book.chapter The s-curve of business growth

The S-curve is a fundamental pattern that exists in many systems that have positive feedback loops and constraints. It is used to model growth or progress of many processes over time, such as project completion, population growth, and the spread of a pandemic. In the context of business and consumer goods, the S-curve reflects the life cycle of products and the rate at which substitute items gain market share. This pattern enables reasonably precise forecasts of future demand and market infiltration. The S-curve begins with a slow start, followed by steep growth, and then a plateau. This is characteristic of many technological capabilities and product life cycles. The timeframe under consideration is significant. Over a relatively brief period, the new product is deemed revolutionary. However, over an extended timeframe, the product is described as evolutionary. Growth cycles do not cease midway. Therefore, if the first half of the pattern materializes, the second half can also be reliably anticipated. Numerous factors account for the S-curve pattern manifesting across many commercial sectors. Growth rates can be constrained by scarce resources during rapid market uptake phases. Accelerated growth aligns with more consumers adopting as familiarity expands. A steady substitution effect transpires as consumers switch from aging products to newer models. Uniform growth rates for new products are implausible and unlikely naturally or in business. The third driver, substitution between products, brings about another naturally occurring pattern replicated in business markets. The market value of Company 1 (with a mature, declining product) transfers to Company 2 launching an innovative offering. This substitution - of products, technologies, services, or normalized practices - directly results from the S-shaped curve in commerce. Joseph Coates, a futurist at Coates & Jarratt, states that most individuals in positions of power, whether in government, business, nonprofit or international institutions, simply lack expertise in responding to change. Theodore Modis shares his experience with S-shaped curves, imparting two realizations. First, many phenomena traverse a life cycle: birth, growth, maturity, decline, and death. The shared aspect is the change dynamic; for instance, the steady progression to an end mirrors initial formation. His second realization involves predictability. Natural growth patterns implicitly promise certainty guaranteed by nature: cycles will not halt midstream. Given the first half sequence, he can forecast the future trajectory. With the second half, he can deduce the past.