I’m pleased to share that this week marks the release of my first book, The Curve Ahead: Discovering the Path to Unlimited Growth. The Curve Ahead is intended to serve as a practical guide to innovation and growth strategy for business leaders, focusing mainly on mid-sized businesses, the engines of economic growth and wealth creation.

I wrote The Curve Ahead because I wanted to share what I’ve learned about what it takes for growth companies and organizations to successfully reach their next S-curve. Often, companies have the talent, required capital and an excellent product – yet lose steam before truly hitting their stride and reaching their full potential. To illustrate how such situations often unfold, I’ve used the story of a fictional company that in each chapter faces the business problems, personal challenges and strategic dilemmas that are typical of many growth companies.

Growth company veterans know that growth-related challenges are inevitable and to anticipate a few curves along the way. I hope that by reading this book, you will gain a fuller understanding of how to navigate these challenges successfully and ultimately lead your company or organization to its next S-curve.

The Curve Ahead is featured in the July edition of the Business and Leadership section of Amazon’s “Best Books of the Month.” Copies are now available through Amazon and iTunes. An audiobook version will be available in the coming weeks.

Whatever happened to Groove Networks and Bowstreet?  Both were founded in the late 1990s by industry veterans, and backed by smart investors.  Groove Networks created collaborative software for workgroups under the direction of Ray Ozzie, the brains behind Lotus Notes.  Bowstreet introduced web services for accessing applications over the web – long before the era of cloud computing – under the leadership of Frank Moss, the founder of Tivoli systems.

Yet 7 years later, both companies were still struggling to gain traction.  Each was stuck on its first S-Curve, with sales of $20M or less. In 2005, Groove Networks was acquired by Microsoft and Bowstreet was acquired by IBM.

What are the barriers to growth for companies like Groove Networks and Bowstreet?  Each had a great idea and vision for growth, but couldn’t scale revenues.  We may never know, but in my view there are five areas where things can go wrong:  market, product, business model, team and capital.  Any one of the five can keep a growth company from reaching its potential. Finding the Groove. 

On the surface, Groove Networks had a lot going for it:

Team?  It doesn’t get better than a team led by Ray Ozzie, now the CTO of Microsoft.   √              Capital?  With $155M from Accel Partners, Intel Capital, and Microsoft, Groove was well-funded.    √     Product?  Groove’s collaborative workgroup software went on to become the foundation of Microsoft’s successful SharePoint product line.  √

Here’s where things may have gone off track:

Market.  Groove was too early for the market.  X   In creating a new market, Groove had to find customers willing to take on the risk of something new.  The problem with innovators as customers is that there aren’t enough of them to generate meaningful revenues.  The rest of the market has to be educated on the new solution and convinced of an ROI – a lot of work for an early growth company.  To avoid overspending on product and market development, a growth company needs to gauge the timing of broader market acceptance.

Business model. Groove couldn’t close Fortune 500 deals.  X   Groove’s product was most useful when installed on every desktop, but Groove didn’t have the distribution and support to make large, complex sales with corporate IT departments.  Ray Ozzie confirmed this point:

“It’s very difficult for a small, independent vendor to make headway in today’s buying environment. Corporate I.T. buys from the big incumbents—Microsoft, IBM, Oracle.” – Ray Ozzie, Baseline Magazine, 5/4/2005                                                             

In acquiring Groove, Microsoft knew it could solve this business model problem with its dominant channel to desktop computers.

Positioning Bowstreet.    

Like Groove Networks, Bowstreet was led by an all-star executive team.  √  It had $140M in capital from over 25 global venture capital firms, investment banks, and corporate investors.   √  Bowstreet’s biggest problem was explaining its product to its customers and developing a market.  X

Can you make sense of its positioning statement?

“The Bowstreet™ Business Web Factory is a web services development and assembly platform that automates the creation and maintenance of complex web applications on demand. The Business Web Factory enables Fortune 500 enterprises to form dynamic, distributed networks that leverage the strengths of the entire value chain while providing rich, streamlined web experiences for their employees, partners and customers.” – Bowstreet Website, 2001

Maybe they could have called it a simple approach to building information portals.

Another challenge was making money with a business model based on the XML open standard that Bowstreet championed.  X  Since any vendor could implement XML solutions, Bowstreet had to out-execute all of them in creating interoperability tools.  This approach requires heavy lifting, with significant upfront investment and lots of arms and legs to make things happen.   At its peak, the company had 350 employees.

There wasn’t much of a stand-alone market for Bowtstreet’s developer tools but these tools did make it easier to turn an application server into an information portal.  It was no surprise when IBM acquired Bowstreet and bundled its tools with the IBM Websphere application server.

The Five Barriers to Growth

Like Groove Networks and Bowstreet, every company has its unique challenges.  However, these barriers to growth generally fall into five categories:

• Market:  There’s no market, the market is too early or the market is too small.

• Product:  The product doesn’t solve a problem (technology-in-search-of-market), or its benefits are simply nice-to-have’s.

• Business Model:  Pricing, margins and operating costs are such that the business won’t scale to profitability.

• Team:  The business outgrows the leadership team.
• Capital:  The company is unable to attract growth capital and assemble a growth stage board.

In May, I was given the great honor of being selected to serve as CEO and President of Perkins – a role that allows me to combine my passion for quality education, my experience as a parent of a student who attended the Perkins School for the Blind, and my many years of bringing innovation to organizations.

It’s an exciting time at Perkins, an institution with a 185-year track record of innovative education for those who are blind or visually impaired. It’s also a time of great opportunity as we look forward.

Before joining Perkins, I had been an operating executive, board member and advisor for many successful growth companies. Throughout this time, I learned that too many organizations forget how to learn from their customers – they offer solutions to yesterday’s problem, stop growing and lose their relevance. With this in mind, I launched Power Strategy to help mid-sized organizations with strategy, innovation and sustained growth. I also just wrote my first book, “The Curve Ahead: Discovering the Path to Unlimited Growth,” which outlines the reasons that growth companies stop growing, and what their leaders can do to sustain growth by discovering their next S-Curve.

Every organization – private or non-profit – needs an innovation process to remain relevant and achieve its objectives. Private companies tend to focus on revenue growth while non-profits focus on impact related to their missions. Either way, an innovative process is the way to achieve results by staying in tune with the changing needs of your customers or constituents.

Perkins is famous for teaching Helen Keller, promoting literacy through braille, and taking its know-how to 67 developing countries. But there is still much work to be done. We want to address the stubborn problem of 75 percent unemployment among adults who are visually impaired. We want to take a fresh look at literacy solutions for the visually impaired – from braille to audio learning to voice recognition and other effective ways to read, write and communicate. And we want to track innovations in information technology, neuroscience, robotics and other fields to uncover new solutions to familiar problems.

In short, it’s my job to make sure we continue to search for our next S-Curve at Perkins.

One of the most memorable lines in film history comes from “Field of Dreams.”  Shoeless Joe Jackson, a baseball legend from the early 1900’s, convinces an Iowa farm owner named Ray Kinsella to build a baseball field in his cornfields, telling him:  “If you build it, he will come.”  Kinsella builds the field and, soon after, members of the 1919 Chicago Black Sox show up to play.

While building it first worked for Ray Kinsella, does this happen when it comes to launching new products and services ?

Many growth companies make the mistake of launching new offers before they understand the market. They believe the value of their new offer will be so obvious to customers that all they need is a great engineering team and a predatory sales force and they can race their idea to market.  This build it and they will come approach to product development is also known as technology in search of a market.  It’s the business equivalent of oil well wildcatting — the high stakes search for oil in unchartered territory.  As a business model, it’s terribly capital inefficient.

Innovators often confuse new technologies with new markets.   Location-based services (LBS) for tracking mobile users, near-field communications (NFC) for secure mobile payments, and infrastructure-as-a-service (IaaS) for cloud computing are all important technologies, but may never become the foundation for building great companies.   The VC firm Kleiner Perkins created a Java Fund to invest in Java startups; what they learned was that Java wasn’t a company category — it simply became part of the fabric of software development.   Open source software is only valuable if it solves a business problem better and cheaper than commercial software; once promising open source alternatives from SugarCRM, Alfresco and Pentaho have yet to gain real traction.

There are two arguments for building a product before validating a market.

• First-mover advantage:  “If we don’t launch it now, someone else will emerge as the category leader.”   This worked for Facebook but not for ESPN’s Mobile Phone, HP ‘s tablet computer, Solyndra’s solar panels, and countless other half-baked new offers.  Furthermore, being the first mover guarantee does not guarantee success: consider Altair (first PC), Netscape (first browser), Wordstar (first word processor) and Excite (first search engine).

Technology in search of a market is an expensive risk that businesses can avoid by answering two simple but enlightening questions:

1)    Who is the customer?

2)    What business problem do we solve?

If a company cannot answer these questions, it may have a technology but not a market.  The best use of seed funding is not to build and launch a first release, but instead to prototype with enough customers and ‘pivot’ until you find a big, unaddressed business problem.

One lesson growth companies can learn from baseball is that every team of 9 needs a manager to focus on the big picture.  Similarly, every ‘new offer’ team needs at least one customer champion for every 9 developers to be sure to find their field of dreams.

Follow Dave on Twitter: @WDavidPower

I am very excited to announce that my first book, The Curve Ahead, will be released by Palgrave MacMillan on July 29, 2014.

I wrote The Curve Ahead as a practical guide to innovation and growth strategy for business leaders, focusing mainly on mid-sized businesses, the engines of economic growth and wealth creation. However, most of these businesses fall behind the curve before reaching their potential, maturing sooner than expected as predicted by the familiar S-Curve. Tragically, once-promising companies are often sold by investors too ready to throw in the towel. So what can leaders do to keep moving forward?  

To sustain growth, companies need to discover their next S-Curve. The Curve Ahead offers a practical approach to sustaining long-term growth, using the cases of LoJack and Groupon, who fell behind the curve, while Amazon, Jawbone, Darn Tough Socks, and many others have fueled growth with a series of new S-Curves. Through these examples, I describe how growth companies can build innovation into the rhythm of their business operations and culture using design thinking, prototyping, business model design, and other Innovation Power Tools. 

In my own career, I have guided growth companies as an operating executive, board member, and advisor for over 25 years. I am currently a Certified Gazelles International Coach and teach Strategic Management and Innovation at the Harvard Extension School. I also recently took the position of CEO of the Perkins School for the Blind, where I plan to bring new innovations to a 185-year-old institution.

I hope that in reading my book, you find practical growth strategies that be applied to your business today. If you would like to pre-order The Curve Ahead, you can do so here.

Thank you in advance for your support. It means the world to me.

Growth companies are middle market companies, typically with $10-200 million in revenue and annual growth targets of 20 percent or more per year. They are the engines of growth and wealth creation in most economies. Unfortunately, most growth companies fall behind the curve before they reach their full potential. They become victims of early maturity – the dreaded S-Curve – as diminishing returns in many forms erode the original business model. Many top out before the reach $30 million in revenue. So what can leaders do to keep moving forward? 

The Curve Ahead tackles two important questions:
·        Why do growth companies stop growing?
·        How can their leaders sustain growth over time?

Growth companies are in a unique position with unique challenges. Unlike startups, they need to make a profit and keep growing. But unlike public companies, they are still fragile businesses in turbulent new markets. Growth companies need better tools to monitor the health of their core business, a process for building innovation into the rhythm of their business activities and leadership committed to a culture of innovation – all themes of The Curve Ahead.

To sustain growth, companies need to discover their next S-Curve: create new products and services, develop new markets, scale operations, develop talent, and attract the right investors.

The Curve Ahead provides a roadmap for leaders who want to sustain growth over the long term. It is designed to illustrate how growth companies get stuck, and what they need to do to get un-stuck. Each chapter of The Curve Ahead begins with the continuing story of a typical growth company called NaviMark. Although NaviMark is not a real company, it faces the business problems, personal challenges, and strategic dilemmas that are typical of the many growth companies I’ve known. In fact, you may find that NaviMark sounds a lot like your own company.

I also look at examples like LoJack and Groupon, both of which fell behind the curve, while Amazon, Jawbone, Darn Tough Socks and many others have fueled growth with a series of new S-Curves.

Steve Jobs liked to say, “The journey is the reward.” Growth company veterans know that you need to be ready for a few curves ahead. This book will show you how to navigate them successfully. Readers who would like to continue the dialogue will find additional resources at www.powerstrategy.com/the-curve-ahead.html.

Instagram created a better way for people to share photographs.  Their innovation was worth $1B to Facebook (even without revenue).  Why couldn’t Facebook develop their own photo sharing solution — for less than $1B.  And why didn’t Kodak or Polaroid come up with this idea first?

Instagram is more about user experience than technology.  Its 13-person team created a new way to enhance and share photographs by understanding users, testing new features, and implementing continuous improvements … until their user community exploded.   Instagram is a classic example of design thinking – the missing ingredient in most innovation processes.

Managers are trained as decision thinkers.  When faced with a problem they define objectives, review options, analyze data and calculate ROI in order to make the best decision.  Design thinkers take a different approach; they believe that if you uncover the right option, the decision will become obvious.  Design thinkers ask questions such as:

“How do we know these are the best options?” 

“What if anything were possible?”

To get the raw material they need to create new options, design thinkers spend time observing, talking to, and ‘standing in the shoes’ of customers.  According to Suzanne Howard, Design Director at IDEO:

“Design thinkers gather information that helps us understand customer experiences. Once we understand their needs, desires, problems and aspirations—we can identify relevant business opportunities … As we prototype, we learn from people by observing, gathering feedback, and refining our approach. This iterative cycle of learning—trying out new business possibilities, gathering feedback and refining the ideas—is what makes design thinking unique.”              
American Express OPEN Forum

Design thinkers offer new tools for business strategists, such as the customer experience map – for discovering new market opportunities – and the business model canvas – for finding new ways to make money.  These tools enable cross-functional teams to generate a broader array of outside-the-box options for new products, services and business models.

The most valuable tool in the discovery phase is the customer experience map, also know as a customer journey map or customer empathy map.  The experience map below examines what customers are doing, thinking, feeling and experiencing during every stage of the shopping, purchasing and consumption process – in order to make Rail Europe a better customer experience (click on this map to open a high resolution PDF).

To design better business models, many design thinkers start with the Business Model Canvas developed by Alexander Osterwalder.

The best practice of growth companies is to incorporate these tools into a four-step innovation process:

1.  Observe customers to uncover new problems (customer mapping)

2.  Create new solutions (ideation, business model canvas)

3.  Prototype and learn in the market (lean development)

4.  Implement the best ideas (get to market and keep learning)

However, what most businesses gloss over is the first step:  observing customers to uncover new problems or pain points.  I’m amazed at the number of companies with great customer franchises who never talk to their customers outside of sales situations.

Unfortunately the design thinking of visionary founders like Edwin Land can get lost as their companies mature, leaving the door open to innovators such Instagram:

In the early days of Polaroid, Mr. Land said photography should “go beyond amusement and record-making to become a continuous partner of most human beings.” His goal was to build a business that would allow any one to feel an emotional connection to photography.
The New York Times

This blog first appeared in The Language of Business. 

Follow Dave on Twitter: @WDavidPower