A few years ago, our company website was ranking in the top few positions in Google’s search results for several keywords. This had been a big priority for us since search traffic can be a significant source of new business. Having met this goal, we moved it down in our priority list. Over time, however, our site slipped gradually in the rankings, and then one day disappeared altogether. What happened? We had missed an inflection point in Search Engine Optimization. A year later and more than a year wiser, our site is back in the top positions, and we’ve gained some valuable insights into spotting movements within an industry.
But wise master, what is this Strategic Inflection Point of which you speak? Very good, my little penguins – the strategic inflection point is a concept brought to the attention of the business world by Andy Grove in his 1996 book Only the Paranoid Survive. Grove describes strategic inflection points as representing what happens to a business when a major change takes place in its competitive environment. Think of it as the point at which a trend or curve changes direction from positive to negative or negative to positive.
In hindsight, strategic inflection points always appear to be painfully obvious – in the switch from film to digital cameras, for instance, it’s obvious today why so many people would prefer the convenience of digital cameras over film cameras, but this was not so clear as it was happening – digital cameras were very expensive and the image quality was lousy. In the switch from physical newspapers to online publications, the many benefits of accessing a huge variety of news sources and publications on one device are easy to see, but it was just a decade ago when it seemed that most people preferred reading the physical edition. Like I said, in hindsight, strategic inflection points are easy to spot, and the course of action is clear. But at the moment, it’s difficult to know if we are looking at a fundamental change in the direction of the curve – or whether it’s just a hiccup, soon to go away.
How to Spot an Inflection Point.
Here, we come to the tricky part. If your revenue has started plummeting, you’ve probably already missed an inflection point – but if something isn’t broken, why fix it? This is why we see so few cases of companies perfectly poised to leap when an inflection point occurs, and doing so at just the right moment. Being able to know when a movement in a trend line is an inflection point and when it’s just an anomaly is as much gut instinct as it is science, and making bad bets is something that anyone is capable of. Although we can’t hand out crystal balls, we can tell you about some frequent causes of strategic inflection points which can fundamentally change an industry and cause you to do business differently:
- New Processes. Changes in the process often coincide with changes in technology. When manufacturing allowed the production of very inexpensive memory chips, there was a quantum shift in the kind of software that personal computers could run, the kind of media that could be viewed, and the level of functionality that was possible.
- New Behaviors. When consumers became willing to read complete publications on screens instead of in their physical form, companies that were slow to recognize that this change in behavior signaled an inflection point became extinct.
- New Frame of Reference. The first time anyone ever popped an ollie on a skateboard, it changed the point of reference for what was possible for skateboarders all over the world, later making its way into surfing and snowboarding. I would say that the birth of the ollie qualifies as a major inflection point in sports.
- New Rules or Regulatory Environment. When Google made a significant change in the way they index websites, a major shift occurred in the design and structure of company websites. Those who stayed abreast of new changes to Google’s indexing algorithm were able to get their websites in the top search engine listings.
So, what are you going to do to be alert to potential inflection points in your industry? Are you keeping a close watch on consumer behaviors? Are you staying abreast of the regulatory environment? Are you engaged in the fun in your work which would help you innovate or change your frame of reference? Are you looking at other industries for processes that might be introduced to your industry? Well, are you? Go pop an ollie!