The rise and fall of any technology start up, software orhardware can easily be described by the Technology Life Cycle. The life cyclewill vary based on the need, growth and demand from the market. The cycle canbe described in four phases : Research and Development, Ascent, Maturity andDecline. Let’s look at the process in each phase that will contribute to itssuccess or failure. Researchand Development, also known as “bleeding edge phase”, is generally ran at aloss 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 corporatetheory described success as growth with return on investment. When it comes toa technology company, growth indicates long term success. Ingredients of growth come in fivestages: market, monetization model, rapid adoption, stealth and incentive.· Market is establishing the startup to reach asmany users as possible.
The best example would be Google since it has theability to reach 2.4 billion internet users.· Monetization model is capturing the demand withoutstifling the need. When creating a pricing structure keep the future in mindand have a plan to scale with growth.
· Rapid adoption is how fast new customers use thetech. Companies’ can pigeon hole themselves by making large concessions for bigaccounts. At the time it might be beneficial, but long term it could hurt thebroader user base.· Stealth is maintaining an unknown status duringAlpha/Beta stages.
Patents protecting intellectual properties are weak andsometimes ineffective. · Incentives are a stage used to keep leadershipon board while establishing the market. A charismatic leader in a startup candrive the adoption of the tech (Ascent). The user base is growing and thecompany moves up the ‘S’ curve of the Technology Life Cycle; this is the Ascentphase. Commonly referred to as the “Leading edge” segment; it comes withsubstantial growth. Out-of-pocket costs are recovering, and if the company is apioneer in the sector it will gain more speed from investors and returns. Maturityis the fourth phase with gains high and stable. Growth is hard to maintain inthe long run, and a proven recipe for sustainability is: growing in phases andmastering transitions.
Once progress is interrupted it becomes impossible togain the traction it had in the Ascent phase. Evidence show that if a companyis able to recover; it recovers at less than a quarter of what it originallywas. With the threat of the next phase becomes apparent the company will lookto licensing. Licensing in this phase will lower risk and expand the financialopportunities.
Last isthe decline phase; patents are ending and being bypassed, the utility of thetech is outdated, and the market is oversaturated with competitors. Prolongingthis phase is met with difficulty, because the last play is to license the technologyfor additional revenue. The best example of a popular decline is the Nokiaoperating system, Symbian. Symbian was remarkable for its time, and with therise of Android with iOS it became archaic.
The TechnologyLife Cycle is a guideline for investors and startups. Investors use it as a wayto take advantage of the early life “hype” stages, while entrepreneurs use itto help fill a need in the market. Success can be obtained as long as a need isfound, growth is nurtured and it meets the demands from the public.