Continued growth, by jumping the S-curve

To secure sustained growth an organisation must have the ability to jump S-curves at the right time, doing this effectively separates an organisation from the pack and puts them in the star player category. The ability to climb and jump S-curves distinguishes star players from those who never manage to transform brief periods of accomplishment and single wins into an ongoing series of successes.

What is a Financial Performance S-curve?

The S-curve model that describes financial performance is normally grouped into four phases. The first is the entrepreneurial phase or introductory phase, the second the growth phase, the third is the maturity phase and the fourth is the declining phase. An example of a financial S-curve is shown below.

Being able to jump to a new S-curve over and over again is the key ingredient to obtaining sustained business growth. According to 'Stall Point' by M. Olson and D. Van Bever once an organisation hits a stall point within their S-curve it has a less than 10% chance of full recovery. I don’t know about you, but that doesn’t seem like very good odds to me. Two thirds of stalled businesses are normally either acquired or face bankruptcy.

Many companies fail to avoid reaching the stall point by simply not seeing the end coming, some view the slowing revenue growth as a result of an economic downturn or industry slowdown and not as a direct result of their own products or services. The longer you wait to reinvent, the harder it will become to succeed.

The hidden curves

According to ‘Jumping the S-Curve’ by P. Nunes and T. Breene there are three hidden S-Curves which companies should pay attention to as these have a determining influence on the success of an organisation’s financial well-being. These include the competition curve, the capabilities curve, and the talent curve.

The competition curve can be described as the basis of competition within an industry. This basis can change, and companies should pre-empt the shift and create the next basis of competition in their industry. These could include things like competition on price, convenience, added value or service design.

The capabilities curve outlines the current capabilities of an organisation, which very often gives an organisation the edge it needs. But, distinction by capability will not last forever therefore organisations should constantly develop new capabilities before the existing ones run out.

The last hidden curve is the talent curve. Retaining a decent quantity of serious talent (people who can drive business growth) is vital. Be careful when streamlining operations that you don’t reduce your headcount in order to focus purely on operational efficiency to best execute your current business model, because you’ll run the risk of cutting the people with an entrepreneurial mindset who are capable of driving the business forward.

In essence looking after the above mentioned curves will help your organisation stay ahead of your competition. It’s easy to get stuck in a comfort zone, but those who would like to drive growth should always be vigilant and drive change within their industry. It really is about living on the edge.