There’s Always a Time Lag (With a Price Tag)

Leaders in business perennially seem to under-appreciate the fact that technological changes occur (much) faster than associated, necessary — even essential — non-technological changes. This time lag usually has a very high price tag.

This pattern is currently playing out in relation to artificial intelligence. Leaders must act to mitigate it, if AI is to benefit society.

The Price of the Time Lag, Circa 1985

To understand how this dynamic works, consider how it unfolded in the development of the modern quality movement.

The U.S. invented statistical process control methodologies in the 1920s and deployed these in the weapons industries just before World War II. Post-war, Japan’s civilian industries adopted these processes, making simple and sophisticated additions (for example, Ishikawa diagrams and the Taguchi method, respectively). Japanese companies packaged these changes with new production control methodologies, such as just-in-time manufacturing. Collectively, these adaptations powered Japan’s rebirth. By the early 1980s, they enabled Japan’s successful economic challenge to the hitherto dominant West.

During the early 1980s, Western companies struggled to respond. They failed to appreciate that quality technologies demanded a new organizational structure — teams — and a new leadership philosophy — empowerment.