the S curve

I once turned down a position at a consulting organization because of an S
curve. The group had shown phenomenal growth for the past three years. They
were owned by a larger international organization which had deep pockets, many
contacts, but small margins. The consulting group was able to leverage the
larger organization's deep pockets and many contacts to grow. The consulting
group had wide enough margins that they were making greater profits than the
parent group. So why would I turn down a wonderful opportunity like this? Am I
mad?

Perhaps. However, I looked at two other facts that decided the deal for me:
(1) the consulting group had reached a plateau for the current year; and (2)
they were hiring like crazy to gear up for the next growth phase. I asked some
silly questions. Why did they think they had reached a temporary plateau? The
answer was that they had been dependant upon the larger group's contacts to
grow. They had used up the contacts, and now were free to market themselves to
the general business market. Why were they hiring? The answer was that they
were bringing in professionals from other consulting businesses -
predominantly big six (or whatever number at the time) - to form practices and
professional methodologies similar to the competition. They hoped to be able
to market their services as being better than the competition. Based upon
those two answers, I opted out.

I reasoned that they had grown as much as they could on their own model. Now
they would have to re-invent themselves. However, they were trying to re-
invent themselves based upon their competition instead of what their customers
wanted. Not once did I hear anything about the customer. Instead of throwing
customer research at the problem, they were throwing money into a roaring fire
they had built from the paper of their benefactors in the larger company. At
best, I could foresee only a shrinking of their profits based upon greater
expenses with no increase in the market. They had ignored their S curve of
growth.

When I explained this to the executives of the company, I got blank stares.
What the hell was I talking about? They didn't have a clue. This plateau was a
temporary dip. Their growth was destined to take off as soon as they had the
manpower to take it to the next level.

I guess I misunderstood. I thought that the S curve analysis was quite common.
Have I misunderstood something?

Hank Heath
Project Manager
HLHeath consulting
home office: 801-733-9716
cell phone: 801-814-5387
7054 S. Ponderosa Dr.
Salt Lake City
UT 84121-3734
e-mail: HLHeath@IBM.net

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