Inflection Spotting

In business, we’re often forced to change our strategy in response to an external force that’s outside of our control. These changes are called inflection points and the most successful businesses are able to spot them early, and react accordingly. Daniel Sills takes us through a whistle-stop tour of 4 inflection points that have changed the trajectory for some of the most famous brands in the world.

Dan Sills

Associate Director at C Space

Dan Sills is the producer of Outside In, a podcast that explores changes in business and consumer behavior and where the two converge. The Huffington Post dubbed Outside In one of “The 7 Best Business Podcasts You Should Be Listening To,” and Entrepreneur named it on its list of “Best Podcasts for Entrepreneurs.” A talented writer and storyteller, Daniel performs on stage in story slams and was a grandSLAM finalist for The Moth.

There’s a good chance that you’re lost right now. Perhaps something changed on your path, and you’re unaware that you’re headed in the wrong direction. The thing about being lost is that you’re usually lost for some time before you know it.

You’re not alone. In business, we cross inflection points and find ourselves lost in a complex world that changes faster than our strategy. The concept was made famous by the late Andrew Grove, former chairman, founder, and CEO of Intel. His theory was that strategic inflection points are changes in a competitive business environment caused by new technology, new regulation, shifting consumer behaviors and values, or other socioeconomic forces:

“A strategic inflection point is that which causes you to make a fundamental change in business strategy. Nothing less is sufficient.”

During a keynote speech at the 1998 Academy of Management annual meeting, Grove explained to a room of executives that senior leaders (just like them!) would be among the last to notice when an inflection point has occurred. The insinuation was that leaders’ ignorance of these changes, or their lack of urgency to react, could endanger the survival of their companies.

I’ve been thinking a lot about strategic inflection points ever since we had Rita Gunther McGrath on the Outside In podcast. McGrath’s books, including the bestselling, The End of Competitive Advantage, are tomes for anyone looking for gamechanging thinking on business strategy and innovation. Her forthcoming book (slated for September 2019) is all about strategic inflection points. During the interview she stressed that inflection points take a long time to play out, which means they open up huge opportunities. Spot them early, decide on how to change strategy, and then get people inside a company to act – that’s how you’ll change the trajectory, and sustainability, of your business’s growth.

I went back and listened to other Outside In episodes and noticed that many of our guests had spotted an inflection point early and, therefore, redrew the roadmap. They’ve founded companies, launched groundbreaking products, and designed new experiences based on their rare ability to notice an inflection point early. (Remember that, according to Grove, senior leaders are usually the last to notice!)

Guests like Tien Tzuo. He recognized that people were increasingly valuing access over ownership. Salesforce.com, Netflix, Zipcar, and Amazon were just a few of the companies starting to participate in what Tzuo would later name “The Subscription Economy.” Today, companies like Dropbox, Spotify, and many others are seeing double-digit – and, in some cases, triple-digit – year-over-year growth, as a result of capitalizing on the subscription model inflection point. This year, Tzuo wrote a bestselling book, Subscribed, all about the potential of subscriptions. Now, as founder and CEO of Zuora, the leading subscription management platform, Tzuo is helping any kind of business launch and manage a subscription-based service.

Another guest, Mike Sepso, understood early that entertainment was undergoing a massive digital transformation. Back in the early 2000s, he noticed the rising popularity of competitive video gaming in South Korea. Younger audiences were flocking to video games as a source of entertainment, and live-streaming technology was enabling it to grow worldwide. In 2002, Sepso jumped on the opportunity and co-founded Major League Gaming, which became one of the largest esports (or, competitive gaming) companies in the world. He eventually sold MLG to Activision Blizzard. Sepso has now launched a new company, Electronic Sports Group that advises others on how to enter or accelerate their growth in the esports market, and with 380 million fans worldwide (and growing) is on track to become a $1.4 billion industry by 2021.

Some of my favorite episodes are with experts who made predictions about inflection points unfolding around us right now. Like Jonathan Reichental. The former CTO of the city of Palo Alto (who recently joined Oracle) is a smart city expert, professor, author, speaker, and blockchain thought-leader. During the interview, Reichental predicted that autonomous vehicles will be the most important technology in the first half of the 21st century. He believes there will be not-yet-known innovations that happen when humans don’t have to drive anymore: “What’s the AppStore for the autonomous vehicle future? What’s the thing we can’t anticipate now that is a complete ecosystem, but that we will know when it happens?”

What sticks with me the most is something Ali Velshi, MSNBC anchor and NBC News business correspondent, pointed out. It’s well known that consumers (especially Millennials) care deeply that the companies they buy from share their values, ethics, and morals. It’s completely changing how businesses operate. But what’s often overlooked is that it’s actually the young workforce that’s driving companies to rethink their corporate social responsibility. “When you look at the Millennial workforce around the world, there are remarkable similarities in this crowd that is a quarter of the world’s workforce now,” Velshi says. “They want social responsibility. More than they want the raise and the title, they want to know that they are not spending eight hours a day in a place that is harming the world.”

We see this playing out right now. Like when thousands of Google employees walked out to demand respect, equality, and dignity. Or when Salesforce employees sent a letter to CEO Marc Benioff, protesting a contract the company had with U.S. Customs and Border Protection. We all have greater influence on our company’s effects on society – and we should never forget, nor should we hesitate, to speak up about it.

As technology makes all our lives more fragmented, inflection points will happen faster and more frequently – sort of a “Moore’s Law” of inflection. What are the ones that are affecting your business right now? What are the inflection points you can spot on the horizon? Perhaps there are some you’re not seeing. Can you think of any? If not, you’re not looking (and listening) hard enough.

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