My Hockey Stick Curve, part 1

Pascal Dennis, co-author of Harnessing Digital Disruption

In the world of startups, everything is a hockey stick curve. Not in real life, of course, but the ones you see, at least. Nothing, nothing, nothing – then fantastic. Bjorn Jeffery

I’ve lived the hockey stick curve, first as a startup founder, and then as a mentor. As Bjorn Jeffery suggests, we usually fail. The ‘nothing, nothing, nothing, then fantastic’ trajectory is rare! Here are typical failure rates in different industries:

Industry-Specific Startup Failure Rates

• Information Industry: 63% failure rate after five years. (Forbes)
• Transportation and Utilities: 55% failure rate after five years. (Forbes)
• Retail and Construction: 53% failure rate after five years. (Forbes)
• Manufacturing: 51% failure rate after five years. (StartupTalky)
• Finance, Insurance, and Real Estate: 42% failure rate after five years.

And as I’ve discussed in earlier articles, new product launch failure rates in say, consumer goods, typically range from 80 to 90%.

Full disclosure: two of my five startups (40%) made money - which means we’ve been extraordinarily lucky. My success rate as a startup mentor is not quite as good, but that’s no big deal. I work with Laurent Simon, my friend, innovation sensei, and co-author. We cull loser ideas quickly, and pivot fluidly based on what we’ve learned. (‘Fail fast & fail forward’.) We work with splendid people around that world, in great industries, and have a hell of a good time. It’s an unusual path for a former Toyota factory rat, no?

So, what have I learned about Innovation and the hockey stick curve? Here’s an overview, detailed in our book, Harnessing Digital Disruption:

• Three phases:
• Confirm traction
• Soft Launch
• Full launch
• Each phase entails answering a key question:
• Confirm traction – Does it wow?
• Soft Launch – Can we make money?
• Full launch – Does it work?
• Working our way up the curve entails answering three questions (and many related sub-questions):
• Who is the customer?
• What does the customer value?
• Why does the customer buy (or not buy) from us?
• Working our way up the curve requires rapid, inexpensive (‘lean’) experiments through which we:
• ‘Discover’ answers to our questions, and
• ‘Validate’ what we have discovered
• This process is iterative, continuous, and entails the disciplined application of the scientific method (Hypothesis – Test – Observation & Reflection – Learning)

And here are some other learning points. None of this works without good visual management. We have to make the invisible ‘information elephant’, visible. None of this works without a disciplined, iterative process – day after day, week after week and sprint after sprint.

Lastly, Innovation and the hockey stick curve are highly abnormal. They’re like fragile hot-house flowers vulnerable to cold winds, harsh chemicals, and dry infertile soils. That’s why we insist on ‘Executive Air Cover’ – to give the flowers a chance to root & grow. We have to protect Innovation and create space for it – physical, financial, strategic, cultural and temporal space.

Some companies are lucky and have the ‘startup gene’ in their DNA. More often, Innovation is foreign and triggers corporate antibodies. As in nature, these antibodies are doing what they’re designed to do. But actions meant to be protective sometimes turn out to be destructive. (Thank you, Clayton Christensen). More to come.

Best regards,

Pascal Dennis

E: pascal.dennis@leansystems.org

PS: To learn more about my executive mentoring programs: Exec 101 - Protecting the Core Business, and Exec 201 – Igniting New Growth, feel free to drop me an e-mail.




In case you missed our last few blogs... please feel free to have another look….

OpEx/Lean, Innovation and Wakefulness
The Difference Between Protecting Your Core Business & Igniting New Growth
The Control Tower – Learning to See What Is
The Hardest Thing - Seeing What Is