In one line: Every industry evolves at its own speed. Since any competitive advantage is temporary, the real core capability is designing the supply chain to keep up.
Core idea
Charles Fine’s Clockspeed [1] borrows from genetics. Biologists study fruit flies because they reproduce so fast that evolution can be watched in real time. Fine argues that fast-moving industries, such as personal computers, consumer electronics and entertainment, are business’s fruit flies. Studying them reveals dynamics that slower industries, like aircraft or chemicals, will eventually face. An industry’s clockspeed is measured by how fast its products, processes and organizations turn over.
How it works
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Three clockspeeds:
- product: how often products are replaced
- process: how often production technology changes
- organizational: how often the structure of the firm and the industry shifts
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All advantage is temporary. The faster the clockspeed, the sooner today’s winning position decays.
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The double helix. Industries cycle between two structures:
- Vertical and integral: one firm controls most of the chain, and products are tightly integrated.
- Horizontal and modular: specialized firms supply standard modules through open interfaces.
Pressures in each state push toward the other. Integrated giants become rigid and get broken up by nimble specialists; fragmented modular industries reward whoever can re-integrate key pieces. The personal-computer industry’s swing from integrated mainframe makers to modular PC suppliers is the canonical example.
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Three-dimensional concurrent engineering. Design the product, the process and the supply chain together, because architecture choices (modular versus integral, see Product Architecture) and supply chain choices (what to make versus buy) are two sides of the same decision.
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Supply chain design is the ultimate core competency. Choosing which capabilities to keep in-house and which to rely on partners for decides long-term position.
In practice
The course asks for a short memo on the book’s main points and how they apply to your company and industry. A useful exercise is to estimate your industry’s product, process and organizational clockspeeds, then ask where on the double helix the industry sits today, and which way it is likely to swing. Defense and aerospace move slowly at the system level, but many of their components (processors, RF chips, software) move at consumer clockspeeds. That mismatch is a constant supply-chain and obsolescence challenge.
Questions to ask yourself
- How fast does my industry’s product turn over, and how fast do its key components turn over?
- Is my industry currently vertical and integral or horizontal and modular, and what would push it the other way?
- Which capability would be dangerous for my company to outsource?
Connections
- Chain design: Supply Chain Management. Architecture link: Product Architecture.
- Strategy and planning: Business Strategy, Product Planning.
- Capabilities exercised: Vision, Decision Making, Connecting Across Disciplines.