We live in uncertain, unpredictable times.
That may be one of the least controversial and most widely accepted statements I’ve ever made.
The world in 2016 is filled with “VUCA” – Variety, Uncertainty, Complexity, and Ambiguity. We face “wicked problems” every day.
However, as chaotic and dynamic as 2016 seems, this is hardly the first time the world has seemed out of control. In fact, that familiar phrase, “The future isn’t what it used to be” (meaning, the future won’t be like the past), was first used by the French poet and philosopher Paul Valery in 1937.
Indeed, for most of the last several hundred years the future has usually seemed unpredictable, if not uncontrollable. Ever since the Industrial Revolution we have experienced never-ending technological change, although clearly the rate of change has been accelerating at an incredible rate of its own.
It is instructive to look at how new technologies penetrate the marketplace over time. This chart is one of many you can find on the Internet that depicts the market penetration rate for a wide variety of technologies:
(Source: Derek Thompson, “The 100-Year March of Technology in One Chart,” The Atlantic, April 7, 2012)
This chart demonstrates clearly that the rate of change is accelerating. From Thompson’s article:
In 1900, <10% of families owned a stove, or had access to electricity or phones
— In 1915, <10% of families owned a car
— In 1930, <10% of families owned a refrigerator or clothes washer
— In 1945, <10% of families owned a clothes dryer or air-conditioning
— In 1960, <10% of families owned a dishwasher or color TV
— In 1975, <10% of families owned a microwave
— In 1990, <10% of families had a cell phone or access to the Internet
Today over 90% of American families have every one of those technologies. But look at how the Internet penetration curve on the far right of the chart is almost vertical. The rate of market penetration feels almost infinite; it’s been just nine years since Steve Jobs introduced the first smartphone).
We are now experiencing the so-called “network effect” in that most of the products we pay attention to today are Internet- and telecommunications-based, and therefore interconnected. The number of nodes and communications links in a network goes up geometrically, not linearly.
But these curves do not show that when a new technology comes along, old ones die, even though often it’s a long-lasting, cruel death – especially when personal and economic interests are involved. Just consider the transition from film to digital photography; what happened to Kodak? Remember video cassette recorders? Or vinyl long-playing records? Or the Sony Walkman? Or Blockbusters? How much longer will traditional taxicabs survive in the face of Uber and Lyft?
The underlying transformation process that we are seeing with increasing frequency is best described by the familiar S-shaped Sigmoid curve, which is often referred to as a technology assimilation curve. But it also applies to business models, social customs, language, and even biology (where we know it as Darwinian evolution):
This curve is basic to life, as well as to the evolution of products, companies, industries, and even societies. But it’s only part of the story. Because as new technologies, or new products, or new social values, take root and grow, the older ones almost always go beyond maturity into decline:
As Harvard Business School professor Clayton Christenson demonstrated so clearly in his landmark book The Innovator’s Dilemma (link is to Amazon.com), new generations of products or technologies almost always begin life at lower levels of productivity and performance (and often at higher cost). However, as they develop over time, costs decline and performance improves, until the new generation begins marching up the curve.
Christenson identified the grim truth for businesses that the market leaders for one generation of technology almost never survive the transition to a new growth curve. His book showcased the disk drive industry; as the industry moved from 7-inch disks to 5-inch disks to 3-inch floppy disks to 1-inch disks to solid-state storage, the industry leader of each product generation was displaced and did not survive the transformation.
In 2016 we are inundated every day with examples of new technologies and new business models disrupting older generations – and the disruptions are occurring more often, and more quickly. You can’t survive today without understanding this phenomenon. This S-shaped curve is technically called a “Sigmoid curve.”
But we must learn to think of it not as some bit of theoretical techno-jargon but as the key to understanding the future. While we can’t always anticipate what the next curve will be, or how rapidly it will drive the current growth wave into decline, we can be confident that the learning and growth phases will inevitably be supplanted by decline and transition. Ignore it at your peril!
Next week I’ll discuss some of the subtleties of this all-important curve – taking each phase (learning, growth, maturity) one at a time and identifying appropriate strategies for thriving at that moment while simultaneously preparing for the next phase.
The Sigmoid curve has been understood for decades, but its impact on strategic planning remains minimal. Call me at +1 510.558.1434 for a free initial conversation about how you can inject Sigmoid thinking into your executive team’s strategic planning processes.
Check out my latest book, Making Meetings Matter: How Smart Leaders Orchestrate Powerful Conversations in the Digital Age (link is to the book website). Chapter 7 describes six different tested approaches for designing extraordinary meetings that enable leadership teams to face the uncertain future with confidence.