Daniel Isenberg says “entrepreneurship has become a fad.” Steve Jobs said, “I’m convinced that about half of what separates successful entrepreneur from the non-successful ones is pure perseverance.” The question is why the whole digital industry is buzzing with a single word, “entrepreneurship”? And what is its relation with start-up?
While entrepreneurship refers to all new businesses, including self-employment and businesses that never intend to become registered; it includes sole-proprietorship, small businesses, partnerships, firms, and corporations. Whereas start-ups mostly mean new businesses that are solving market problems with unique ideas. A start-up seeks to create a viable and scalable business model. It faces high uncertainty and has high rates of failure but intend to grow large beyond the solo founder.
As it involves high rate of failure but has the prospect to grow large, so it’s essential to go in-depth to find out the shortcomings. One of the most important one is an understanding of the S-curve in the scope of your business. Though it determines almost everything in innovation, but looks simple and is incredibly hard to grasp in practice.
What is an S-Curve?
S-Curve is nothing but a mathematical graph that represents all of the data for a project. It’s called so because the graph has a striking similarity to the alphabet, S. the S shape represents growth over time-starting out slowly, picking up speed during rapid growth then tapering off as growth slows.
This illustrates the cumulative data for a project: either the project cost or the number of hours worked compared against time. It can effectively track the progress of the project and is a highly useful tool for project managers.
Why an ‘S’?
An ‘S’ because it is the shape that the graph makes.
During the early stages of the project when the standard growth of the project is very slow, it looks more like a straight line, whereas more rapid growth would be reflected with a sharper incline. Many internal and external factors through a project’s life cycle can cause the shape of an S- curve graph.
How an ‘S’?: the detailed analysis:
When it crosses the early stage of the project, that makes the bottom part of the ‘S’, the growth suddenly starts to speed up. It will generally be the middle part of the ‘s’. The point which exhibits the maximum growth is called the point of inflection. These are the parts of the curve where the growth stagnates.
At this point, the team members are generally working hard on the project tasks and as they speed up this process, more and more tasks surface along their costs. So, after passing the point of inflection, the growth slows down and makes the shape of plateaus and forms the upper part of the s-curve. This part is called the upper asymptote. Thus comes the mature phase of the project.
This maturity is the final stage and most projects are finished at this point and are in the process of winding down. Consequently the curve levels out again. Some of the tasks like finishing touches and the last stage approvals are unfinished.
What are s-curve inflection points?
The inflection point is the point along the curve where changes in the business environment or practices shift the curve itself from upward to downward or vice versa. That means business growth slows down, and may eventually stop or decrease. The following are the factors that can cause an inflection point:
Internal changes within a company
external factors or
A combination of internal and external factors
What causes inflection points?
Both internal and external events can bring an inflection point for a business. Here are some causes of inflection points:
External factors:
1. New technology in the industry: When a new technology comes in the market or the company's competitors release a new technology or product, this may cause an inflection point for the company.
2. Market saturation: A company's successful product can take over a certain market and this can cause a decrease of demand when they have reached a majority of their possible customers.
3. Regulatory changes: Regulations can also impact the inflection point in a positive and negative way. Additional regulations can slow down the growth and cause a negative inflection point, while reduced regulations may cause a sudden growth increase.
4. Funding changes: Some of the financial changes like:
new bank policies or
government policies that affect subsidies, grants and loan
Can limit or enable a company's growth, bringing an inflection point.
5. Natural disasters: Natural disasters can change what resources and infrastructure are available over the long or short term, sometimes bringing inflection points for entire industries.
6. Economic changes: Businesses may find their growth limited or enabled as the economy cycles through different stages.
7. Trends: The rise and fall of trends often causes inflection points for products perceived as luxuries or items that gain viral popularity.
Internal factors:
1. Infrastructure: New infrastructure can impact the inflection point as changes in publicly maintained infrastructure may cause temporary or permanent additional costs.
2. Scaling issues: Some of the internal issues that can affect the inflection point are:
Decision-making challenges
Leadership issues while hiring,
Supervision issues
Employee related issues
3. Changing values: For some companies, values may be harder to communicate or maintain as more people join the organization, and if the values are an important part of company culture or product value, this can cause an inflection point.
4. Customer relations: As companies scale, maintaining a high level of customer attention and individual care can be challenging. This change in customer relations may change consumer behaviour, bringing a decreased demand and eventually an inflection point.
5. Slower innovation: because of scaling and developmental changes, new companies or the companies built on a newer technology can be affected by inflection points. If innovation doesn't meet customer needs or keep up with competitors, this can cause an inflection point.
How to deal with Inflection points?
Inflection points can be a challenge and great opportunity as well. A business that experiences an inflection point may adapt by
Offering new products,
Developing new features for their existing products or
Changing their processes to offer those products at a lower price.
If this works then the business may be able to begin a new s-curve.
How to maintain momentum on the s-curve?
1. By making plans before the stationary growth stage: As no company can predict a sudden inflection point, a business should be well-prepared for this by developing plans to innovate and investing in that innovation even while its first product or concept is in the rapid growth stage. This will prepare the business well when the stationary growth period arrives, and will help to keep up a steady stream of revenue by shifting its focus to other products that are just starting their own rapid growth stage.
2. By considering all s-curves: Many other processes in business follow the s-curve pattern in addition to individual products. So, considering that can impact your business in a positive way.
3. By maintaining a healthy corporate environment: By maintaining and investing in employees and systems with growth can prevent internal challenges. One of the strategies that a company can follow is training current employees in new skills like leadership and adjacent specialties enable them to make decisions confidently and move into supervising positions as the company grows.
4. By looking at external factors as opportunities: External factors can provide great opportunities for business to grow in new ways; considering that, can keep the momentum on the curve.
How does the ‘S’ curve help managers to make decisions:
An s-curve is highly beneficial to track the progress of a project as
It displays the real-time cumulative data of various project elements on it.
It can show the point of comparison with projected data.
Managers can examine the degree of alignment between two graphs to reveal the progress—or lack.
S-curve can also help:
to predict when resources will be heavily utilized
to manage stakeholder expectations
to plan for different schedule scenarios.
Types of S-Curves:
There are a wide variety of s-curves that can be used in the project management application. These are as follows:
Target S-curve
Costs versus Time S-curve
Value and Percentage S-curves
Baseline S-curve
Man-Hours versus Time S-curve
Actual S-curve
What are common uses of the S-Curve:
S-curves are useful for many different purposes. Some of the most important uses of s-curves are discussed below:
1. In evaluation Performance and Progress:
S-curves are used in evaluating the progress of the project while using Earned Value Management. These graphs are traditionally generated as a part of the EVMS process and are the basic building block of the evaluation of progress and performance.
While evaluation, a lot of factors determine current status of the project and the future forecasts about the project. They are:
Performance Measurement Baseline (PMB), (also known as Planned Value)
Earned Value
Actual Cost
All of these factors need to be compared with the planned S-curve to generate results.
A glance at the graph makes it clear:
1. The project is overrunning the budget or
2. some other task is behind schedule
2. In cash flow forecasting:
S-curves:
show the development of cash flow and
forecast the changes that the cash flow would bring
Cash Flow is nothing but the timing and the movement of the cash with respect to the tasks and events happening during the project execution.
This is highly beneficial for the stakeholders as it can:
Evaluate the need for cash and
The actual timing when the payment is due under the obligations accepted by the company.
3. In comparing quantity output:
S-curves can be used to evaluate the quantity output that the on-going project will yield. The construction and manufacturing industries can utilize this in its fullest potential.
4. In comparing quantity output:
These two types of s-curves overlapping at the start and end of the project, form a banana shape, hence the name, Banana Curves. This tells the range of possibilities when to expect the project to be completed.
We can conclude by saying that S-curve is an important but often misunderstood tool of start-ups. It is essential to understand and explore this properly as it can lead the path to a successful start-up while driving out all the shortcomings.
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