of deals that get made, the number of people that have to get hired and trained.
Think about Internet Time for a company like Yahoo. It’s hard to imagine the world of the Web without Yahoo. It is the flagship brand of the Internet economy. And it’s hard to imagine a company like Yahoo even existing in the old world of business. This is a company started in April 1995 in Jerry Yang‘s dorm room at the Stanford Business School. He said, we’re going to create a Web directory to help people navigate the Internet. A year after he starts this company in his dorm room, Yahoo is getting four million page views per day. Four million times a day someone is clicking on a page at Yahoo and going somewhere. A year after that Yahoo was getting 30 million page views a day.
Today, a year after that, Yahoo is getting 95 million page views a day. Imagine — 95 million times a day somebody is clicking on a Yahoo page to go somewhere on the Web. This is at a company that was started in a dormitory room just three years ago! Yahoo went public two years ago. Today Yahoo’s market value on Wall Street is $10 billion. From a dorm room to $10 billion in three years. That is Internet time. And it seems to me that as the Net infiltrates every business you can name, more and more of us are going to have to set our watches by Internet time.
From the point of view of how companies work in the future, to me the conclusion is clear: If you move faster you will do better. Competition today is not so much about return on investment as it is about return on minutes. If you get good return on your minutes as a company and as individual businesspeople you can pretty well figure that good return on investment will follow. There are such powerful advantages to being first to the market, to being early to the market. You still have to get things right. But you also have to do them fast.
The problem is, so many of our measurement systems still worship at the altar of money. “Hey, our project came in on budget — good job. ” Of course, no one notices that the project was a month late. Or “Hey, we’re growing and we’re keeping the number of people to the target headcount we set.” Of course, no one notices all the missed opportunities for growth — if you’ve hired more people faster. We don’t have enough performance measurements that deal with time. And it is often the case, I would submit to you, that it is worth spending more money to go faster, because good things happen if you get there first. It is worth hiring more people to go faster because good things will happen if you get there there first.
Now, you do it however you want to do it. All I’m suggesting is that in the “fast companies” that I see, they now explicitly treat time as a management resource that’s every bit as important, every bit as measurable, every bit as much of a driver of the business as the more traditional financial that we’ve come to use. If you want to cut costs, cut time. If you want to grow faster, go faster.
And let me take just two minutes to tell you about an example of that. Probably the most time-based company I’ve ever met is a software company — it happens to be in our backyard in Boston — called Cambridge Technology Partners. They’re time-based because their whole business is time-based. They do custom software applications for big companies — big, complex, powerful applications, stuff that costs several million dollars.
They’ve got a very unique selling proposition. They say to companies, “we guarantee that we will produce the software for you on time and on budget, and if we go over budget we pay the extra cost. If we go overtime, we take penalty fees for being late. ” And 95% of the time they deliver on that guarantee.
It is a very audacious promise to make. And the way they deliver on it is to reverse-engineer from that promise and say that everything they do inside the company has to be based on meeting their time metric. So when they have a job opening they have to fill, there is not really a money budget for it — “We can spend x amount on headhunters this quarter, or you can spend x amount on a finder’s fee. ” They say — “you have 30 days from the minute you spot an opening to the day that someone is in there, trained, and a full-fledged member of the team. Do whatever you have to do to meet the time budget. ” That’s what’s important.
They have time metrics for strategy. Basically they’re a consulting firm. And the way consulting firms grow is to open offices in different cities around the world. Which is, for a lot of consulting firms, a way to grow revenues fast and grow losses even faster — because you take on so much overhead. Cambridge Technology Partners says, “whenever we open an office we need to plan for that office to be profitable within nine months. ” Everything else is negotiable. The only thing that is not negotiable is that office is making a profit in nine months.
And on and on it goes — they’ve just applied time metrics to every aspect of their business, which turns out to be a powerful thing.