Where Are You On The S-Curve (And Which Curve Are You On)?

Thanks, as always, to Bankwatch<, for finding this from Doc Searls:

Amazon and other excellent online retailers have improved the online shopping experience as far as a retailer can. Yes, there is always room for improvement, but there is only so much improvement you can carry out only on the sell side, even if you’re equipping buyers to do a better and better job. At a certain point the improvements need to happen on the buy side. You need better buyers, not just better sellers.

My take: I don’t know if online retailers have improved the online shopping experience as far as they can or not. But there’s an underlying message buried in the comment above, regarding the evolution of technological development and implementation.

Years ago, I worked for a consulting firm called Nlolan, Norton. One of the founders, Dick Nolan, had formulated a theory of the stages by which information technology is leveraged by organizations. His theory (see the diagram below) was that the rate at which technology was deployed could be depicted by a series of S-curves. The time periods between the s-curves were periods of discontinuity — first, technological discontinuity, and then organizational discontinuity.

Nolan formulated his Stages Theory more than 30 years ago, and it still holds up today. Amazon (and perhaps other online retailers) may very well be in that stage of organizational discontinuity — and that’s why Searls says “we need better buyers.”

A former colleague of mine asked me recently if I thought technology vendors were draggind down firms’ ability to implement new technologies. I said it was the other way around — vendors have developed new technologies that are ahead of firms’ ability to implement them.

Another beauty of Nolan’s Stages Theory is that an industry can be characterized as being somewhere along the S-curves, a single organization can be plotted on the curves, and even a line of business within a company can be positoned on the graph.

I tried to put Searls’ comment in the context of the banking industry: Has retail banking (and online banking, more narrowly) improved as far as it can?

No way. My guess is that it’s somewhere in the middle of the middle curve. Many banks have clearly improved their online presence and capabilities beyond their initial efforts of 5 and 10 years ago. But they would be deluding themselves into thinking their sites are good as they can get from a technology perspective.

But from a broader perspective — an organizational perspective — few financial firms have confronted the organizational discontinuity that is caused as they transition from the middle to third curves.

The credit crisis is certainly causing some financial firms to rethink their business. But from what I can tell, most are reverting to [old-way-of-thinking] cost cutting measures, rather than the fundamental, gut-wrenching, strategic change that comes from technology development.

Despite all the attention that social media is getting within the financial services industry, I can’t think of a single firm that has truly confronted — let alone navigated through — the period of organizational discontinuity.

I do think, though, that some (if not many) will get there. And it won’t be pretty.

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