Entrepreneurship and Startup Trends
Entrepreneurship and the S-curve
Written by Chukwuma Asala for Gaebler Ventures
Understanding S-curves is vital to your company's success. How do you harness the knowledge from some of the S-curve trends of past industries?
What is an S-curve? An s-curve is a representation of market penetration with regards to a new product, service, or idea.
It is called an s-curve because of its shape, and shows the different stages that a successful product goes through in an industry. The three stages are innovation, growth, and maturity. The Innovation Stage is marked by technological breakthroughs and fine-tuning to get the product to about 10% market penetration. The Growth Stage happens right after 10% market penetration and is marked by great increases in profit margins. The Maturity Stage happens after 90% when the market is fully saturated and so the competitiveness of the product is not as high which lowers the cost of the product and reduces profit margins.
How do you maximize it?
The most effective way to enter a market is usually right before critical mass which is at 10% market penetration. Entering a market before it hits 10% could be premature and most times is. And a market will never enter the growth stage unless it actually hits 10% market penetration.
If you're a young entrepreneur and you're debating which industry to break into you might want to take a look at which markets right now are currently on the upswing and are close to critical mass. The internet and business online would be an obvious choice for most entrepreneurs. The home-based business industry is booming like never before because of the ability to own a business from the comfort of your own home. This is attractive to a lot of full-time professionals that are looking for a way to supplement their full-time income.
So getting into an industry that is at critical mass or above is the priority if you want to ride the industry wave. The internet is hot right now but who knows how long it will be before it is just a thing of the past. Cassette tapes used to be revolutionary, but now even DVDs are becoming outdated. Don't underestimate the rate of change and fickleness of technology.
What do the latest trends tell us?
With the continual improvement of technology over the last two decades, the time taken for a product to go from the Innovation Stage to the Growth Stage has continued to decrease. From microwave ovens, cars, televisions, radios, and so on, every one of these products took a certain amount of time to reach 10% and then took off.
Technology has reached the point now where what used to take years for a product to reach 10% now just takes months. The I-pod mp3 player is a prime example. The important thing is that you keep your eyes open for what the consumers are telling you they're looking for. The I-pod was not the first mp3 player but it was the only mp3 player that was able to give consumers everything they wanted.
Chukwuma Asala is an international student from Nigeria who is studying to earn an MBA from the State University of New York in Albany. He has analyzed more than 20 industry case studies throughout his education thus far, and hopes to bring some of his business knowledge to Gaebler.com.
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