Paul Nunes of Accenture presented some of his work at the Accenture Institute for High Performance. He began with a story – Zenith. Zenith did well in radios, got into television and rode that curve and as competition grew more intense they got into PCs and computers. But they sold off the computer business rather than the TV business and could not make it. Having rode several “S curves” they failed to jump onto the new one. So a company must be able to scale up an S curve AND know how to jump to a new one. And then another new one and another…. Accenture did some research into the companies that managed this.
He gave four reasons why it is particularly important that companies manage this going forward:
- Stalling usually means stopping – only 7% of companies that have a revenue peak – a stall – ever return to rapid growth
- Company life spans are growing shorter
- Global competition is intensifying
- Downturns don’t lengthen curves, often they shorten them
So what does it take? They found that high performers focused not only on the financial performance curve but also on competition, capabilities and talent curves. Nature of competition, marketplace differentiation (capabilities) and ratio of top talent to the rest of the company (talent) curves all peak earlier than the financial curve and so act as a kind of early warning curve.
There were three ways companies climbed the curves they were on:
- Superior market focus
A big enough market insight – spotted a change in the marketplace that would give them a significant advantage. For instance, recognizing that emerging markets would adopt western diets and so the rate of diabetes in the world would rise rapidly. And then acting on this insight.
- Distinctive capabilities
They build a “threshold” competence before scaling – they did not scale up their business until they met the exact needs of the market.They made sure they had the product, its pricing etc all set up just right.
- Serious talent management
They looked INWARD not just outward. They looked for people who cared about their careers, their future and became worthy of the kind of talent they needed. They focused on pervasive competence, they were predictable in terms of mutual accountability and were reliable in terms of honoring people’s efforts – not making policy for everything but relying more on judgment and social more
Then there were three ways that companies found the next curve to jump to – what they call an edge-centric strategy: Edge of the market to go beyond traditional sources of information; Edge of the organization to find insights away from the core of the company; Edge of control by making strategy planning a permanent process not a one-time event. So, what did the successful companies do to find ways to jump to the next curve.
- Top teams changed ahead of the curve
CEOs retiring long before they could and being replaced with leader focused on next thing. They also built teams with a foot in today and tomorrow and organized to avoid overloading their teams.
- Created a constant talent surplus by becoming a “hot house” of talent.
They hire for life (from an intent point of view, focusing on culture), give people assignments not jobs, cultivate hardiness through variety and providing room to grow.
He also pointed out that S curves are always shorter than you think….
So – how will you learn of new trends, how will you determine the exact thresholds of new products or services for new markets, how worthy is your company of serious talent and how would you know, how will you get ideas from the periphery of your company, how can you tell who should be on your team? All questions you could use analytics to address, at least in part.