The rise and fall of any technology start up, software or
hardware can easily be described by the Technology Life Cycle. The life cycle
will vary based on the need, growth and demand from the market. The cycle can
be described in four phases : Research and Development, Ascent, Maturity and
Decline. Let’s look at the process in each phase that will contribute to its
success or failure.
and Development, also known as “bleeding edge phase”, is generally ran at a
loss with the rate of failure being at the highest point. This phase is vital;
with technology growth is the backbone of a startup. The classic corporate
theory described success as growth with return on investment. When it comes to
a technology company, growth indicates long term success.
Ingredients of growth come in five
stages: market, monetization model, rapid adoption, stealth and incentive.
Market is establishing the startup to reach as
many users as possible. The best example would be Google since it has the
ability to reach 2.4 billion internet users.
Monetization model is capturing the demand without
stifling the need. When creating a pricing structure keep the future in mind
and have a plan to scale with growth.
Rapid adoption is how fast new customers use the
tech. Companies’ can pigeon hole themselves by making large concessions for big
accounts. At the time it might be beneficial, but long term it could hurt the
broader user base.
Stealth is maintaining an unknown status during
Alpha/Beta stages. Patents protecting intellectual properties are weak and
Incentives are a stage used to keep leadership
on board while establishing the market. A charismatic leader in a startup can
drive the adoption of the tech (Ascent).
The user base is growing and the
company moves up the ‘S’ curve of the Technology Life Cycle; this is the Ascent
phase. Commonly referred to as the “Leading edge” segment; it comes with
substantial growth. Out-of-pocket costs are recovering, and if the company is a
pioneer in the sector it will gain more speed from investors and returns.
is the fourth phase with gains high and stable. Growth is hard to maintain in
the long run, and a proven recipe for sustainability is: growing in phases and
mastering transitions. Once progress is interrupted it becomes impossible to
gain the traction it had in the Ascent phase. Evidence show that if a company
is able to recover; it recovers at less than a quarter of what it originally
was. With the threat of the next phase becomes apparent the company will look
to licensing. Licensing in this phase will lower risk and expand the financial
the decline phase; patents are ending and being bypassed, the utility of the
tech is outdated, and the market is oversaturated with competitors. Prolonging
this phase is met with difficulty, because the last play is to license the technology
for additional revenue. The best example of a popular decline is the Nokia
operating system, Symbian. Symbian was remarkable for its time, and with the
rise of Android with iOS it became archaic.
Life Cycle is a guideline for investors and startups. Investors use it as a way
to take advantage of the early life “hype” stages, while entrepreneurs use it
to help fill a need in the market. Success can be obtained as long as a need is
found, growth is nurtured and it meets the demands from the public.