“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
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
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'
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
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
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
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.