A system dynamics model of the impact of clockspeed on the survival of companies in an industry

• Main Author: Reyes, Victor Paolo Cesar
• Format: text
• Language: English
• Published: Animo Repository 2010
• Subjects: Competition; Industrial management; Organizational change > Management; Technological innovation > Management; Operations Research, Systems Engineering and Industrial Engineering
• Online Access: https://animorepository.dlsu.edu.ph/etd_masteral/3861; https://animorepository.dlsu.edu.ph/context/etd_masteral/article/10699/viewcontent/CDTG004729_P.pdf
• Institution: De La Salle University

In todays business environment firms must manage to be faster in order to survive. Technology and innovation, market, and competition are changing at a rate that the world has never seen before. Clockspeed gauges this velocity of change in the external business environment and influences the pace of firms internal operations. It is measured through the rate at which product technology and process technology changes over time. However in spite of the broad recognition of the importance of Clockspeed, much of the work done on it has been subjective, anecdotal and at times speculative in nature, therefore making it hard to explicitly show the extent of its impact. Using a systems thinking perspective, this paper aims to examine the relationship between Clockspeed and its drivers by developing a simulation model of its impact on the survival of companies in an industry. Parameters that determine the Clockspeed are varied and tested to show their relative impact on the industry. The study was able to show that clockspeed (process and product clockspeed) does indeed impact the dynamic behavior of the number of companies in an industry. It revealed that survival can be maintained by having a fast process technology clockspeed and average product technology clockspeed while growth in the number of companies can be achieved by having fast product technology clockspeed regardless of how fast the process technology clockspeed. The study is able to improve industry classification that explicitly recognizes the dynamic nature of industry and technology; rather than just stating that an industry belongs to a fast or slow clockspeed one it can be stated as a fast product clockspeed industry with average process clockspeed.