Business Growth on The Edge: Which Edge, Depends on You

Posted: Updated:
Dan Arens is an Indiana-based business growth advisor. Dan Arens is an Indiana-based business growth advisor.

By all accounts, P.R. Nelson was on top of his game within the music industry. Of the four edges in business development; the bleeding edge, leading edge, the edge, and lagging edge, he was clearly on the bleeding edge.

Prince Rogers Nelson (The Artist Formerly Known As Prince, or TAFKAP) was emblematic of the bleeding edge for change when it came to music. With his recent death still in the news, it does provide an opportunity to reflect and see that he was pushing his type or blend of music out to the bleeding edge of the industry. He was too late for Rock and Roll, but very creative with his blend of hip-hop, blues, jazz and rock.

History is full of cultural edge changes; slavery, women’s suffrage, and prohibition are but a few examples. Each cultural change was affected by someone or something leading the people into an era of change. From a business viewpoint, our country has experienced a technology revolution over the last several decades. How did it start? It could easily be attributed to the likes of Bill Gates and Steve Jobs. There is no question technology was and arguably still is, on the bleeding edge for leading the United States into an era of change.

Each edge for business development is a point of transition, a margin of superiority/inferiority, or an advantage/disadvantage, as the product or service traverses up or down the continuum. The risk is greater for businesses on the bleeding edge. Even so, the rewards can be far greater.

Typically, according to the Kauffman Foundation of Kansas City, a leading authority on entrepreneurship, the bleeding edge is indicative of lower profits at first because development costs, marketing costs, and the overall cost of production is much higher. Companies who deal with the bleeding edge need to be ever mindful of rapid market changes that are taking place. The areas of sales volumes, prices, and the timeframe in which the market is reacting to accepting your product or service can be problematic. The slightest change in an area might prompt you to pivot in another direction.

As your company gains acceptance in the marketplace, however, development transitions to the leading edge of growth. Your sales are increasing as demand increases. Cash flow and profit are maximized in this stage. In order for your business to grow, maintaining your sales and honing your competitive advantage is of paramount importance. You should be reaping the rewards of your or someone else’s bleeding edge efforts. Be certain to plan on new possibilities as the product or service begins to plateau.

The edge of business development is when your product or service is maturing. Sales are leveling or have leveled off and profits are less. If you can adapt or change to boost demand this is the time to try it. The edge is a good place to be if you can maintain it.

The lagging edge is when sales have dropped off and prices are falling. Sometimes new features or functions can transition you back to the leading edge, but usually, you need to be certain that your costs are not exceeding the sales of your product.

A perfect example of the lagging edge is a comment by IBM Senior Vice-President and Chief Financial Officer Martin Schroeter, when he said this past October “In the third quarter, we’re at the back end of the mainframe (sales) cycle, so we’d expect it to be down.”

How are your products or services positioned along the four edges? Have you ever thought about it? Do what you can to manage your edges. Analyze what you did going from edge to edge, either advancing or retreating.

Many companies just hop on and enjoy the ride along the various edges. They don’t tweak, pivot, or try to achieve any competitive advantage. Why not? Maybe they haven’t thought about it until now. Consider managing your market segments. Try expanding them to take you to another edge or help you stay in your current position.

Hindsight is 20/20. Overall, it will be up to you to determine how to manage where your company goes with regard to the edge continuum. As part of that determination, you should take a step back and look at your historical performance. Furthermore, an historical view could be helpful in determining whether you are an early adopter or a late adopter to market changes in your industry.

Dan Arens is an Indiana-based business growth advisor.

  • Perspectives

    • School District Raises Questions About ILEARN

      Like all schools in Indiana, we were disheartened at the ILEARN results for school year 2018. We would like to raise several questions concerning this test as it relates to college and career readiness for our students. The annual Indiana Statewide Assessment (this year’s ILEARN) has been developed to evaluate college and career readiness at all levels tested. We are very troubled by our lack of understanding of what indicators in the test evaluate...

    More

Events



  • Most Popular Stories

    • Purdue University ranks #7 for Best Value in a college education in the U.S., according to the Wall Street Journal

      Two Indiana Schools Break Top 50 List of Best Colleges

      The Wall Street Journal and the Times Higher Education magazine have released their annual list of the top 801 colleges and universities in the country. Two Hoosier universities are included in the top 50.

    • Purdue to Open Chick-Fil-A Amid Protests

      Citing overwhelming demand for Chick-fil-A’s food and services, Purdue University has announced it will allow the restaurant to open on campus. The university has been at the center of a debate over the Georgia-based food chain. 

    • Buttigieg to Lead Task Force on Automation

      South Bend Mayor Pete Buttigieg will Friday launch a task force aimed at preparing for the effects of automation at the U.S. Conference of Mayors Winter Meeting. The mayor's office says “Automation and the Impacts on America’s Cities” will include mayors from throughout the country.

    • Sports betting is now legal in Indiana

      Protecting Data Integrity as Sports Betting Grows in Indiana

      Casinos across the state are opening sports betting parlors this week, legally allowing gamblers in Indiana to place bets on professional and some collegiate sports. Some opponents of the law are concerned the integrity of sports is at risk. Others are worried about the integrity of the data used by odds makers in the now-legal betting houses. “There's a mechanism in place that can stop that from happening, or curtail it from happening in the future,” explains...

    • (photo courtesy Cummins)

      Cummins Completes Deal for Fuel Cells Producer

      Columbus-based Cummins Inc. (NYSE: CMI) has closed on its acquisition of Hydrogenics Corp., a fuel cell systems provider in Canada. Cummins says the $290 million deal helps push the company towards a wider range of power technologies, including fuel cells and hydrogen-fueled sectors.