Tag Archives: s-curve

Shifting S-Curve in Business– Sustained Growth thru Reinvent, Transform, Innovate: Shift Your S-Curve– Again, Again, Again…

Shifting your S-curve: Winning in business once is not enough even if you score big you can’t rest on your laurels. You must rack up repeated victories in the market, one right after the other… Otherwise, you become a has-been, just another business that sparkled brightly before flaming out. This has been the fate of many once-successful companies that got to the top but couldn’t stay there. Yet, some organizations do thrive at the top for decades and even longer. They launch one successful business after another, and routinely outperform their rivals…

To make the shift from one market-leading business to the next, successful companies manage growth across multiple fronts… The ability to both climb and shift the S-curve is what separates high performers from those that never manage to translate a brief period of success with a single winning business into a string of business successes… S-curve means the pattern of revenue growth in which a successful business starts small with few customers; grows rapidly as demand for the new offering swells, and eventually peaks and levels off as the market matures.

High performers not only manage to successfully climb the S-curve; as each business performance curve begins to flatten, but more important they quickly shift to the start of the next curve… Making the shift again and again is crucial to sustained business success… The secret to successfully shifting the S-curve is not about what you do at, or near the top of the curve, but what you do to prepare for next shift on the way up… Sustaining a successful business is predicated on understanding and answering two simple questions: Where is your company on current S-curve? Is your company prepared or preparing for the shift to next S-curve?

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In the article Reinvent Your Business by Paul Nunes and Tim Breene write: Companies that successfully reinvent themselves have one trait in common. They tend to broaden their focus beyond the financial S-curve (i.e., revenues) and manage the three much shorter but vitally important hidden S-curves; tracking the basis of competition in their industry, renewing their capabilities, and nurturing a ready supply of talent. In essence, they turn conventional wisdom on its head and learn to focus on fixing what doesn’t yet appear to be broken…

Making a commitment to reinvention before the need is glaringly obvious doesn’t come naturally. Things often look rosiest just before a company heads into decline: Revenues from the current business model are surging, profits are robust, and the company stock commands a hefty premium. But that’s exactly when managers need to take action… In order to position themselves so that they can jump to the next business S-curve, they need to focus on the following: Hidden competition curve. Hidden capabilities curve. Hidden talent curve…

By managing to these hidden curves– as well as keeping focused on the revenue growth S-curve, high performers typically start the reinvention process well before their current businesses begin to slow… To make reinvention possible, companies must supplement their traditional approaches with a parallel strategic process that brings the edges of the market and the edges of the organization to the center. In this ‘edge-centric’ approach, strategy making becomes a permanent activity… An edge-centric strategy allows companies to continually scan the periphery of the market for untapped customer needs or unsolved problems…

Also, high performers recognize that a key to building the capabilities necessary to jump to a new financial S-curve is the early injection of new leadership blood and continual shake-up of top management… Reinvention of a business requires not just nimble top management, but also people who are ready to take on the considerable challenge of getting new businesses off the ground and making them thrive…

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In the article Climbing a Curve: A Big Enough Market Insight by Joost de Haas writes: Companies manage to jump their S-curve not just once but repeatedly, and this requires something we call the ‘big enough market insight’ (BEMI). A BEMI is an insight into the future of a market with enough growth potential to generate substantial revenues– and profit–  for years to come. An insight so powerful that it puts the company way ahead of the competition, at least for a time…

To be a real high performer, it’s not enough to simply win– you must win big… High performance companies are constantly on the lookout for the next BEMI– it could be something entirely new, or it can be a game-changing product or service that totally rewrites the rules of a given market… Hindsight is a wonderful thing, of course, and many BEMIs look startlingly obvious today, for example; who can imagine today’s consumer world without the Apple iPad or the Nintendo Wii? But these products exist solely because their makers saw real demand for products that did not yet exist.

What makes these companies true high-performance businesses is that they are able to predict a world that ‘would be’, as opposed to a world that ‘could be’, or ‘might be’. What now seems obvious to most people was based on real market insight and an early commitment to an S-curve shift… Our research shows repeatedly that high-performance companies are those that are able to identify BEMI opportunities, and are prepared to exploit those trends well before they occur…

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In the article The S-Curve by Harry S. Dent Jr. writes: One of the great concepts I learned in business school was ‘product life cycle’. Products, technologies, industries go through life cycles just as people do, and business strategies have to change at each stage of the life cycle for a business to continue to grow and dominate its markets.

The S-curve allows businesses to predict the rise-fall of new product life cycles within their market-industry. People have distinct bias to predict trends using straight lines, when growth clearly occurs exponentially– until natural limits set in causing it to taper. These limits, in turn, create cycles of growth and decline. A product life cycle consists of; product market introduction, than growth, maturity and finally decline…

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In my experience; products go from initial commercialization at 0.1% market penetration to 1%, then from 1% to 10% in approximately equal time periods. Each period represents a 10-times growth in market penetration, which is clearly not linear… The higher the costs, e.g., market resistance… the longer the S-curve progression takes. The 0.1% to 10% stage– introduction-initial growth– typically engages consumers who are the early adopters and cutting-edge users.

When products penetrate the critical mass of acceptance the product is more visible and proven– at this stage, products becomes popular-mainstream: (Note: At this point the business must be fully prepared for the next new product cycle, i.e., the next S-curve). As more of the market is penetrated, market saturation or competition might be issues that begin to limit the exponential growth. In this phase, there is from 10% to 50% market penetration, the gains are five times– versus the 10 times in the 0.1% to 10% stage.

Then, from 50% to 90% market penetration gains are only 1.9 times– exponential growth slows. Products then enter maturing or slower growth from 90% to 99.9% penetration… Typically, this phase takes about the same time as 10% to 90% acceleration phase. Finally, the product begins to lose customers, sales, market share… in steady trajectory of decline– the decline phase…

Over the entire product life cycle of; invention, innovation, growth, maturity and decline, 80% of market penetration comes in one stage… The message is clear: Business must have a strategy for each stage of the product life cycle. If the product is just beginning to enter the mainstream– introduction phase– you must aggressively gain market share, quickly… If you don’t fill demand, someone else will. However, if the product is already past the 50% market penetration level, your focus must be very different… For example, observe what is happening with cellular phones, personal computers…

Prices are falling to the point that PCs are now cheap commodities and similarly cell phones are now so commoditized that they are often given away free with new contracts. If the product is this stage, your primary focus must be– control costs, maximize revenues, and aggressively prepare for the next S-curve… Likewise, if the product is in the stage of virtually no growth– 90% to 99.9%– you must act quickly and shift to the next S-curve; ASAP– better late than never…

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There are many reasons why businesses fail, stall, decline… According to Paul Nunes and Tim Breene; companies fail to reinvent themselves because they wait much too long before repairing the deteriorating bulwarks of the company Some companies simply don’t see the end coming, preferring to view slowing revenue growth as the result of a bad economy or an industry slowdown, not as a referendum on their own products or services.

Others don’t recognize how slim their chances for late-stage recovery and change really are and thus fail to muster the urgency needed to jump to a new S-curve… High performers see the shift and create the next basis of competition in their industry even as they exploit an existing business that has not yet peaked… In creating the offerings that will enable them to climb the financial S-curve, high performers invariably create new capabilities…

According to mshaikh; know which S-curve you are on, and where on that S-curve you currently reside. Are you trying to move along an S-curve or shift to a new one? The S-curve provides signposts along a path that, while frequently trod, is not always evident… The hypothesis is that those who can successfully navigate, even harness, the successive cycles of the S-curve will thrive in this era of highly competitive disruption…