How to keep a company thriving indefinitely
Company performance typically follows a predictable S-Curve trajectory, starting slowly, then accelerating rapidly, and then tapering off. Most companies then fade into oblivion, but high performance companies manage to jump from one S-curve to another, according to Paul Nunes and Tim Breen in their book Jumping the S-Curve: How to Beat the Growth Cycle, Get on Top, and Stay There. The book is based on research by Accenture on more than 800 companies, approximately 10% of which were identified as high performance companies based on a range of financial metrics.
The authors’ research revealed a number of surprising results, including:
- High performance is still possible in a highly competitive or mature market.
- Being the biggest is not a requirement for high performance.
- It is possible to have high growth and high profits at the same time.
So how do you find an S-Curve and jump onto it? To climb a curve, you must first identify a Big Enough Market Insight, which has potential to bring significant financial rewards. Next, you must develop a threshold competence, which is sufficient to get customers to purchase the new product or service. Next, operations must be expanded to a substantial scale quickly enough to pre-empt competitors.
To jump from one S-Curve to the next, you must monitor the market relevance of your offering (which declines before profits do), have your most talented employees focused on the next big thing, and grow a reserve of talent ready for the next big expansion.
The authors’ methodology has some similarities to that of Jim Collins, and they refer to his work in Built to Last and Good to Great a number of times. However, I felt when reading the book that the authors were making bald assertions and asking me to take it on faith that these assertions were derived from the research. I was unable to get a feel for the strength with which any particular proposition was supported by the data. The appendix describes the methodology but not the data. As is often the case with Kindle books, many of the figures were illegible, although this did not detract significantly from the content of the book as a whole.
In my view this book makes a useful contribution to the field of corporate strategy, and I recommend it for any manager who is currently caught in the declining part of an S-Curve.