Elon Musk and his ability to navigate the grand Pattern of S-Curves is the key to Success
As per his brief biography, Elon Reeve Musk, born June 28, 1971 is a South African born, Canadian American entrepreneur. Musk became a multi-millionaire in his early twenties. Elon Musk was the Co-Founder of PayPal, Zip and since then founded Tesla, Space-X as well as Solar City . He is an technology entrepreneur extraordinaire who has been revolutionizing the industry. While there are many commentaries on “What can we learn from Elon Musk “ right from improve signal versus noise ratio, working with smart people and even how to develop learning and mental superpowers, I will provide a completely contrarian overview of what can we can learn from Musk. Some may be awestruck by how much wealth has has generated, however, I would define him in a way that complete sidesteps his ability to create wealth. As you will see, wealth and fame is a peripheral side-effect of his actions in this industry. He was not actively looking for it.
“Going from PayPal, I thought: ‘Well, what are some of the other problems that are likely to most affect the future of humanity?’ Not from the perspective, ‘What’s the best way to make money?'” – Elon Musk
To the entrepreneurs who want to create the next billion dollar company, Musk offers a unsolicited advice that follow your “motive” and wealth and fame will come along with it. There is however an implicit lesson Elon Musk passively teaches us. The inspiring and powerful message points us to a simple thing that has a very deep meaning. It is not about learning better, learning faster. It is not about visionary leadership and it is not about how to build four multi-billion dollar companies.
It is about what I call “S-Curve Jumping”. Every great entrepreneur and genius has exhibited this one important pattern. I came across this not by inspiration but, by desperation. I hope you get the message early so that it inspires you rather than you having to learn it the hard way.
S-Curve Jumping is the equivalent of extreme adventure sports in business and entrepreneurship. Fainthearted should not try this as significant emotional, psychological, financial and social stress is guaranteed on this path. The odds of succeeding are very low compared to conventional entrepreneurship. S-Curve jumping is “Extreme Reinventing from Inside Out”. We need to disrupt our prior successes and attempt to replicate our past successes in potentially new and complex domains. Once the internal re-inventing of our mental models is complete, only then,we can carry out an external reinvention or disruption.
After selling Zip2, the first company Elon Musk co-founded with his brother, Kimbal, he got 22 M USD from the sale. He could have retired on a beach and never worried about working again. However, he jumped another S-Curve (Paypal) and yet another (Space-X and Tesla), each distinctly different and much more challenging from the previous one.
What is an S-Curve ?
An S-Curve is a mathematical function (Sigmoid Function) that forms a line in the shape of an “S” when its data points are plotted on a graph. The data plot looks like an S that has been straightened out. You may have seen this innovation curve made famous by the books “Innovator’s Dilemma” and “Crossing the Chasm”.
All S-Curves are not alike. They are many variants of them. We will, however, discuss a couple of them for the benefit of our discussion. S-Curves can either have a positive skew or negative skew. There is height, width, and skew of the S-Curves. The more positive the skew of the S-Curves, the harder and steeper the ascend. S-Curves are usually applied to technological innovation, however are also applied to learning. Steep learning gradients are learning environments with diverse and accurate feedback loops. Entrepreneurship is a domain with steep learning curves, rapid feedback loops and failure rate is extremely high as individual mental models are unable to cope with the rapid cycling effect.
Specific unique combinations of S-Curves can have positive skew, significant height, and minimal width. These are the most challenging S-Curves in life. I call them Anomalies, Outliers or Black Swans. They are rare and extremely challenging to transcend.
S-Curves are always existent in our environment as a harmonic layered structure. We can either be the creators of S-Curves or be at the reactive end of the S-Curves. Majority of the population clusters are at the reactive end of the S-Curves. Few outliers are at the creative end of the S-Curves. Elon Musk is one of those outliers. Outliers exist in civil, industrial, scientific and technological revolutions. We will focus our discussion on the technological revolution part.
Creators and Reactors of S-Curves
I want to use a metaphor from Farming. Farming is backbreaking and laborious work. Farmers take massive risks in an skewed environment. They heavily invest in various capital and operating costs with no guarantee of a return. The sow the seeds, they harvest the crops and at the tail end of their hard work, they may see an ROI on their investment. Imagine the risk factors a farmer faces and you will notice that they are the original entrepreneurs of our society. They are faced with uncertain weather conditions, potential infestation of crops, rapidly changing consumer demand and transportation and logistics hassles. They toil hard to start from the high risk end of the spectrum hoping for a good return on their tangible and intangible efforts. The effort to results supply chain is so long that failure rates across the spectrum are very high.
Similarly, in technological innovation, we have Bleeding Edge Technologies, Leading Edge Technologies and Trailing Edge Technologies. It is hard to pin point how these terms originated, however my guess is that they were carried as analogies from the flight wings of fighter jets.
Leading Edge Extension in Fighter Jets provide 50% increase in maximum lift and lower drag due to Lift. The front end of the Leading Edge is Bleeding Edge, the Aft End is Trailing Edge. A fighter jet has to maneuver rapidly under uncertain conditions. To improve handling of the multi-million dollar iron wing, a leading edge extension is added to the leading edge. The leading edge extension allows for improved airflow at low speeds or higher angles of combative positions. Leading Edge helps in sustaining stability during uncertain conditions. Using the same analogy, Bleeding Edge is the beginning of the Leading Edge, highly risky, unstable and only provides short term advantage. Trailing edge is the most comfortable and least stressful portion of the flight wings. They get shelter from the work done by the Bleeding Edge and Leading Edges.
Using the same metaphor, Leading Edge technology is at the forefront of Sustained Disruption creating a Market Leader in existing or New Category. Leading Edge concepts or products are widely accepted by the market segments, competitors and regulators. They are still risky due to “Irrational Exuberance” of Investors and Markets. Bleeding Edge technologies play at the really sharp, risky front end of the Leading Edge. Leading Edge technology is also called “Cutting Edge” as it carves new market segments while maintaining stability and sustenance. However, Bleeding Edge is “Super Cutting Edge”, so much so, that it can hurt those badly who invented the technology.
Finally, trailing edge technologies are those that advantage from the gaps left in the “Interstitial Spaces” in the market segments. Bleeding Edge Technologies are leaders and S-Curve generators while Trailing Edge technologies are Laggards who are bounty hunting in the pockets of opportunities. Most of the B2B (Business to Business) and B2C (Business to Consumer) businesses are Trailing Edge businesses. A small majority are leading edge and a smaller number in fractions are bleeding edge technologies. As I will discuss in another upcoming article , Entrepreneurial Hotbeds can be created by Bleeding Edge, Leading Edge or Trailing Edge technologies, however, only Bleeding Edge Technologies which can successfully navigate the S-Curves into Leading Edge can create sustainable hotbeds like Silicon Valley. If you understand this part, you will also notice that all efforts to recreate Silicon Valley elsewhere have failed as they are relying on Trailing Edge work versus Bleeding Edge work.
Entrepreneurs like Elon Musk move up the chain from Trailing Edge to Bleeding Edge Technologies. Most of the young entrepreneurs want to emulate these celebrity entrepreneurs. They however, forget that the first test of successful entrepreneurship is to prove their mettle in the Trailing Edge before they graduate upwards. Working in extremely challenging greenfield projects, I used to frequently come across those who used rhetoric and embellishment to prove their worth. I used to say to them “If you can turn my Water into Wine, then we can talk about your Magic Abilities”.
“If you can Turn my Water into Wine, then we can talk about your Magic Abilities- Rohit Sharma”.
S- Curves as Predictors
Did you know that our brain is a massive parallel and distributed computing system which carries out Intuitive Predictions using Cluster S-Curve mapping. To most of us, the computation carried out by our brain and mind never reaches our conscious perception as Hindsights, Insights or Foresights. Super-Entrepreneurs as well as a Criminal Entrepreneurs unconsciously and intuitively use this massively parallel processing system to hyperforecast subtle, high impact changes in our environment using horizon scanning. Provided the data and assumptions models are accurate and tempered; S-Curves can provide an advantage of informational asymmetry over others. S-Curves never work alone; they are always in a cluster of other S-curve. For every big S-Curve that we see, we have many smaller S-Curves in the vicinity. They are not always visible and have to be carefully recognized.
By the way, Informational Asymmetry is at the core of creating an “Entrepreneurial Edge” specifically for Bleeding Edge and Leading Edge technologies.
S-Curves can be seen in economic trends, industrial and civic revolutions, sleep-wake cycles, personal success, artistic creativity, the success of companies, population growth, the spread of cancer and other diseases, adoption of new technology and even in expertise development. They always start slowly after a long incubation phase in the blind zone (chaos), are slow to be accepted as they develop, suddenly reach an inflection point where a significant growth takes place and finally, it hits the upper limit after which a gradual decline starts. Long before one S-Curve is reaching its full potential, other S-Curves are developing in the vicinity. These zones are called discontinuities and rarely can one notice these developments. Most of us are caught unaware, busy enjoying the ending of the meteoric rise of our current S-Curve.
Chaos, Fear and Turmoil on Either Side
Either side of the S-Curve is full of Chaos, Confusion, Fear, and Turmoil. S-Curves can be considered as a transforming function from completely chaotic environments to complex systems right across to conscious environmental phenomenon. S-Curves convert chaos in some sort of order before going back into Chaos. Chaotic environments are very difficult to make sense of, complex systems are marginally easier than chaotic systems to decipher and almost anyone can make sense of the structured environment.
Entrepreneurs who create Bleeding Edge Technologies have found a unique way of optimization of chaotic environment signals. They have developed an inherent ability to significantly improve the signal to noise ratio. As per Wikipedia, “Signal-to-noise ratio (abbreviated SNR or S/N) is a measure used in science and engineering that compares the level of a desired signal to the level of background noise.”
Their mental models have innovated to an extent that they see opportunities where other perceive risk, instability and lack of coherence. As they successfully push the Bleeding Edge technology into Leading Edge zone, the complete eco-system wakes up creating a massive peripheral industry mostly created by Trailing Edge entrepreneurs. Once we notice a technological innovation and engage with it (e.g. Internet, Apple Products, Facebook), most of us fail to realize that the technological innovation is a symptom of the cause that started as a seed during the times of chaos years or decades back.
As S-Curves are developing and new ones are taking shape, there are zones in which transition from one S-Curve to second S-Curve is effortless and timely. These S-Curve zones are very closely intertwined with Bleeding to Trailing Edge zones. I have also discovered that our emotional cycles and creativity zones follow cyclical S-Curves. Those who can learn how to navigate these mental and emotional S-Curves can navigate the S-Curves successfully.
S-Curves for Successful Navigation
We are always navigating the current S-Curves and always unconsciously preparing to navigate the future S-Curves. As we discussed before, the complex prediction function of our brain and mind can carry out complex calculations to maintain stability in our environment. During technological progress or personal and professional journey, we move across many S-Curves across the product life span or individual life span.
I want to know focus on how does one navigate S-Curves. Using two inter-lapping S-Curves, let us mark some zones. These zones are “Hop Zones”, “Paradox Zones” and “Turn Around Zones”.
It rarely happens and it is a phenomenon where a small cluster of the population spectrum can unconsciously recognize the shifting market trend and the potential for a bleeding or leading edge S-Curves. This is also the point where their existing S-Curves is experiencing an ascension before it commences it’s descend. Not stuck to the comfort and allure of their ascending current S-Curves, some individuals catch on to the second S-Curves. The point at which they usually do it is called the “Hop Zone”. These zones are easy to miss as our current S-Curve has yet to complete its full run and we can be intoxicated by the future potential of the current S-Curve ignoring other S-Curves. It needs a lot of research, regular environmental, horizon scanning and well developed intuitive predictive ability to be able to notice the Hop Zones as we cross them. It is even more challenging to see them before arriving at them. An infinitesimally small number of individuals can maintain Anticipative Unconscious Search for Hope Zones well before they reach them. These individuals create Bleeding Edge technologies. Those who suddenly notice that they are crossing the “Hop Zone” usually create “Leading Edge Technologies”.
Before we define Paradox Zones, I want to tell you a story that I read somewhere. Once I can find the webpage again, I will provide a citation here. It was probably the best explanation I read about Paradox Zones. I have taken the original story, modified and incorporated it for this post.
The Story of the Traveler
A hiker is trekking through the woods in the back-country zone of the rockies in Western Canada without any navigation aids. The area is mostly deserted and for miles, the hiker does not see any markings or any fellow hikers. After hiking for more than two hours, he comes across a Parks Canada representative who is scouting the area for violators. The hiker is looking for Parker Ridge from where one can have dramatic views of the Saskatchewan Glacier and the headwaters of the Saskatchewan River.
The Parks Canada representative provides directions to the destination and tells him to travel around 6 miles straight where he will see an abandoned hut. The representative then provides a detailed description of the hut and it’s surrounding area. He goes out of the way to offer milestone details so that the hiker does not get lost. Then, as if in a hurry, he tells the hiker that around 2 miles before that hut, he will see a small hidden path from where he needs to take a right to reach Parker Ridge. Parks Canada rep walks away and suddenly the hiker realizes the paradox in the situation.
He realizes that due to lack of a reference point around or before the hidden path, the parks representative provided him a future reference point. He will have to go to the brewery first and then retrace his steps to the hidden road. For the representative, due to past experience (akin to Serial Entrepreneurship), the reference point was before the right turn. But, realizing that the hiker will most definitely miss the right turn, he offered a more foolproof, fail-safe future reference point.
A paradox is similar in life when we have crossed the invisible detour (Hop Zone) and then a “blinding flash of the obvious” hits us like a deer in the headlights that we intuitively know the exact point that we missed it. Paradox Zones are the result of Intersection of “Opportunity Recognition”, “Horizon Scanning of Trends”, “Domain Expertise” and “Anticipative Unconscious Search”. This paradox is also made famous by Steve Jobs in his convocation speech quoted below. There is another paradox in his speech itself. Steve Jobs was akin to the Parks Canada representative who able to predict how the dots are likely to connect intuitively, else he would not have been so successful. I guess that he was advising the lesser mortals (the rookie hikers) that connecting the dots is easier in hindsight, but, connecting them as they develop in foresight i.e. Hyperforecasting takes a lot of effort and intuitive ability.
You can’t connect the dots looking forward; you can only connect them looking backward. So you have to trust that the dots will somehow connect in your future – Steve Jobs”
If we miss the “Hop Zone” and the “Paradox Zone”, then the last point at which we can make a U-Turn is the “Turn Around Zone”. Turn Around Zones are the final opportunity to make a switch to another S-Curve before we enter a rapid decline. The turnaround zone is way past the Paradox Zones when we get a sharp sense of regretful insight that we are super late to the party. If the turn around zone is missed, the rapid decline is almost unstoppable. We have to wait to get to the bottom, recover from the fall and start the ascent to a new S-Curve. The rapid decline zone and the restful inertia of situation can sometimes leave us unable to start again. As we have limited time in life, even if we can start again, using Turn Around Zones is not an efficient way of living life.
The Grand S-Curve – Master Pattern of Success
There is something called the Grand S-Curve, which I term the Master Pattern of Success. Entrepreneurs like Elon Musk follow this journey using expertful S-Curve jumping. Moving from a negatively skewed S-Curve to a positively skewed S-Curve and noticing the “Hop Zone” using “Anticipative Unconscious Search” is the key to creating Bleeding Edge or Leading Edge Innovation. Out of the many who head out towards this extremely risky journey, very few make it across the ravines of the S-Curves. Elon Musk has proven that he is following the same journey and has demonstrated potential for success in this area.