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An extract from the 60 tools available in...
The TOOLBOX for CHANGE - A PRACTICAL APPROACH
Section 1: General tools
This section deals with tools that have general application to individuals, groups, communities and organisations.

Tool # 1.3 The S Curve

• Is easily applied to most organisations/communities/groups/products/issues etc.
• Requires general data to be graphed to explain your position.
• Enables timely changes in strategy to revitalise the context.

The S-curve illustrates one of the main reasons individuals, organisations or communities need to regularly change, revitalise or re-invent themselves. The other main reasons include:

  1. the organisation/community is out of step with the changing environment, such as stakeholders, markets and community expectations
  2. opportunities emerge to enhance the organisation/community"s strategic intent, such as takeovers, mergers and alliances
  3. core competencies (i.e. what the organisation/community does best) need to be strengthened
  4. opportunities emerge to expand core competencies (i.e. diversify)
  5. the next phase of the S-curve needs to be managed

Of these reasons, managing of the next phase of S-curve is the least understood. The S-curve is mostly used to show the life history of products and services. Sometimes called the life-cycle approach, sigmoid curve, second curve or curvilinear logic, it can be applied to countries, social groups, families, communities or relationships.

Patterns of S-curve

The S-curve shows the typical development pattern for most products, services, organisations or communities

Most products/services/organisations/communities follow a similar development pattern: the S-curve (as illustrated in the diagram below). The S-curve has a beginning (1), a period of slow growth or decline (2), a period of rapid growth (3), a mature phase (4) and an ending (5).

For example, a product or service is launched (1), sells slowly (2), becomes accepted and sales rise rapidly (3), the market matures (i.e. market saturated) (4) and the market changes (e.g. replacement product needed) (5). For an organisation or community, the sequence is start up (1), growth (2), control (3), maturity (4) and shake out or decline (5).

So what does this mean for you? Even if you are successful, you need to constantly revitalise and/or re-invent and/or change your products, services, organisations or communities. The S-curve is a valuable tool for company boards and senior management who are time-poor and/or have a short attention span. For example, if an organisation"s sales or profit figures for the last few years are gathered and graphed, most managers will recognise the organisation"s position on the S-curve.

The different stages of the S-curve require different mindsets, competencies and expertise. At the start of the S-curve (or while revitalising), discovery and inventiveness are required (these are called pioneering colonisers). The middle part of the S-curve requires the exploitation of economies of scale, production of goods and services most suited to the marketplace and control of the channels of distribution (these are called consolidators). When nearing the peak of the S-curve, it is time to re-invent, ensuring that adequate resources are available. On the downward side of the S-curve, the urgency to re-invent becomes very strong as all resources, especially time, are in very short supply.

Remember: the elements that gave you success are not necessarily those that will keep you there!

Ideally, you need to change before the S-curve peaks. This is when you have enough resources (money, time, energy and so on) to handle the development of something new or different. On the other hand, this position is where you are most successful and do not see the need to change ("we have the formula for success, so leave us alone!"). The corporate graveyard is full of organisations and communities that thought they had the correct formula for success!

One of our corporate clients had two separate divisions. One division was at the bottom of the S-curve and starting to head upwards, while the other division was at the top of the S-curve and starting to head downwards. The first division"s manager realised his position and was focused on improving his division"s performance, while the other division"s manager was very complacent and arrogant about his division"s performance and felt no need to look at things differently. He did not take notice of the warnings, but around six months later his division"s performance deteriorated and he lost his job. There is a message here!

Usually, success breeds complacency. We try to hang onto past successes and to stay in our "zone of comfort", and very few of us are willing to challenge the assumptions of success and/or use creative tension or mental arm wrestling to move in different directions. In this mindset, we are less likely to acknowledge changing trends and to find new ways of doing things, especially if they threaten our current and past success and/or comfort zone.

The impact of changing at different parts of the S-curve

In their book Strategy of the Dolphin: Scoring a Win in a Chaotic World, (Fawcett Columbine, 1988), Dudley Lynch and Paul Kordis provide some examples of the impact of changing on different parts of the S-curve.

The top-left-hand graph below is the ideal scenario for revitalisation - maximising gains from the first curve as the community/organisation/product/service moves into the next curve.

The other three diagrams each show less-than-ideal scenarios. Obviously, the bottom-right-hand diagram illustrates the worst scenario - changing when on the downward slide with fewer resources available to handle the revitalisation. Usually, this scenario involves knee-jerk or drastic reactions, such as downsizing, that will bring short-term benefits, such as reducing costs immediately, but impact negatively on the long-term viability of the organisation.

Process

If you are unsure where your community/organisation/product/ service is on the S-curve, apply some performance criteria, such as sales, profit, staff numbers, productivity indicators, market share or number of awards achieved in order to draw your S-curve. Even if things are going well, it is prudent to think of ways to change or re-invent or revitalise. It may mean developing a new market for your products/services, changing your products/services, changing to a new industry or restructuring your organisation. On the other hand, if you have already peaked and are moving downhill, you need to urgently start doing things differently!

For a decade, Bill has been conducting public workshops on change management and needs to constantly revitalise the workshops. Some revitalising strategies he has used are:

• switching to organising the workshops himself (initially he presented the workshop on behalf of a training organisation)

• expanding them from one to two days

• changing venues (different hotels) and locations (different cities)

• changing where he advertised (initially focused on mailing lists, then on professional journals and now concentrates more on the internet and business magazines)

• altering the registration process (initially had an assistant handle all enquiries and registration; now does it himself as it allows him to talk directly with potential attendees)

• redesigning the brochure advertising the workshop (making it more colourful and professional)

• changing the presentation style (started with overheads, moved to PowerPoint and now focuses on attendees" participation)

• changing workshop frequency (from twice a year to once

• regularly upgrading accompanying manuals (started with one volume of around 120 pages and now provides two volumes in excess of 1300 pages)

• devoting more time to pre and post-workshop discussions with attendees

• attracting different clientele (e.g. increasing number of consultants and female managers attending the workshop)

• asking associates to attend his workshops regularly to carry out critical reflection on his performance in the workshops.

Examples

Most people assume that big and/or old organisations are the hardest to change. Yet General Electric (GE), under the guidance of Jack Welsh and Jeff Immelt, is one example of how a large and old organisation has continually revitalised itself around four main initiatives: globalisation, services, 6 sigma and E-business (see graph at left). Their vision is to be:
"...the most competitive enterprise in the world..."

Furthermore, Jack Welch wanted GE
"...to operate with the speed, informality, and open communication of a corner store..."

Source: Jack Welch et al 2005

In the 1970s, GE started to move away from businesses, such as television sets, small appliances, and air conditioners, which were becoming more commoditised, towards manufacturing high-value technology products or services. Quality, costs and services were not good enough in the commodity business in the face of increasing competition, mainly from Japan - these businesses were suffering from declining margins. Furthermore, GE Capital demonstrated that it was easier to make money in the financial services where there were fewer obstacles to business, such as unions and foreign competition.

The new businesses included media (RCA, NBC, etc.) and high-technology products in the power, medical, aircraft engine and locomotive businesses.

It is interesting to watch as other large and successful firms endeavour to revitalise:

• Nokia (from mobile phones to an information technology consumer electronics powerhouse)

• McDonald"s (from dominating the fast food industry with alleged "junk food" to producing more health-conscious products and targeting older customers)

• Coca Cola (has previously revitalised by continually updating its advertising and packaging to be in line with the ever changing youth culture; recent problems include competing with other lifestyle drinks and a dysfunctional top management/board - Coca Cola has changed its top management and is improving Board governance)

• IBM (services are more important than the mainframe computer sales). Will they succeed? Only time will tell. Invoking the S-curve methodology unleashes a very powerful tool with which to convince people of the need to revitalise!

Sources: Danny Samson and David Challis 1999, Gary Hamel 2000a, Jerry Useem 2001, Jack Welch et al 2001, Gerry van Wyngen 2003, Charles Handy 2002, Sean Aylmer 2004, Betsy Morris 2004, Janet Guyon 2004, David Kirkpatrick 2004 and 2005, Costas Markides 2003, Marc Gunther 2004, Sean Aylmer 2004a, Matthew Boyle 2004, W. Chan et al 2005, Spencer Ante 2004, Geoffrey Colvin 2005, Carol J Loomis 2005, Mara Der Hovanesian 2005, Emily Ross et al 2004, Anita M McGahan 2004, Geoffrey Colvin 2005

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