Industry Clockspeed: Measurement and Operational Implications

Abstract

We argue that industries and industry segments are characterized by a clockspeed that gauges the velocity of change in the external business environment and sets the pace of their firms' internal operations. Using data from the electronics industry, we develop and validate an integrated metric for clockspeed that takes into account both demand- and supply-side factors. We show that after controlling for product complexity and other factors, higher industry clockspeed is associated with faster execution in product development and manufacturing (e.g., shorter development time, quicker stabilization of production) and more frequent changes in organizational structure. Our findings on the effects of clockspeed can help researchers studying other industries, and our results provide benchmarks against which practitioners can compare and classify their own organizations.

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