Strategic Inflection Points– Events That Changes the Way You Think, Act: Why Some Companies Grow and Others Decline…

Strategic Inflection Point ‘inflection’ means a bend or change in the course or direction of something… ‘point’ means a place or position where a curve changes direction from convex to concave, or vice versa… However, in reality the word ‘point’ is really a misnomer; it’s actually more of a long, sometimes painful, extended period of change…

And, the management ‘trick’ (or skill) is to recognize when you are approaching an inflection point or when it’s just a normal variation, and adjust accordingly… The concept was originated by Andrew Grove who described it as– an event that changes the way we think and act… According to Grove; there is at least one point in the history of any company when it must change, dramatically, to rise to the next level of performance: Miss that ‘point’ and it starts to decline…

Strategic inflection points  can occur suddenly or more subtle, in the form of sustained, steady growth that increasingly weighs down on existing infrastructure and staff… It occurs when the old strategic picture dissolves (cease to be valid) and gives way to new directions.  Regardless of the catalyst, growth eventually forces management to acknowledge that the next phase of their business cycle will be very different from the previous phases. If the management team fails to implement the changes needed to accommodate ever-rising levels of complexity in their business, than sudden growth morphs into a sudden crisis…

point thO9I5KUP1Strategic inflection points happen to business when a major change takes place in its competitive environment: A major change due to new technologies, or major change due to a different regulatory environment, or it can be simply a change in how customers’ see value, preferences… But whatever the cause a fundamental change in strategy of the business is required, nothing less is sufficient…

The biggest difficulty with strategic inflection points is to distinguish it from the many changes that impinge on a business: How do you know if a change is garden variety or monumental, catastrophic change? An empirical observation made by companies that deal with it is that there is a growing divergence, a dissonance, between their existing strategy and the execution of their strategy…

According to Andy Grove; strategic inflection points can be caused by technological change, but they are more than technological change. They can be caused by competitors, but they are more than just competition. They are full-scale changes in ways business is conducted, so that simply adopting new technology or fighting the competition as you used to may be insufficient. They build up force so insidiously that you may have a hard time even putting a finger on what has changed, yet you know that something has.

Let’s not mince words: A strategic inflection point can be deadly when unattended to. Companies that begin a decline as a result of its changes rarely recover their previous greatness… According to Joe Evans; strategic inflection point is when, over time, key customer relationships, business models, primary markets… go through major transitions. What was once a great business engine can grow less viable over time because it has become outdated or ineffective due to market shifts or new developments in the industry’s business environmental conditions…

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In the article Reasons Great Companies Stop Growing by Christine Comaford writes: When companies grow, they come to certain places where the things that used to work, the things that created that level of success, don’t work anymore. We call these inflection points: At each ‘point’ you have a whole new company… At each ‘point’ a company must reinvent itself in order to move through it. If it does not, it becomes ‘stuck’ and ultimately declines into parabolic upside-down curve, rather than an undulation growth mode…

The key is to avoid organizational ‘stuck spots’– the spots of stasis usually found between inflection points where the company stops growing and swirls around at approximately the same level of revenues before sliding precipitously backward… The world is full of ‘living dead’ companies that reached an inflection point and cannot grow to the next one. Remember: You either moving forward or moving back– stasis is not sustainable…

In the article Only the Paranoid Survive – Social Business Inflection Point by Chip Roberson writes: A strategic inflection point is a time in the life of business when its fundamentals are about to change. That change can mean an opportunity to rise to new heights, or it may just as likely signal of the beginning of the endWhen a company is at an inflection point it has two options; rise to ‘new heights’ or slide down a path of ‘decline’. Too many businesses still look at ‘social media’ as primarily a technological challenge: It’s not! It’s a force that requires a company to respond by adapting its culture, policies, practices… Social media are reshaping your business whether you like it or not…

According to Andrew S. Grove; the ability to recognize that the winds have shifted and to take appropriate action before you wreck your boat is crucial to the future of your enterprise. Most companies don’t die because they do wrong; most die because they don’t commit themselves. They fritter away their valuable resources while attempting to make a decision. The greatest danger is in just standing still… 

In the article Strategic Inflection Point by Brad Squires writes: Think of a strategic inflection point as the ‘point’ at which a trend or curve changes direction from positive to negative or negative to positive. In hindsight, strategic inflection points are easy to spot, and the course of action is clear, but in real-time moments, it’s difficult to know if you are looking at a fundamental change in the direction of the curve, or whether it’s just a hiccup soon to go away… So here is the tricky part: How do you spot an inflection point?

How do you know when a ‘change in movement of a trend line’ is an inflection point or just another anomaly? Although there are no crystal balls, there are some indicators-events that are triggers for a strategic inflection point… These are fundamental changes in industries that can cause it to do business differently, for example; new technology, new process, new behavior, new frame of reference, new rules or regulatory environment... In reality the signs are very simple, they track the winds of change… maintaining super vigilance over all aspects of the business, markets, competition… while being a little paranoid…

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According to Greg; we all follow trends, they are a sign of the times… but, what’s really interesting are the inflection points, when trends switch directions. Trends are nice, mostly because they are easy to follow, but the  problem is that everybody else is following them as well, and that makes it difficult to gain a competitive advantage… Change is an opportunity to make course corrections, update, modify, and it can invigorate and inspire… But then there are changes that are so all-encompassing that the external industry landscape shifts to the extent that nothing less than a fundamental revision of business strategy is necessary…

Economic shifts coupled with the aggressive pace of technology advancement have forever altered the way business communicate with markets… In fact, many ‘markets’ have morphed into actual individuals, defying categorization and capable of responding quickly and directly to reach multitudes of like-minded consumers… While the point itself may be static, it’s not a place you can afford to remain for any length of time.

Recognition of the enormity of the change may be slow to emerge, but the response must be deliberate and well-focused… Old narratives and company stories, must be abandoned in favor of key messages and strategies that resonate within the new paradigm…

According to Steve Bauer; the lesson is (or should be) clear – sooner or later, change (business, technological, financial… ) is going to affect every company… If you manage a business you must plan for change despite the fact that no amount of education, research or analysis can accurately anticipate what those changes will be– no one can predict the future…

the best you can do is size up your chances, calculate the risks involved, estimate your ability to deal with things, and then make plans with some level of confidence. One might argue that change is something that all companies must deal with– that is nothing new; but, the thing that is drastically different in recent years is its ‘pace’… The adage– ‘change is not an option’, is as valid today as it was a decade ago…

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Industries are littered with companies that fail to recognize an inflection point, or fail to take prompt action that will safeguard the company’s survival… most often companies are often blind sighted by it… the reality is that the best companies are forever paranoid and are continuously innovating to keep themselves ahead of the curve…

However, many companies are unable to keep in tune with the fast changing market landscapes and are falling by the wayside losing their market share quickly… Strategically, inflection points occurs when an old strategic picture dissolves, and gives way to the new, allowing a business to soar to new heights…

Unfortunately, from the inside, it’s not always evident, at point in time, that there are major changes, but rather it’s a long period of extreme unrest… Typically, corporate strategy and operational actions are not always aligned, and ideas about the right direction splits many of the people on the same team… In workplaces that usually operate with civility, can often turn on each other and a holy wars erupt: Chaos reigns…

Getting through strategic inflection point requires an enduring period of confusion, experimentation, chaos… followed by a period of single-minded determination to pursue a new direction towards an initially nebulous goal: It’s one of the most daunting tasks organization must endure…