Of early adopters, S-curves and the business life cycle
If you have studied business in school, you would no doubt have come across S-curves, early adopters and business life cycles. For some of us, these were just theories we needed to sprout to get our degree. For others, usually business owners, this is a matter of grave importance. Understanding these helps us position ourselves better to adopt new strategies, paving the way to continued growth or expedited exit. So in this article, I take a walk down memory lane to discuss the fundamentals of business and product life cycles, and reiterate what we can learn from these B-school staples.
The Innovators and Early Adopters
I start with Roger’s Innovation Adoption curve. What it shows is the rate at which customers adopt your innovative product over time. Take a look at the green-blue bell curve below. It shows the typical adoption rate of a new product. In the beginning, no one knows about your product, and as such, only a few people will dare strike out to use it. These few are the innovators. Coming hot on their heels are the early adopters. They are a larger in number than the innovators, but are still the market minority. Taken together, innovators and early adopters are people who are more interested in being seen with the latest gadgets, running at the fringes of the market, and driven by a, sometimes irrational, need to be first users. It is only after these two groups have provided the (rave) reviews would the bulk of the people come along, pushing the product onto a growth trajectory. Indeed, that is where the green line ends and the blue begins. And if a product cannot move past the early adopters, its growth is dead on the water.
The key therefore is to shoot for the innovators and early adopters when you go to market. Obviously, your messaging cannot be the same as for the mass market. You must use a different value proposition to set yourself apart from your competitors, the incumbents who have been in the market for a much longer time. You must accentuate your difference and what it means to be the first off the line with your product.
Let’s turn our attention to the yellow curve. It shows the rate of adoption of your new product. It also coincides with the business life-cycle, which looks like this:
In other words, a new product will have the similar growth stages as a business and if the business has only one product, then both curves coincide. What does this mean? Simply that growth is usually slower when the product or business starts, but it will start accelerating when it hits the growth stage, usually whtn the early and late majority come on board. However, growth will start to slow, and by the time the laggards come on board, the business growth rate will be in decline. It also means that the business needs to find new sources of revenue, new products or new markets.
Jumping the S-Curve
When the business develops a new product, it is basically engineering a jump onto a new S-curve, leading to way to higher revenue.
It is important to note from the graph above, that you don’t start jumping off when your product is in the maturity or declining stage; you do it while still in the growth stage. This will allow time for development, and for the product to take root in the market and lead to a new grow curve.
Take away value
In summary, and this is something that all business owners know instinctively, your products, and by extension, your business, needs constant updating. If you are not innovative and if you don’t constantly introduce new products to market, you will head to decline. And when you do launch that new product, remember to first dial in the innovators and early adopters, because they are the ones who will provide the platform upon which your early majority will come in. Failing to recognize the adoption process of innovations might lead a business with a really great product out the market before it had a chance to showcase its usefulness.
This makes the case for constant innovation.