If your upcoming business careers were a movie plot, it would resemble the movie "Speed".

“Speed Saves: Living on the Edge is America’s Edge”

Prepared Remarks of Mitchell E. Daniels, Jr.Oscar C. Schmidt Memorial Lecture

Rose-Hulman Institute of Technology
May 16, 2003

Thanks for your hospitality. In a country that insists on producing more than one lawyer for every two engineers, this is an inspiring place to be, and audience to meet. I hope one day that ratio will move in favor of engineering; until it does, study hard. There's a lot riding on you.
Here in Indiana, as we'll demonstrate again ten days from now, we love things that go fast. Maybe some of you will be designing and building cars for a living soon; as a sucker for Corvettes, I hope a couple of you go to work on them.

But in America, fast is about more than hot cars. It's the essence of our national success. It's our edge on the rest of the world. And it's an edge, and an attitude, we have to constantly guard against losing.

Starting 58 days ago, the world was witness to -- to use properly a word that's getting worn out -- an awesome display of the achievement of which a free people is capable. The United States military swept away its enemies and its critics in less time than it takes to get a passport. Combining scientific supremacy with tactics based on mobility, quickness, and individual decision making, American units rocketed 350 miles to victory. Germany's conquest of France in 1940, which earned the label "lightning war," took twice that long.
Skeptics alleged that planning had been inadequate; that too few troops and too little equipment had been brought into position; that the campaign was moving too quickly to maintain supply lines, protect our soldiers from surprise attacks, or preclude a host of other risks, real or imagined.

On Day 2 of action in Iraq, an attack on a critical objective labeled Safwan Hill was cancelled at headquarters because a sandstorm grounded the helicopters. The Marines on the scene, being Marines, took the outpost anyway, surprising both the Iraqis and their own headquarters. The colonel in charge said "This isn't chess...It's like basketball...you run and adjust on the fly."
Gen. Douglas MacArthur once remarked that the history of defeat in warfare can be summed up in one phrase: "Too late." In Operation Iraqi Freedom, lateness was not a problem. One missile arrived through the window of a Presidential hideaway 44 minutes after the first intelligence report placing top Iraqis at the scene. I'm sure American justice arrived way too early in the eyes of the mass murderer who once ruled that country.

The same qualities that "shocked and awed" the world in Iraq have produced a different kind of national success. Despite a series of blows that would have crippled any other economy on earth, the American free enterprise system, through speed, agility, flexibility, and a high tolerance for risk and occasional failure, has remained the strongest anywhere.

At the moment, U.S. economic growth is too slow. The President and Congress are working on measures that might contribute to its acceleration. But short-term difficulty cannot blind us to the unique resilience of a national business system that has withstood an incredible string of shocks and continued to expand and excel.

Think back over the last three years. About this time in 2000, a huge speculative stock market bubble popped, leading to a plummet of trillions of dollars in equity value. As 2001 began, the new President inherited a recession. Just as that contraction was ending, a terrible terrorist attack cost 3000 lives, over $100 billion taxpayer dollars to repair damage and launch a war on terror, and hundreds of billions more in damage to the business of airlines, tourism, and other industries.

Shortly thereafter, corporate wrongdoing shook investor confidence further. Next, the runup to the disarming of Iraq raised oil prices and created a lengthy period of uncertainty, the worst enemy of business boldness. And yet, through it all, the U.S. economy absorbed all these shocks and soldiered ahead.

The rest of the developed world, though largely free from these blows, has struggled even more than the U.S. Europe is muddling along with growth rates far below and unemployment far above U.S. levels. Japan, once touted to Americans as an irresistible competitor from whom we should take lessons, remains mired in a 12-year slump. Whatever our difficulties, we would not trade places with any other economy in the world. There is something that separates our system from our competitors. That something, I believe, is the faster clock speed at which Americans tend to operate. Our willingness to live closer to the edge is the American edge.
We all know the hazards of moving too fast in life. "Haste makes waste" and "measure twice, cut once" are lessons we all learned early (and usually the hard way!) And many of us took Driver's Ed under a sign that read "Speed Kills."

But not always. When it comes to creating wealth, speed saves. It saves time, and time is money, and money is jobs, prosperity, and national success. It is the fast feet of American businesses, innovators, and investors that gives us a vital edge on the rest of the economic world. Disciplined by the world's most demanding consumers and most open, competitive, free-for-all markets, our businesses know that to lose a step is to lose a sale.

Sure, when you drive fast, you're going to bend a fender now and then. Some competitors will hit the wall. But that only leaves a more open track and a better-marked path for the rest of the field.

If your upcoming business careers were a movie plot, it would resemble the movie "Speed." As you recall, in that film a criminal has rigged a bus so that it will be destroyed if it ever slows down. That is pretty much the situation confronting today's actors in a wired, global economy. We're winning and leading the world forward because of our natural lead foot, which helps us drive to the next breakthrough, the latest wacky idea, the "New, New Thing," a minute or two before others do. The mistake we have to avoid is letting the bus slow down.

In almost every way, American enterprise moves more quickly than its international counterparts. While the European Union busies itself writing layer upon layer of rules, Americans are starting 600,000 new businesses every year. It seems an American can conceive, finance, launch a business, and fail or succeed in less time than it takes a European to get a license to operate. Like the Marines at Safwan Hill, Americans fix problems as they arise; Europeans often seem bent on preventing any chance of trouble arising in the first place.
At Mothers Work, a maker of maternity apparel, the motto is "Give the lady what she wants when she wants it." They live up to it, and they'd better. The 3 million women who are pregnant on any given day are changing sizes -- and preferences -- on a daily basis, and if you've spent any time around one, are usually very clear about the latter. So Mothers Work keeps designers working around the clock, and ships new stock to each of its 726 outlets every night; what is sold today is replaced tomorrow.

Everyone knows the Dell story, where orders for new PCs come in every 20 seconds. But did you know that, 7 times out of 8, the custom order you place this afternoon will be built and shipped tonight? That's barely time to say, "Dude, you're gettin' a Dell." The assembly lines that work these miracles only have enough parts on hand for the next two hours' production.
And then there's that fabulous only-in-America success story we know as Wal-Mart. Sam Walton didn't leave his foot speed behind when his football days were over. Tired of the delays and the no-value markups of too many middlemen, he began driving his own station wagon from Arkansas to Tennessee and bringing back dresses, socks, toothbrushes, whatever his customers wanted, faster and cheaper than his competitors. He saw no reason why people in small towns should have to wait around and then pay more for the newest goods than their big-city cousins.

Today, Wal-Mart's success is still built on speed. At a Wal-Mart distribution center, millions of items never touch the warehouse floor. They come off a truck at one end and onto a truck at the other end without ever leaving a series of intersecting conveyor belts.

In my business days at Eli Lilly, we worked out a new resupply process that cut our delivery times to Wal-Mart from over a week to a few hours. The working capital savings to them was enough to build and outfit a new Wal-Mart store every year. I always thought they should name one of them after me, but of course at that company progress like Lilly helped them make happens every single day.

Our greatest economists have always reminded us that the "dismal science" ultimately is more about human behavior than dry statistics or impersonal forces. Lord Keynes wrote of the intangibles necessary to capitalist progress, saying, "Our decisions to do something positive...can only be taken as the result of animal spirits, a spontaneous urge to action rather than inaction, and not as the outcome of a weighted average of quantitative benefits multiplied by quantitative probabilities." An American personality biased to action and speed, that prizes the calculated risk, the improvisation, that trusts the platoon leader to deal with the problem when he encounters it, has the kind of "animal spirits" that produce business success in today's world marketplace.

Americans have worried almost from the founding that our national character and special spirit would erode away. In one of the most influential scholarly papers ever written in our country, Frederick Jackson Turner in 1893 attributed much of America's success to the frontier and to the pioneering, risk-taking, reach-for-the-stars attributes it attracted and cultivated in several generations of us. As Turner summed it up, "Since the days...of Columbus...America has been another name for opportunity.....unless this training has no effect upon a people, the American energy will continually demand a wider field for its exercise."
Turner pondered whether the closing of the West might lead to a decline in the energy of his countrymen. He hoped not, and if he were still with us, I think he would be relieved. We may have long since run out of totally open land to explore, but the frontier never closes, not even in the physical sense.

Through nanotechnology, you are now exploring spaces incomprehensibly small to people like me, let alone a man of Turner's day. Unimaginable discoveries await there, to say nothing of the oceans, outer space, and the human body itself, and I'm betting it is Americans who will usually find them first. The same alacrity which our predecessors brought to the Oklahoma land rush or the California gold strike still sets us apart. Where speed, daring, and a willingness to cast off convention matter -- and that is almost everywhere -- it tends to be Americans who are a step ahead.

This is not an argument for ignoring risks, only for remembering that there is also great risk when the bus slows down. We must be careful never to impose a school zone speed limit on our entire national economy in pursuit of the illusion of perfect safety.
The example of our European friends -- it's a little hard to say "allies" just now -- is a cautionary one. Even as their people struggle with double-digit unemployment and stagnant incomes, they continue to shackle themselves with "safeguards" that make them no safer, "protections" against individual failure that only produce greater overall failure.
France now limits the work week to 35 hours, supposedly to protect jobs. Our company found that, with a high percentage of employees on forced leave on any given day, it took weeks to arrange necessary meetings and make big decisions.
Most of the EU imposes incredible costs and restrictions on companies seeking to shift operations or lay off workers. The result is that far fewer workers get hired in the first place, and it takes forever to make the simplest change to raise efficiency or seize a new customer opportunity.
And what American pioneer would understand the European rejection of the breakthrough discoveries of biotechnology, one of today's true frontiers?

We in the U.S. are not immune to the fear of speed. And of course we do need limits. But it's critical that we keep our speed bumps in the right places, and the right height. Especially after a serious accident, there is a human tendency to set up "School Zone" signs even on the interstate.
For example, we learned the hard way that we must take new steps to defend our homeland against fanatical terrorists. But the steps must be careful, analytical ones: if we overshoot, and slow down movement through our ports and borders too much, or deter businesspeople too often from flying to see that marginal customer or product opportunity, we could pay a price in lost jobs and commerce beyond any gains in security.

The same events that gave birth to homeland defense prompted direct taxpayer aid to the nation's airlines. In that emergency, some help was fair and rational. But this spring brought a second transfer of billions from taxpayers to these same companies. A pattern of bailouts of this or any troubled industry risks slowing the necessary process of getting costs down to levels customers are willing to pay. When the Pony Express got into money trouble, it didn't occur to our pioneer ancestors to pass the hat to help the company avoid change.

Another kind of problem recently led us to toughen our laws governing corporate responsibility. As in the case of homeland security, this is right and necessary. But as we devise and establish new rules of the corporate road, it will be important not to set the radar guns too low. Small company owners tell me they have abandoned any thought of going public due to the many new risks and new costs. One thriving Hoosier firm calculates that, to comply with the new laws during and after an Initial Public Offering, they would have to add expenses equal to the entire payroll of their senior management team, while subjecting themselves to personal liability for errors. No thanks, they decided; suspecting a speed trap, they have hit the brakes.
So this is the assignment for the next generation of business, and engineering, leadership. Stay quick. When the odds look good and your common sense tells you to, act on 70 or 80 per cent of the data you'd ideally like to have. Chances are, you'll cross the line while the other guy is waiting for the last piece of information to arrive.

Don't throttle back in fear of spinning out. Recognize that ours is a land of second, and third, and multiple chances. Thomas Edison ran 2000 unsuccessful experiments before his filament produced sustained illumination. When a reporter asked him how he dealt with all that failure, Edison said "I never failed. I invented the light bulb in a 2000-step process." America loves winners, but we love losers even more, when they get back on the track and into the race.

Let the record note that, in keeping with this unsolicited advice I'm doling out, I am finishing in eighteen minutes vs. my assigned twenty. So I can claim to have given you a two-minute head start on the field, as your turn to drive our economy comes.
When it does, remember that speed saves. Put your foot down and leave it there. Adopt a pioneer mentality. Don't let anything dampen your "animal spirits." And never, never let the bus slow down.