ECONOMIES OF TIME

By enabling global connectivity, the Internet made it possible for companies to reduce the number of steps involved in many business processes, prevent duplication of effort, and in some cases eliminate the need for manual human tasks. Because the efforts of staff then could be focused on improvements and developments versus repetitious tasks, the resulting "economies of time" led to cost savings for many organizations, along with lower labor costs and increased productivity. Online business-to-business marketplaces, where companies are able to link their systems with those of suppliers, distributors, and manufacturers, are one example of how companies can increase efficiency and save time. For example, automated procurement systems replenish some of a company's supplies automatically from suppliers, thereby freeing staff to focus on more valuable tasks.

Under the right conditions the Internet can make companies more agile and responsive to the needs of customers and other business partners. According to the Boston Consulting Group's George Stalk, Jr., many companies have discovered that in addition to providing customers with the most value at the lowest cost, doing it quickly is an important part of the equation. Stalk explained: "To improve its responsiveness a company needs to organize for economies of time and for visibility. To do so, many companies disassemble their functional organizations and reassemble them into permanent, multifunctional teams. The members of these teams focus on entire processes, products, projects, customers, and/or competitors. The teams include everyone who can slow or speed the process and are often in one location. Their performance measures are set to achieve goals rather than efficiency."

The emphasis on time and speediness has received a great deal of attention as related to the Internet. In the early 2000s it was common to hear representatives from leading technology companies emphasize the importance of being first-to-market with developments on the World Wide Web. The term "economies of time" also is based partially on ideas like this. In addition to other benefits, pioneering companies often get to set the stage about what is standard, normal, or expected in their particular niche. However, it is important to note that while being first has its advantages in a networked world, it does not necessarily guarantee a company's success. Technology that is both flexible and scalable; a solid business model; strategic plans; and other factors were key variables that also contributed heavily to a company's success or failure.

FURTHER READING:

"Encyclopedia of the New Economy." Wired Digital Inc. June 13, 2001. Available from www.hotwired.lycos.com/special/ene/index.html.

Odlyzko, Andrew. "The Myth of 'Internet Time.'&edquo; Technology Review, April, 2001.

Stalk, George Jr. "The Time Paradigm." The Boston Consulting Group Inc. 1998. Available from www.bcg.com/publications.

SEE ALSO: Economies of Scale