You. Yeah, you — in the mature business. Things are working great, but you’ve got a sense that the past isn’t a guaranteed representation of the future. You want to explore future growth opportunities, but you can’t do it alone. You need to compel your business with the same desire. The S-Curve exercise is a simple, effective means of drawing a wide set of the business into this conversation.
The s-curve describes a common trajectory of the mature business. Initial adoption of a product or service is slow but steady as the business builds up product-market fit and momentum. Eventually (one hopes) the business is able to scale that business model, move on from early adopters to a broad customer base, and build revenue quickly through a growth stage. But eventually, that rapid growth starts to stall. Market saturation or segmentation, aging product offering, and/or evolving customer demands all put pressure on the growth rate of the core business.
The successful long-term business reinvests in itself, developing new products and new business models, and repeats the cycle. And the unsuccessful? They take a trip down the backside of the curve like a rollercoaster (except that no one has their hands in the air saying ‘wheee!’)
The s-curve exercise is a simple way to engage a cross-section of the business on where their mature company is at on the curve, and what they could do about it. I use this simplified diagram:
Explain the basic dynamics of the s-curve. Even for business executives steeped in growth metrics, it is good to reiterate the phases:
- A segment early in the curve representing core business model investment (pre- point 1),
- A growth segment where the core offering scales and gains market share (1–4),
- A period where it becomes harder and more expensive to grow at the same rate (4–6),
- A backside of the curve ( 8–9) and a new business model offering (7).
Then, ask the group by show of hands to identify where the business is on the curve. “Raise your hand if it’s at point #1… #2… “). Be sure to remind them there’s no right or wrong answer. At the conclusion of the polling, ask folks to explain their choice. Start with ‘why’ they chose that point. Also, don’t ignore outliers. If the group consensus was #4, and one person said #1 — ask them to explain why, and validate their perspective. Finally, transition the conversation to the following questions:
- What are we doing about this?
- What should we be doing about this?
Expect a wide range of responses, all of which generate a good starting point for an innovation conversation. When I put this in front of a CEO of a half-billion dollar business, he correctly pointed out the significant new revenue the business was winning with it’s core model. #6, #8, and #9 were clearly out. He asked me how he would tell between #3 – #5. Everything about the successful mature business is pre-disposed to think it is earlier on the curve. How could I engage a leader who knew more about the industry and business than I will ever know?
When the answers trends to the early side of the curve, ask about sales pipeline. Are future customers for the core business identified? Are their needs the same as the growth customers (or will they require major investment to win over?), and are there enough of them? This leads to great conversations about sustaining vs. breakthrough/disruptive innovations.
Typically, I’ve found that business development roles tend towards earlier positions on the curve, and internal roles tend towards later positions. This is a function of focus — business development is tuned to new customers and growth, internal folks are tuned to serve existing customers and market. The temptation for both is to focus on sustaining innovations — things that empower the core business model. Use this in the conversation — highlight new business models, yet acknowledge that there are several types of innovation investment all of which are needed for the business.
The s-curve exercise is a level-playing field for any role in the business; it’s easy enough to explain to roles not caught up in sales forecasts and P&L, yet familiar and legitimate to executives. It’s a great way to start the conversation about innovation and investing in the future.
The s-curve has applications in other contexts where the motivation to find the next ‘leap forward’ is key. Whitney Johnson describes an application to personal career, and others have reported using this to inspire and reason about new development methodologies for software delivery.