I have often mentioned the marketing phenomenon known as the S-curve. This basically shows the growth curve of a product, starting slowly in the initial phase of its life, followed by a rapid uptake among the early adopters, with a slower uptake by the ‘followers’, and ending with a decline phase.

The key is to jump the curve before it starts its phase of decline.

At the moment we are facing the end stage of a relatively large range of traditional products and services. The reason for this is that for a long time traditional industries have been able to delay the arrival of the decline phase of many of their products, basically because of the monopolistic, or at least dominant, structures of many of the industry sectors—and in particular telecoms, media, energy and banking.

The writing has been on the wall for a long time, but change has been more definitely in the air since the stellar success of the Internet. This has opened up new opportunities for companies who, prior to the availability of the Internet, were unable to successfully compete with the incumbent players.

This is producing a rather rapid development of new products and services—easily illustrated by the so-called three-month innovation cycle that is often linked to those companies who are now using the Internet as their sales and marketing avenue. The rapid uptake of fixed and mobile broadband services also clearly demonstrates the pent-up demand that is behind this phenomenal growth, held back for such a long time by the old business structures of those traditional companies.

I have already mentioned in several previous blog entries, the book, The Power of Pull, by former Xerox Chief Scientist and Innovation Officer, John Seely Brown. In this book he describes the dramatic decline in asset values of the Fortune 500 companies for basically the same reasons mentioned above—the inability of the incumbent players to follow the lead of Internet companies like Amazon, Google, Apple, Cisco, HP and others, in adopting significantly different—and simpler—business models.

In his book Brown talks about the ‘exponential S-curve’. It resembles a punctured S-curve, with a rapid set of ‘jumps’ that extend the S-curve upwards in a punctured way, rather than jumping to the next or another S-curve. This new marketing development is made possible by the digital infrastructure that allows marketers and entrepreneurs to develop totally different business models, building on combined knowledge, contacts and information that is becoming available through the use of digital infrastructure across various sectors. Exponential S-curve activity is based on sharing, cooperation, collaboration and a trans-sector (horizontal) approach, which allows the adopters of these models to far more rapidly develop new skills, new products and services, new knowledge etc.

Social networks, wikis and cloud computing are quickly becoming key elements of these new models that allow for exponential learning, as well as for the creation of new knowledge. John Seely Brown called this ‘knowledge at the edge’. Every day between 12,000 and 20,000 new ideas are born and thanks to the new models it is now far easier to tap into some of these ideas.

With such changes taking place so quickly it is no wonder that the value of those old assets is declining, as a punctured exponential S-curve also shortens the period for return on investments and as such hastens the decline of the value of, in particular, old assets.