This is one of those arguable insights, where both sides win. Dell is a great example of emphasis upon fast, creating a customized computer in 48 hours or less, bringing in assemblies and components just-in-time to make the assembly line. However, if Dell quality were poor and returns high, the company surely would not have survived on speed of response alone. If someone were to ask, “What is the secret sauce, Michael Dell?” Dell’s response would be something like “Quality custom computers more quickly than the competition.” And in this company example, both quality and speed are the critical factors in competitive advantage.

More examples of fast above better

Think of McDonalds. Its reputation is based upon fast food in a minute, with quality that is acceptable but not discernibly above the competition. Or one of the instant auto service companies where an oil change is fast and inexpensive, but the number of inspection points far fewer than at a dealer location. Speed above quality.

We have become a society not used to paying even a little extra for speed, but willing to pay much more for quality. How about the $14 hamburger at a restaurant, compared to fast food? We pay for the quality of product and service, happily defining our own tolerance for cost versus quality and speed.

An important decision for you

So, in planning for your niche to defend, one of the first decisions is between quality and speed. We will soon examine the entire gamut of pricing structures in future weeks, but let’s start with this one. It is fair to repeat that quality and speed together are the winners in this contest, not one alone.

Questions for your management team

Which will you want to accent for your competitive advantage? How will your customers react to your positioning? Will you make more in revenues and profits with one against the other? Where is your competitive landscape? Is there a more aggressive competitor in one (speed) as opposed to the other (quality)? Can you “knock off” the competition in one of these areas more easily than the other? There are great questions for your next strategic planning session or board meeting. Try them.

SOURCEBerkonomics
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Dave Berkus
Dave Berkus is a noted speaker, author and early stage private equity investor. He is acknowledged as one of the most active angel investors in the country, having made and actively participated in over 87 technology investments during the past decade. He currently manages two angel VC funds (Berkus Technology Ventures, LLC and Kodiak Ventures, L.P.) Dave is past Chairman of the Tech Coast Angels, one of the largest angel networks in the United States. Dave is author of “Basic Berkonomics,” “Berkonomics,” “Advanced Berkonomics,” “Extending the Runway,” and the Small Business Success Collection. Find out more at Berkus.com or contact Dave at dberkus@berkus.com

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