Ecosystems: the key to survive to the market curve

Ecosystems: the key to survive to the market curve

From five to two: following the impact of new technologies, the phases of  Rogers’ innovation adoption curve  are evolving, transforming the provisional model into a “shark fin” model, according to which innovations are introduced, spread, reach their apex and then fade till they are completely phased out, much faster than in the past. The old bell model showing, following Everett Rogers’s theory, ( few ) pioneers walking along the path of innovation basically alone, followed by the first buyers, then by the “early adopters” and by “late adopters” (the biggest share of those adopting the innovation ) and, finally, by the stragglers, is now reduced to two variable and different peaks, where innovators, early buyers and early adopters actually intermingle with late adopters and stragglers. Which, in other words, means that nowadays, innovations may boom and die in just a few months. Read it in Italian

Let’s take Pokémon Go as an example: in July 2016, the game designed for being played on  smartphones and exploiting the augmented reality technology, went viral and earned over 35 million dollars in just one month. After only 10 weeks, however, it started losing players (15 million in 30 days), and at the end of summer, it basically died to the point that now no-one talks about it any longer.

Americans have defined this phenomenon as the “missing second act”: technological evolutions (Artificial Intelligence, drones, cloud, social media etc) make a product rocket very fast, but they make it plummet exactly as fast. And businesses very often do not recover from such a flop. The common mistake, made not only by Nintendo-Niantic but also by many other companies such as GoPro, Fitbit, TiVo and many others, is to bask in their glory instead of promptly start developing a new product to be launched as soon as its predecessor starts dropping. Indeed, according to Standard & Poor’s today, the average life of a company is about 15 years, while in 1920 it used to be 67.

The point is that, unlike in the past when  Rogers’five categories of people did work, now consumers can easily access online all information concerning any product (  previews, reviews and/or criticism in the markets and on social media etc) sometimes even before it is actually launched, and they consequently can decide whether they want it or not. The others, the so-called stragglers, also know products in advance, but simply wait for competitors to launch something similar at a lower price. Therefore, the market gets rapidly saturated. Moreover the speed at which a product  becomes technologically obsolete and is replaced by one with better performances is also to be taken into account. And here is why Rogers’ curve has changed.

In Finding Your Company’s Second Act, Larry Downes and Paul Nunes have listed the seven most common mistakes made by business which lose the “the second act challenge”

  • Deploying all resources in the development of just one product;
  • Poor or no flexibility at all in diversifying investments;
  • Losing founders-visionaries of the, who are their face and brain (having then to call them back as Apple was forced to do with Steve Jobs);
  • Managing investors badly;
  • Mistaking luck (without taking proper advantage of it!) with genius;
  • Not involving layers in time to contrast the measures adopted by the public administration which can be crippling (see Uber, AirBnb and sharing economy businesses);
  • Forecasting customers who don’t actually exist.

The suggested solution to survive the “shark fin”? Launching a whole eco system instead a product. I.e. build a platform which can evolve alongside the products and can make the company survive!

What do you think about this evolution of the market? Tweet @agostinellialdo.

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