You can’t help but watch in amazement at the hyper growth of many recent consumer internet companies. And now, just as quickly, the speed at which some are plateauing, or even declining, is just as striking.
The theory folks are kicking around in tech circles is these companies are reaching market saturation faster than ever due to viral channels (read: facebook). Their growth then slows (or even reverses). Net: they’re moving through the typical lifecycle of a business at an accelerated rate
(Thanks to http://joshbersin.com/2008/07/31/make-learning-part-of-your-business-strategy/ for the graphic!)
The x-axis is now super compressed. Time is flying by. These folks end up in the decline and the subsequent fork in the road – rebirth or death – extraordinarily fast.
This poses an interesting new challenge: navigating the Innovator’s Dilemma at an accelerated rate.
For a company to achieve rebirth, it often has to invent a new line of business. This process is hard – the definitive book on the topic is Clayton Christensen’s Innovator’s Dilemma.
For the company to achieve rebirth, it often has to wrap its collective noggin around a new, small team, breaking the established rules, that may be doing things that cannibalize the existing business. An internal startup. This is so difficult to accept that the company often has to come near death to get sufficient internal support to really make a run at the new new thing. See Apple, IBM, etc.
So now back to our new world of accelerated timelines. Imagine running a business that goes from nothing to billions in a few short years. Your (still messy) systems are built around hyper growth – your culture, staffing, data dashboards you look at daily. Your employees’ expectations. And then, suddenly, you’re plateauing. You’re likely to not recognize it until a couple of months after it takes hold. And before you know it, you’re potentially in decline. It all happened so fast that your company is still tooled for hyper growth. Rebirth v death depends on how well you navigate the Innovator’s Dilemma.
We’re all watching this show in real time. It’s possible that these companies have an advantage in navigating the Innovator’s Dilemma – they’re already tooled for growth! On the other hand, their growth resources are fixated on a business that has saturated its market and now likely needs to be managed in a different way. How well these companies capture the energy around their now mature business into new forms of innovation – and how flexible the people, from senior leadership to individual contributors, are able to be, will likely determine the outcome.
Reblogged this on strutdogg and commented:
interesting
Interesting essay. You should submit it for publication on other blogs that have much broader circulation. I think it would educate a lot of folks who are currently ignorant of the “life cycle” concept, even without the timeline compression issue being considered.
Your post caught my eye on the Freshly Pressed page – I just happen to be reading “How Will You Measure Your Life?” by Christensen! Small world. Nice short and concise post.
Hey, I think this rebirth stuff can even be applied to religion (my interest). Thanks.
Interesting post. A big dilemma for the innovator is clearly finding the ability to execute on ideas within this accelerated timeline. It’s not just about the quality of the idea but focussing on managing growth and expectations. http://palumbopicks.wordpress.com
Interesting blog. I remember a story about Bill Hewlett when he was at HP. Bill was legend for short precise (what I will call) “quantum motivation.” He didn’t ratchet things up like, “Let’s do ten percent better next year,” he went big. For example, when the HP engineers had just innovated a calculator the size of a shoe box (the previous one being the size of a grocery box), instead of heaping accolades, Bill addressed the meeting with, “Now I want one that will fit in a shirt pocket” and abruptly left the stage. Consternation was quickly met with applause and knowledge that someone had the faith in them. The result was a mindset of, “Sure, we can do that!” and of course, they did.
It is remarkable hearing about the many companies that rise, get everyone excited, and then fizzle. If they’re lucky, a large corporation will pay an exorbitant price before they die. It’s a vicious cycle, and unsustainable. But, I also think we’re still in stages of adapting to an internet-based economy. We’re far more advanced than the late nineties, but there are still unknown business models to explore.
Reblogged this on Blog-a-tastic and commented:
Lifecycle of a business is like an lifecycle of our own life. There are up’s and down’s throughout life. It’s all a rollercoaster
Lifecycle of a business is like an lifecycle of our own life. There are up’s and down’s throughout life. It’s all a rollercoaster
Indeed, modern internet business seem to soar and plummet over night.
I think it is not just the quick market saturation (the plateau) that is the downfall of these companies. The consumer’s attention span has also shortened considerably. It is becoming increasingly harder to retain the consumer as they move on to the next big thing, which makes the decline fast and cruel.
Innovation. It’s a risk, but it’s definitely worth taking. Especially when no innovation at all, can lead to inevitable defeat.
Employing Sinek’s Golden Circle, the graph would reflect the execution of the “what’s” and “how’s”; however, if, for a company, the leaders also believe the graph captures its “why”, then either the company’s “why” was improperly defined or the market has shifted or no longer exists. The bottom line is to get the “why” nailed down so that the culture is always in a mode of driving continual “rebirth” of the “what’s” and “how’s”. It’s back to Lt. Colonel John Boyd’s Decision Cycle (or OODA Loop). My 2 cents…