"What such a transition does to a business is profound, and
how the business manages this transition determines its future."
A "10X" Force
When a change in how some element of one's business
is conducted becomes an order of magnitude larger than what that
business is accustomed to, then all bets are off. There's wind and
then there's a typhoon, there are waves and then there's a tsunami.
There are competitive forces and then there are supercompetitive
forces. I'll call such a very large change in one of these six
forces a "10X" change, suggesting that the force has become ten
times what it was just recently. This is illustrated in the
When a business goes from the condition shown in the
first figure to the second, the changes it faces are enormous. In
the face of such "10X" forces, you can lose control of your destiny.
Things happen to your business that didn't before, your business no
longer responds to your actions as it used to. It is at times like
this that the telling phrase "Something has changed" is apt to come
To manage a business in the face of a "10X" change
is very, very difficult. The business responds differently to
managerial actions than it did before. We have lost control and
don't know how to regain it. Eventually, a new equilibrium in the
industry will be reached. Some businesses will be stronger, others
will be weaker. However, the period of transition depicted in the
diagram below is particularly confusing and treacherous.
Now, nobody will ring a bell to call your attention
to the fact that you are entering into such a transition. It's a
gradual process; the forces start to grow and, as they do, the
characteristics of the business begin to change. Only the beginning
and the end are clear; the transition in between is gradual and
What such a transition does to a business is
profound, and how the business manages this transition determines
its future. I like to describe this phenomenon as an inflection
The Strategic Inflection Point
What is an inflection point? Mathematically, we
encounter an inflection point when the rate of change of the slope
of the curve (referred to as its "second derivative") changes sign,
for instance, going from negative to positive. In physical terms,
it's where a curve changes from convex to concave, or vice versa. As
shown in the diagram, it's the point at which a curve stops curving
one way and starts curving the other way.
So it is with strategic business matters, too. An
inflection point occurs where the old strategic picture dissolves
and gives way to the new, allowing the business to ascend to new
heights. However, if you don't navigate your way through an
inflection point, you go through a peak and after the peak the
business declines. It is around such inflection points that managers
puzzle and observe, "Things are different. Something has changed."
Put another way, a strategic inflection point is when the balance of
forces shifts from the old structure, from the old ways of doing
business and the old ways of competing, to the new. Before the
strategic inflection point, the industry simply was more like the
old. After it, it is more like the new. It is a point where the
curve has subtly but profoundly changed, never to change back again.
Copyright © 1996 by Andrew S. Grove. All rights