My Proficorn Way (Part 50)

Inflection Points

What a year 2020 is turning out to be! Coronavirus crept up on us and took over our lives in a way none could have imagined. Businesses have been upended – some have flourished while others have floundered. The health scare has changed buying behaviour of consumers. The switch to online has done in a few months what would otherwise have taken many years. In India, the banning of Chinese apps by the government transformed the fortunes of some overnight. 2020 will be seen as a year of inflection points.

Investopedia defines an inflection point thus: “[It] is an event that results in a significant change in the progress of a company, industry, sector, economy, or geopolitical situation and can be considered a turning point after which a dramatic change, with either positive or negative results, is expected to result. Companies, industries, sectors, and economies are dynamic and constantly evolving. Inflection points are more significant than the small day-to-day progress typically made, and the effects of the change are often well known and widespread.”

Rita McGrath, writing in Fortune in January 2020, says:

Strategic inflection points—changes that alter the taken-for-granted assumptions underlying a business model—can feel sudden. In reality, however, they tend to build up slowly, gathering momentum until a transformative shift becomes clear. Andy Grove, who coined the term, said it referred to change that was 10 times more significant than a typical change encountered by a business.

When these shifts occur, companies tend to fall into three categories. The first are those that have missed the inflection point entirely. These firms often shrink or disappear…The second group comprises those that realize an inflection point is underway and place a huge, last-minute bet on catching the wave…The third set of companies are ones that have placed a number of small bets over time to position themselves to take advantage of shifts when they happen. These investments are in effect options companies can exercise once the new landscape is more clearly in view.

The challenge for senior leaders is: How do they prepare to see an inflection point coming—so they don’t need to make a last-second turn? And how do they bring the organization along into the post-inflection point world?

The Internet in 1995, Apple’s iPhone in 2007, the launch of Jio in 2016 can all be seen as inflection points which led to a 10X change in our lives. And 2020 perhaps upends them all. As entrepreneurs, these are moments of great disruption and opportunity. The impact of inflection points plays out over time, but entrepreneurs who have made the small bets, created options and invested in tomorrow will have a disproportionate advantage over others.

Will be continued soon.

Published by

Rajesh Jain

An Entrepreneur based in Mumbai, India.