Has Your Business Reached an Inflection Point? Here's How to Tell.
Sometimes, a mere change of tactics won't be enough to help you win your next chapter. Here are the early warning signs that you need a reset.
This is Part V in a six-part series about why inflection points are critical moments in the growth of your business, and what to do about them. Head here to start at the beginning.
Last week, we covered three real-world examples of inflection points that brands are encountering right now, and how they are navigating them:
• GM faces a shift in buying preferences. After committing to go all-electric by 2035, slowing EV adoption forced GM to scrap a $300M EV plant and invest $888M in V8 production instead.
• AMD was getting left out of the AI race. The CEO pivoted the company, made a strategic acquisition to kickstart the transition to AI, and pushed its valuation from $90B to $300B in the process.
• CBS News has a reinvention mandate. New owner David Ellison acquired Free Press for $150M and installed its founder, Bari Weiss, as editor-in-chief. The goal? Target the center-left and center-right and counter politicized content.
Today, we’re covering the warning signs that your business is about to hit an inflection point, so you can act while you still have time.
During the Cold War, Canada and the United States created the Distant Early Warning system. It was a network of radars, placed near the Arctic Circle, that could detect Soviet attacks early enough so they had time to react.
Inflection points aren’t that much different.
Seeing one on the horizon puts you at an advantage. Recognizing one too late comes with an opportunity cost and leaves you little room to maneuver.
So today, I’m sharing a “distant early warning” system for telling if your business is approaching an inflection point.
Look at the questions below. The more that describe your situation, the greater the likelihood that you’re reaching an inflection point yourself.
And the more critical it is that you act now.
Outsiders Have a Different View of the Business Than Your Team Does
Sometimes the writing’s on the wall, but you’re the last to see it. When investors, analysts, the press, and even potential employees have a more cynical view of your prospects, it could be a sign that you’re no longer equipped to win.
Has it become more difficult to raise capital because investors are no longer excited about your category?
Are your shares undervalued, even though you continue to meet or beat analyst expectations?
Have analysts and journalists grown tired of covering your brand?
Has it become difficult to attract high-quality hires, even though you have a good culture, offer competitive pay, and seem like a great place to work?
Are your executives now being passed over for speaking opportunities at the kinds of events that used to invite them regularly?
Your Operating Paradigm Has Become Outdated
Times change. A product that was once in high demand is no longer as attractive. A business model that once helped you dominate is on its way out. When the game itself has changed, a mere shift in tactics won’t get the job done.
Has a new product category started to draw customers away from you?
Has a competitor introduced a new pricing or distribution model that is rendering yours obsolete?
Does your once-growing category now feel like a zero-sum game?
Has a new technology wave hit your industry, but no one seems to know what to do about it?
Have pricing or cost pressures put you in a position where once healthy margins are now razor-thin?
Have you had to increasingly rely on discounts or promotions to reach sales targets, when such tactics weren’t needed in the past?
Company Culture Shifts from Offense to Defense
When your team starts to doubt your company’s future, you’ll see this show up in the way they behave. These are signs that your team lacks a clear mental model of the business. The story about the future must be clarified.
Has your once-innovative product team become fixated on matching competitors instead of breaking new ground?
Does cutting costs feel more reasonable than growing revenue?
Have your employees started to care more about beating each other instead of beating the competition?
Has your company culture shifted from thinking about “How can we win?” to “How can we avoid losing?”
Does your team believe it’s no longer possible to create demand?
Have you become overly reliant on existing customers because attracting new ones feels impossible?
Hard Conversations are Needed, but No One’s Having Them
Changing course means having difficult conversations and making hard choices. So sometimes, a team will distract itself by finding secondary problems to solve. When that happens, be on the lookout for the real issue.
Has your org chart started to feel like a game of musical chairs?
Is your marketing team convinced that an expensive rebranding effort is the only way forward?
Does your ops team keep pushing for a new CRM or ERP, even though it will consume all your attention for several quarters?
Do attempts at strategy discussions keep devolving into debates about tactical, short-term plans?
Is there a revolving door of ad agencies that are finally going to “fix” things?
Has your engineering team become consumed by ways to “build more efficiently” instead of exploring what should be built?
Do you leave planning offsites feeling inspired, or just thankful to have the ordeal behind you?
Remember, no business has everything figured out.
But if too many of the questions on this list sound too close to home, then it’s time to put tactics aside and re-evaluate the game you’re playing. Your team needs a new mental model about the business: a shared belief about what your next chapter should look like, and why.
It’s time to reset. Do it now, while you can.
As the founder of Flag & Frontier, John Rougeux partners with executive teams to align on their strategic narrative, build belief in the market, and win the next chapter of their business. You can chat with John here or connect with him on LinkedIn.