The Secret of the Second Curve
Michael Wilkinson, Managing Director
Leadership Strategies, Inc.
The standard product/service life cycle provides us important insight into a requirement for the long-term health and success of an organization. Product managers know that over time, every product and service goes through a four-stage life cycle: development, growth, plateau and decline. Some stages may be longer or shorter, but every product and service goes through all four stages.
What causes products to decline, even successful ones? It could be one of a myriad of reasons, including:
q Changes in your customers’ desires or needs
q A competitor developing replacement products
q New entrants into the market
q Market saturation
q Changes in technology that make your product obsolete.
There are other causes as well. But despite the various reasons that products go into decline, there is one key word that characterizes just about all of them: change. This includes change in the market, in the customer, in your competition, in regulations, etc. You might be able to do things to extend the growth or plateau stage of your product – adding new markets, adding new features, adding new customers, etc. – but eventually change will cause decline to occur. It’s just a matter of time.
And, if all you have is one product, and every product and service goes through this life cycle, it means that, inevitably, your organization will go into decline as well. If you have just one product, it’s just a matter of time.
So what’s the secret to growth and how do organizations continue to grow year after year? We call it the secret of the second curve.
The Secret of the Second Curve
Before your primary product goes into decline, you have to be well into the growth stage of your second product.
Think about each of the four stages as being divided into two sections, with A as the early portion of that stage and B as the late portion. So 1A is early in the development stage, 1B is late in the development stage, 2A is early in the growth stage, and so on. To prevent decline, you have to be well into the growth stage of your second product before your first product goes into decline. So here’s the question:
When do you begin developing the second product?
At 1A, 1B, 2A, 2B, or so on?
Of course, it depends on what industry you’re in. For some industries, the developing and growth stages are very rapid. But in general we know that if you wait until 3A, 3B, 4A or 4B, this is too late. Your first product will be in decline before your second product is well into the growth stage.
What about 1A and 1B? If you start developing your second product at 1A, while your first product is at 1A, you haven’t learned anything from your first product to make sure your second product is even better. And 1B is probably too early for the same reason.
Generally, you should begin developing the next product when the first is in 2A or 2B. If you wait too late to start on the second product, you’ll be in decline on the first and won’t be able to fund the development of the second. But you don’t want to start too early because you need to learn the lessons from the first product. By starting the development of the second product when the first is at 2A, you should be in the growth stage of your second product when the first begins to plateau at 3A. And as the plateau moves into decline, you’ll be heavy into the growth stage of that second product. In this way, your organization will continue to move forward.
As a strategic leader, you must be constantly focusing on the future. When your first product is in 2A and you tell your people that it’s time to start on the second product, they will likely respond with something roughly akin to, “You’re kidding right? It can’t be time to do that. We’re just getting orders and we can barely get them out the door. It’s just starting to get good.” Then you have to tell them, “You know, there’s this thing called the secret of the second curve and if we don’t start now…”
To learn more about strategic topics like the Secret of the Second Curve, consider taking our online course: Springboard Online! This four-to-six hour course allows you to learn key strategy concepts on-line, at your own pace. Click on this link ____ for a free demonstration of Springboard Online!
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