It was all going so well … How successful companies slide off the curve.

It was all going so well … How successful companies slide off the curve.

It is now over 20 years since Charles Handy wrote about his trip along the Road to Davy’s Bar in his insightful yet charming book ‘The Empty Raincoat’.  In it, he introduced the concept of the Sigmoid Curve.  Handy has been acclaimed as one of the most advanced management thinkers in the world and so it is perhaps not surprising that his ideas seem both profound and obvious.  According to Handy, the Sigmoid curve, which looks like an elongated ‘S’ that has fallen forward, describes the trajectory of most empires, businesses and products.  They start slowly, then enjoy dramatic success and just when they seem to be doing everything right, they begin to fail.  There are numerous examples that one can think of such as Blackberry, once the businessman’s device of choice, not to mention Nokia – or even Blockbuster, the video rental chain, and remember the Sony Walkman?

So why do companies that have achieved so much and appear to have market dominance fail so badly?  The answer lies in the Sigmoid Curve.  Handy argues that the companies that endure are those that start a second Sigmoid Curve while they are still expanding and succeeding.  For example, Amazon started as an online bookstore and could have easily stayed in that market, competing with Waterstones, WH Smith and others.   Instead, while it still sells books, it is now the world’s largest provider of Cloud infrastructure services.

Clearly, moving to a second Sigmoid Curve takes bravery and foresight; starting a new curve is expensive and can seem to be a distraction from the real business of growing an already proven product[1].  However, by planning for the future while you still have time and resources available, you can successfully grow your business into something that endures.  None of this is easy, comfortable or intuitive; as Bill Gates observed: “Success is a lousy teacher; it seduces smart people into thinking they can’t lose[2].

An added difficulty is that those inside a business are often the ones least able to detect when it is time to move to a second Sigmoid Curve.   So how do you design a strategy that helps you jump to a second Sigmoid Curve before it’s too late?   At Sampson Hall we have a unique Strategy Model based on a seven-step process that allows businesses of any size to develop, plan and execute their own long term plans and goals. This process flexes around and adapts to any organisation’s size or circumstances.

By Ian Huntley, Sampson Hall

To find out more go to www.sampsonhall.co.uk

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