Businesses can only be “mastering the clock of business” if they know “when to be fast and when to be slow”.
This is the conclusion of an article in The Economist which examines Apple’s rapid sales and contrasts this with the development of other businesses. The article said that Apple’s reputation for selling 1,000 iPhone, iPads and Macs every couple of minutes is encouraging “the rest of America’s business establishment” to aim at speeding up.
Critics have said this has the effect of making business more hostile to long-term investment and incapable of creating durable products, which the article says is plausible but difficult to prove. The article does point to mass acceleration as information technology has developed interconnectedness, while deregulation is allowing companies to “make products through networks of third-party suppliers whose efforts can be amped up or services sloughed off with ease”.
Futhermore, the ‘adoption lag’, referring to the speed at which poorer countries take on the ideas of a pioneering country, has shortened from 100 years for the spindle, invented in 1779, to 13 years for mobile phones, scholars suggest. Patent registrations have also grown by around 11 percent a year for the past five years, compared to the long-term average of six percent. The Recycler recently reported that China’s patent applications have grown 22 percent this year.
Yet the piece disputes that claim that this acceleration is clearly happening, as the rate of new consumer product launches is “probably slowing or in decline”. The inventories of industrial firms point to a slowdown over the past decade, with outsourced production overseas having little positive effect. The overall rate at which new firms are created is near its lowest since records began, with about eight percent of a firms being less than a year old, compared with 13 percent three decades ago, and younger firms are still less important overall in terms of their number and share of employment.
Meanwhile, the median tenure of serving CEOs was five years in 2014, up from three in 2007, while the average retiring chief executive of an S&P 500 firm in that year had served their post for ten years, the highest figure since 2002.
Assuming that acceleration is the way forward can be “dangerous” if it encourages managers to quickly grow their portfolio of companies. It gave the case of General Electric, which has bought and sold businesses worth over 100 percent of its capital base in the past decade or so, while US pharmaceutical firms have attempted $1.1 trillion (€1.01 trillion) of deals since the beginning of 201, which is 51 percent of the their current stock market value.
The article further posited that “someone has to own the slow-growing business”, and that “what appears hot today may be cold tomorrow”. It also advised that firms can be seen as “time transformers, mediating the different time horizons of customers, staff, suppliers and owners”.