To a business owner or CEO, “Stay the Course & Reinvent Yourself” may sound like a choice between continuing on a given path or choosing another. However, the truth is that innovative firms continue being one thing while becoming something else; they bridge a paradox, a duality. Let’s think of our business in terms of “Performance Engines” or “S-Curves”.
Lifecycles and S-Curves
An S-Curve can be thought of as a lifecycle of any particular product, service or business model. We can use an S-Curve to explain innovative business performance over time. Our businesses thrive by successfully delivering some form of innovation to customers or users. Our performance starts slowly as we launch a particular business (or new product/service line) on a somewhat tentative basis as we experiment to find the right business formula. We are in the red for a while but eventually we learn enough to make the formula work. As our grasp of our market increases, our business performance (now heralded – - not as a formula – - but as a business model) moves from red ink to solidly black. We breathe a sigh of relief as all our sweat and blood start to bear fruit.
Then as the attractiveness of our offering spreads our performance accelerates; often our growth looks like an exponential upward curve. Our numbers and graphs feel like “straight up forever” … and we gasp to keep up to a newfound pace. Exciting new plans (that later look ridiculous in hindsight) are made with wild goals. Our very success attracts envy and imitation. It’s not long before competition brings “me too” products to market; saturation with the accompanying erosion of margins and profits is the inevitable result. The best and brightest in our industry react with innovation and new technology. Our business model (and just about everyone else’s in our marketplace) hits obsolescence.
As growth moves from acceleration, to de-acceleration, to flat, to down what does not change is the cost of the infrastructure that was built to support that amazing growth. That overhead is rarely jettisoned easily in a decline and it may turn into a deadly millstone around our neck that kills our life’s work. Not all of us can do turnaround management.
Our Lifeblood: Performance Engines
The S-Curve by its directional shape takes us from down-sloping during the investment startup stage, to flat as we go from red to black, to rising as we make a fortune in the acceleration stage, to flat as we lose our differentiation and position, to down again as the world goes flying past us. That’s why it’s the job of the strategist to be continuously building new S-Curves or Performance Engines. That’s why we must both stay the course and reinvent ourselves.
It’s the job of every top officer to drive the current Performance Engine. The performance engine is the lifeblood of the company – – the way by which everything operates, breathes and grows in our world. High-Performance is often defined as “consistently and enduringly surpassing industry rivals in market and revenue growth, margins and profitability, total returns and cash in the bank”. When we are at our highest performance we often don’t even notice jealous competitors.