The Speed premium

If there could be a VUCA* period in highly compressed time, we are in it right now. The world around us is changing in ways that we are yet to fully grasp. Among the many things that will change (some forever), I think we will end up re-defining what growth and innovation mean.

The traditional growth models have been developed on the idea that factors that increase productivity drive growth (remember Robert Solow?). Simply put, you can keep growing so long as you innovate. This has been the dominant paradigm all these years – from countries to companies. And this is the very narrative that has driven the technology companies here in the Silicon Valley. To be sure, we have always known that speed is an important dimension – particularly, when it came to introducing new technologies or ideas to market faster than competition.

And now, what many of us are beginning to realize how important the ‘speed premium’ becomes when the situation around is evolving rapidly. As the situation around us continues to unravel very rapidly and in ways we have never seen before, it becomes ever more important to move with speed. To be sure, we are going through a scary time – and most of us just want this to end and get back to our daily lives. And we will come through, hopefully a lot wiser as a species, from this experience.

One thing that I do want to take out of this experience is the importance of speed. And to me, there are two equally important dimensions to this:

1. What is the speed with which we are able to extract the weak signals from all the noise to decide the next course of action? The last few weeks have taught all of us this lesson, at a staggeringly painful cost. As some of us try to navigate our companies through this current situation, one key factor that is going to make a big difference is the speed with which we are able to apply judgment on whatever weak signals we get to take action – as they say, if you wait for data from Finance to make your decisions, you are already behind the puck. And so, the question to think hard about: what are your leading indicators? And how far ahead should you act on them?
2. When you act with speed working with weak signals, you can be sure that you will get it wrong, often more frequently than you have been used to. And that brings us to the next aspect of speed: how fast can you change your course of action? This of course is much harder to do: the first barrier is our own biases which trick us into holding on to our decisions longer than we really should. And then comes the bigger barrier: our willingness to inject an increase in the entropy in the system (complexity and uncertainty). We all have been through these dilemmas before: for instance, should we make the change in the team now, or should we wait just a little longer? Instead, should the question be: what is the cost of delaying the difficult decision? Knowing fully well that we will never have the perfect information, how can we act on our weak signals?

Related link: https://patrickcollison.com/fast – a fascinating list of big goals being accomplished rapidly by groups of people. All of them make for great reading. Do take a look at the oral history of ‘The Making of Amazon Prime’ – a fantastic example of how to operate at speed.   

And so, that is the lesson I am taking from what we are going through: the importance of the ‘speed premium’ to navigate through these uncertain times. If there is one place to learn more about this, it is sports. The best sportsmen seem to do this effortlessly – play with supreme situational awareness in the moment; and at the same time, making fine adjustments on a near continuous basis. How do they do it? That is a topic for another day.

*VUCA = Volatility, Uncertainty, Complexity and Ambiguity: first coined by the US Army. Not surprising that this concept, like many of the best thinking in strategy and leadership, came from the Army.

And I speed wrote this blog in 30mins.