In The Coming Boom in Hybrid Cars ‘in strategy+business makes out that sales of hybrid vehicles are following exactly what would be expected from ‘S-curve theory’ [?] – slow initial growth being driven by early adopters until the innovation becomes mainstream. Standard approaches have little to say about the scale or nature of change in such cases.
Strategy dynamics frameworks capture, quantitatively, the interactions between improved functionality, pricing, marketing, as wellas those amongst different groups of customers. Much of this integrates long-established principles, such as experience-curve-driven falls in unit cost, technology-diffusion models, and the complementary effect of multiple competitors driving the industry dynamic.
One key feature of this is that word-of-mouth effects may well be way less important than threshold effects in driving the take-off tipping point. [Note that a continued percentage growth rate does not constitute a tipping point, even if they mean sales growth goes from 10 to 100 to 1000 to 10,000 units in successive periods].
Does this distinction actually matter to strategic business management? Well, if you think your market’s dynamic is driven by one mechanism when it’s actually driven by something quite different, you will likely do entirely the wrong things to encourage and exploit it, so I guess it does.
This is explained in Chapter 6 of Strategic Management Dynamics. The following figure shows the kind of dynamic that results from this kind of analysis – note the specifics re scale and timing of the development. Right-click and ‘save target as’ to get the image out so you can see it full-scale.Share
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