How to select strategies, catch waves and make market leading returns.
Within this article I am going to share with you how you can get ahead of the market by selecting strategies and catching waves to make market leading returns before your competitors have even got out of bed to look for them.
The Adoption Curve
Success and failure are both very predictable. Here, I will share a couple of very basic economic models that I initially studied during my ‘Strategic Entrepreneurship’ degree, have used in business every year since and are still highly valuable over a decade later as we teach them on Property Entrepreneur™.
The below model has various names and applications however for the purpose of this article we will refer to it as the ‘Strategy Adoption Curve’ (SAC).
The SAC illustrates the distribution of how investors adopt strategies at each stage of the game through launch, traction and development into the market. This model can be applied to the majority of products and services around the world and if you wanted to benchmark it against general applications you are familiar with, consider the pace of adoption with other new entrants outside of the norm and into the market; things like Facebook, the iphone, Netflix and Uber.
With each of these, which phase of product/service adoption would you traditionally pay attention and take action in?
When on Property Entrepreneur™ we apply the SAC to the property industry, and more specifically to our own markets and businesses, to define our strategies for the year ahead, it’s reasonably conclusive that you have two strategic options here.
1.Follow the established and mass market strategies (majority phases) where you’ll find high degrees of confidence, experience, track record, data and activity.
2.Engage in the fringes where you’ll find opportunities for emerging strategies with high levels of uncertainty, low levels of confidence, a lack of established track record, data or activity.
One of these strategies attracts high margins and low/modest competition.
The other delivers low/modest margins and high competition.
I’ll let you work out which is which!
The Market Lifecycle
Whilst the SAC illustrates the distribution of adoption at different stages through the curve, the second model, The Market Lifecycle (ML), illustrates the phases of a strategy, product or service as it is launched and develops into the market.
All market/strategy lifecycles are made up of four core phases; you will note how these can lie similarly over the SAC.
Where do you think your market/strategy currently sits on this curve?
- Introduction – Outside of the norm: Minimal track record, high risk, high margin, low competition
- Growth – Market development: Demand exceed supply, high confidence, reasonable margin, emerging competition
- Maturity – Approaching equilibrium: Supply and demand approach equilibrium, higher competition, reducing margin
- Decline/Revive – Market saturation: Supply exceeds demand, prices decrease, dangerous competition levels; people exit the market or reposition their stock
When we talk about the importance of operating outside of the norm, and riding a wave within our property strategies for low competition and high margins, we are referring to the structure and predictability of mastering these curves.
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