Sunday, December 7, 2008

Business Life Cycle as an adoption Curve

When I have conversations about a business decision, I try to put the questions in context. The right answer for a business that is in the middle of rapid growth has dramatically different numbers and expectations than a company that is in full maintenance mode. There is a GREAT book called Diffusion of Innovation by Everett Rogers. It is the basis of the work that supports the idea of "Crossing the Chasm". Let's assume we have a product which we can sell to a fixed number of people. Let's also assume that we will only sell them one in their lifetime. Over time, we should be able to plot the revenue for the company. With this One-Trick-pony of a company, we would expect that as people adopt the product, we will get revenue. As the product is purchased, the Diffusion of Innovation suggests that there will be a Normal Curve for how the product is adopted. However, since we are selling only one to everyone, there is a point where the population is exhasted and you no longer have any revenue. This outlines the Business LifeCycle for a single product company with no replacement. When people talk about the S-Curve in adoption, they forget that there is the opposite curve as that technology is abandoned. The business process, expectations and activies need to be appropriate to the stage of the company. Over the next several blog post, I will explore many of the details of this curve. We are going to explore some of the expectations and divots that make this curve different than the Normal Curve and when this should cause you to take one action or another.

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