Getting ready to scale? Mastering your S-curve is key

What do entrepreneurs, scientists, engineers, business executives, students, even government officials have in common? They all need to face the dreaded S-curve.

There is much argument as to when S-curves were first unveiled. Some argue it was Everett Rogers, who in the early 1960s, in his book Diffusion of Innovations depicted its distinct shape to explain that innovations are adopted, not a linear relationship or directly dependent on the innovation itself. Rather, other factors were at play that determine the rate of adoption. Rogers went on to describe ?the different categories of adopters and what drives them, namely ?innovators, early adopters, majority (early and late) as well as laggards.

Some point to Gabriel Tarde, a French judge, who in 1903 published The Laws of Imitation. Like Rogers, sixty years later, Tarde noticed that the rate of “imitation” or adoption of a new idea usually followed an s-shaped curve over time. As a social scientist, he saw the diffusion of new ideas as a form of social or cultural Darwinism, that followed natural selection, refinement and adaptation, for these ideas to find their place in the world and impart their value for future generations.

Others point to a much earlier period. They noticed depictions of S-curves dating back to Ancient Greece, in depictions of nature, of the human body and how the Greeks saw the world. The S-curve is clearly recognised as a common pattern in human history.

In modern management thinking, facing a hyper-competitive environment, with familair and non-traditional competitors alike, many organizations are ill-equipped to deal with the pace of change. Here, the S-curve offers us a visual lens to test our thinking. Let us take the opportunity to do exactly that.

Let me introduce Prof. Ed Morrison first. He is the founder of the Agile Strategy Lab at Purdue University in the US. Ed dedicated much of his professional life to studying the challenges of how humans collaborate as they face significant shifts in their surroundings. In other words, navingating a shift from one S-curve to the next. He recounts how in the 1990’s, Oklahoma City was facing a decade of stagnation. Oil prices had collapsed, and the city had yet to recover from a serious banking collapse a decade before. The city's fortunes looked bleak.

Oklahoma City's mayor, Ron Norick, and the City Chamber were busy planning a multimillion‐dollar infrastructure investment to change the city's fortunes. Called MAPS (Metropolitan Area Projects), it was a planned investment of approximately $400 million in infrastructure - a significant number in those days.

Such public investments in infrastructure, however, were not enough to turn around Oklahoma’s economy. Would the private sector show enough confidence to invest in the city’s economic prospects? Could it create a fly-wheel effect, where a network of partners come together to, in effect, generate a new S-curve of growth and renewal?

To complement the city’s efforts, Ed proposed that the City Chamber think of their strategy more like open-source software development. He argued that a continuous iteration of experiments would help clarify “what works”, a process we now recognize as Agile. The central problem they faced was how to design and guide complex collaborations in open, loosely connected networks, when no one can tell anyone else what to do. Navigating a new S-curve, an unfamilair terrain, becoame a collaborative effort.

Within a few years, the city’s MAPS investment portfolio was backed by a network of private sector role-players. Together, they tirggered an additional $403 million in private investments, and gained the interest of?technology companies, for whom Oklahoma City was previously not on the radar screen. This was a major achievement in scaling thier investment efforts, and doing so collaboratively.

Fast forward to today and Oklahoma has the fifth-best economic outlook among the 50 U.S. states and ranks highest among its neighbors, ahead of Texas, Colorado and New Mexico, to name a few. Ed Morrison’s approach, known as Strategic Doing, has since been tested in cities, countries, and complex ecosystems across the world, from Japan to Chile. What is most intriguing though is what it tells us about how we can ready ourselves, our organizations, and partners to scale.

For those who have studied S-Curves for years, there is an important distinction here. Despite a widely prevailing belief that a single inflection point can launch us onto a new S-curve, a single event that changes our perspective of what lies ahead and re-calibrates our efforts towards a new S-curve which we can scale along.?

What we experience as an inflection point is in fact a liminal space, where the current S-curve which we are on, overlaps with a new S-curve, and at times several others. It is a space where the old paradigm is weakened, and signals seem to conflict. This is where we encounter new forms of competition, others who do not follow our organised logic and industry paradigm. It can be a wildly opportune space if we are willing to step in and challenge.

It can be a humbling (and equally frustrating) experience. We find our runway is shortening and we have less time to respond to new copetitive threats, the risk of beig disrupted, even de-throwned. It happened, in fact, to Elon Musk, who when asked in 2011 about battery-maker BYD turned EV manufacturer, dismissed their vehicles as "neither attractive or technologically strong". By 2023, he acknowledged that he shouldn’t have taken BYD, recently crowned the world’s largest EV manufacturer, lightly.

Along such responses by industry incumbents, we find new forms of innovation take form. The ability of Tesla for example to offer fully battery-electric vehicles at a price-performance combination that did not conform to what most automotive OEMs or industry incumbents could offer. The ‘re-combination’ of electric power, associated with clean power generation and efficiencies, with high-end vehicle performance, opened the door for a new class of vehicles to enter the market and provide Tesla with a unique positioning, at least for several years, until Chinese rivals such as BYD became commonplace in major markets, in 2022-3.

The liminal space that lies between incumbent moves to extend their runway and scale new innovations under managed market conditions, and on the other hand, disruptive newcomers who operate under a different paradigm, is a space within which we can make new decisions and get ready to scale.

Here we find three types of response:

1. Extending the runway - Often persistent moves to extend one's runway along their familair S-curve, one that is flattening and where signals of diminishing returns begin to accumulate.
2. Making strategic bets - A deliberate attempt to leapfrog from one S-curve to the next, often by inorganic moves, such as an acquisition of an organization already positioned on your desired S-curve or well into the transition. At times, various forms of partnerships can play a role here, aimed at accelerating our learning in such a new space and building our portfolio to include high-growth opportunity fields.
3. Growing optionality through experimentation - where we explore the liminal space along several paths.

Getting ready to scale can take more than one form. It is often a testament to our nuanced understanding of customers and the complex landscape in which we operate. Being conscious of such an environment and the opportunities it opens to us to experiment, learn and position ourselves for future success, is the foundation for our scaling efforts.

Have a good week ahead!

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