Why Humans Are So Successful…

I was watching a show on the Discovery Channel recently. This scientist guy had a school of chimpanzees, the second most intelligent animal on Earth.

He put a banana inside a jar and screwed on the lid. Then he let the first chimp out of its cage. It grabbed the jar, shook it, pounded it, until it finally figured out how to screw off the lid and get the treat inside.

Then came the big surprise…

When the other chimps, who had been watching the first chimp solve the mystery of the jar, had a chance to get that banana out, they went through similar experiments and tactics. They didn’t learn to just screw the lid off. They had to walk their own path to discovery (and banana).

They couldn’t imitate social behaviors!

That is one of the great distinctions between humans and chimpanzees. When a useful new innovation emerges, we humans learn from the experiences of those before us. We adopt the resulting innovations on a predictable S-Curve.

Now, the S-Curve is simple in principle…

Many students of evolution would say it is our creative capacity for innovation that distinguishes humans from the rest of the animal world. But most of us are not entrepreneurs, pioneers or radical innovators. A very small percentage (about 1%) of people actually are.

Over time, that 1% gains control of between 30% and 50% of the wealth in developed countries like the U.S.

It is that 1% that questions, experiments and ultimately comes up with new solutions or innovations. They are the starters of the S-Curve.

Then come the early adopters, those 10% of people who, either through their natural interests, their access to information or their above-average intelligence, tend to discover and adopt the solutions or innovations that the 1% created. This group tests the new trend to see if it is something that can move mainstream. Once such a trend is proven in niche markets, it then becomes commonplace.

Of course, many innovations never make it to or through those early adopters. But what’s important here is that once the ten-percenters offer their stamp of approval, the innovation or solution takes off like a rocket.

It takes the same time to go from 10% adoption to 90% adoption as it does to go from 0.1% to 10%. Once new innovations are successfully tested and proven in niche markets, they move mainstream rapidly and in surprisingly predictable ways.

Aha! Predictable. You can make money with predictable.

It just amazes me that most businesspeople miss these S-Curve accelerations. Some analysts say that the development and mainstream acceptance of new innovations are difficult to predict.

Are these guys on crack?

They are very easy to predict once they have reached 10% adoption. It’s like doctors today who can measure your kid’s height at age two and tell you how tall they’ll be at age 18 or 19.

That’s not to say that all S-Curves are created equal. Some move more slowly from creation to mass adoption than others. Typically, the more radical an innovation, the more difficult it is to adopt, the longer it takes to go viral. There’s just simply more resistance.

It took a couple hundred years for people to understand that the earth revolved around the sun. People resisted this notion (regardless of its truth) because it challenged some of their core religious beliefs. But the pattern and progression of the S-Curve is the same.

Track Trends to Make Money

I first experienced the S-Curve in business forecasting at Bain and Company when I consulted for Firestone Tire. Radial tires took seven years to penetrate 10% of the market, and then just seven more years for the remaining 90%.

It took automobiles 14 years to go from commercialization to 10% of urban households. That number exploded to 90% between 1914 and 1928.

The Internet followed the same exact progression 80 years later, going from 10% to 90% of households between 1994 and 2008. Facebook already has 50% of all Internet users. That number will be at 90% in no time. Crap! That means I’ll finally have to use the silly thing.

Learn to notice and track new social, business or technological trends. Are they progressing towards 10% in niche markets? How long has it taken to get to 10%? From there you can project the acceleration and growth to 90%.

Harry

 

 

Ahead of the Curve with Adam O’Dell

Facebook’s Flop

Harry mentioned the popularity of Facebook. And that got me thinking about the company’s botched IPO this past summer … through the lens of Harry’s S-curve.

 

 

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Categories: Purchasing Power

About Author

Harry studied economics in college in the ’70s, but found it vague and inconclusive. He became so disillusioned by the state of the profession that he turned his back on it. Instead, he threw himself into the burgeoning New Science of Finance, which married economic research and market research and encompassed identifying and studying demographic trends, business cycles, consumers’ purchasing power and many, many other trends that empowered him to forecast economic and market changes.