in·flec·tion point:
Noun: The point of change on curve: a point on a curve at which the arc changes from convex to concave or vice versa.
Encarta Online
"An event that changes the way we think and act."
-Andy Grove, Founder of Intel
An inflection point refers to the locus of major change within a system. When applied to a business context it refers to an invention or paradigm shift that disrupts entire companies and industries. It is a reminder that no matter how secure a position may be now, market disruptions are always a risk, if not an inevitability.
To minimize this risk, we must be able to conceive of change beyond our immediate views and perceptions. In doing so, we remove the blinders that may cause us to miss threats beyond the immediate event horizon.
From a medical standpoint, death is simple. The heart stops beating and the body stands by for decomposition. In the business world, death is far less final. Some business paradigms or models have become adept at simply remaining on life support for as long as possible, rather than succumbing to a natural death at the market's hand. Numerous unresolved consumer complaints, specious profits, and gimmicky marketing tactics are all symptoms of this underlying problem: Business models that fail to reflect consumer realities struggle to hang on at the precipice of death until they are gradually pushed off by emergent models.
Let's unravel this further by looking a case that illustrates this phenomenon. The US cellphone model is based on an archaic, closed legacy model whereby the cellphone carriers subsidize OEM phones and redeem their lost margins through monopolistic phone plans. Over time, as profit margins have tightened, this model has become synonymous with a lack of regard for the consumer, frustrating overcharges, hidden fees, and possible tiered data charges in the case of AT&T (who is just starting to get hit by iPad traffic).
Despite the best efforts by the big cellphone companies to hang on for a dear life, their business model is starting to change, if only because the current model is unsustainable. Viable competitive technologies are just starting to emerge after years of actively being resisted by their entrenched interests. For a perfect example of this collective industry stupidity, see this multipart series in which David Pogue enlists his readers to hassle the big four until they turn off maddening voicemail prompts. Chaos and hilarity ensue, and we see just how poorly these companies really treat their most vocal customers.
Despite all this, there are encouraging signs that the legacy model is moving closer to its expiration date. The advent of ubiquitous Wi-fi, Skype, magic jack, VOIP, and data centric phones are all harbingers of reliable alternative means of communications without rigid rules of service providers.
As we all know, Google and Apple have fired their respective opening salvos in this battle with their respective handsets. Although still (mostly) subject to existing industry rules, these phones represent the beginning of an open cellphone model consisting of "multi communication" devices. These internet centric devices have the capability of communicating via a wide range options, including social networking websites, text messaging, skype, AIM, Google Voice, and other technologies yet to be developed. Unlike the legacy model, the open, multicommunication model shifts the focus from voice plans (measured in minutes) to data packages that handle a wide range of consumer needs in addition to communication, such as shopping, media consumption, and navigation.
Because these internet centric devices are equipped with Wi-Fi, the need for a menu of voice plans is increasingly unnecessary. And as voice plans are cell companies' primary bread and butter, it is easy to see why the industry is so intransigent in embracing multi communication platforms.
Herein lies the lesson of the inflection point. Once the internet made its way to mobile devices, the game changed. Companies with a stake in older infrastructure were put on notice, but instead of embracing the change, their size made them unable to move quickly enough take advantage it.
Herein lies the lesson of the inflection point. Once the internet made its way to mobile devices, the game changed. Companies with a stake in older infrastructure were put on notice, but instead of embracing the change, their size made them unable to move quickly enough take advantage it.
The best way to avoid being upended by the next inflection point is to act generatively, not reactively. As the old saying goes, the best way to predict the future is to create it yourself. Past success guarantees nothing. Everyone returns to zero once the paradigm shifts, and the status quo becomes irrelevant.
Adesina "Ade" Aladetohun is a Communications Officer in the US Marine Corps
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