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6 Stages of Cultural Impact

Apple may have temporarily appeased people who had problems with their new iPhone but it is sitting at a dangerous point in terms of its cultural impact.

The Cultural Impact Cycle

Most successful companies go through a 6 steps cycle where their cultural impact on society as a whole can be felt. For my purpose, I call it the mindset cycle and it works as shown in the figure below:

The Mindset Cycle

Looking at the different stages of cultural impact

Alphaworld

In Alphaword, the first step, a few early adopters are aware of the company and its products and test them out. This is generally a stage most companies do not get out of.

There are many reason for companies not getting out of this space. Their product could be bad; their product could be targeted at the wrong market; their product could be too early in the market; the company might have failed to explain its relevance to users; etc…

Ultimately, the main reason a company gets out of this stage is that its team has done a very good job executing on the implementation of a product and company strategy, creating value for its investors, and delivering even more value to its users.

Those that make it out will be prosperous and those that don’t will die.

The Land of Mass Adoption

The land of mass adoption then represent a steep climb as a company starts getting noticed by people outside of the technology world and non-technologists start using the application.

The majority of companies that made it out of alphaworld spend a very long time in that area and can profit by targeting niches without having to move on to the next stage.

The land of mass adoption is an area where companies are forced to shed some of their more technical attributes (or hide them away) in order to appeal to a mass audience. The mass audience is not as forgiving as people in alphaworld so the company has to properly adapt to the market. It’s a great balancing act where the company has to show early adopters that it can continue delivering cutting edge for them while talking to the mainstream and figuring out the right timing and hand-holding to get mainstream users to start using some of those new attributes.

Mainstream Mountain

Mainstream mountain is where most companies want to be. At that point, a company achieves great economic success and is at close to the peak of its cultural relevance, impacting not only its own product but the industry it’s in. Very few companies achieve that stage and even fewer stay there for a long time. The great majority of people look to the company as the main provider of direction and believe it can do no wrong.

In the 80s, IBM was there with its personal computers. In the 90s, Microsoft was there with its Windows operating system and Office Suite. In the first decade of the 21st century, the spot was held by Google with its dominant search engine, online advertising model and YouTube video site.

Apple is currently at the apex of mainstream mountain, having redefined the PC industry (computers as consumption), the music industry (digital as default) and the telecom industry (phones as computers). Facebook, with its social network is currently climbing that mountain, having become the largest site in the world, built solely on the back of relationships.

Unfortunately, it is almost impossible to stay in that arena and the fall seems to eventually come for most companies.

Disgruntled Hills

In the disgruntled hills, the public perception of a company starts to turn. What was one seen as a benevolent force for good is now being questioned. People start questioning whether the company is holding too much power and the mention of anti-trust comes up more often. Early adopters start looking for alternative providers and any misstep by the company is seen as a major example of how flawed the company is. Over time, the mass start turning their back on the company, reluctantly using its products but no longer imbuing them with the kind of magic attributes they granted to the company.

At this point, it seems the company starts having problems pleasing customers. No matter what it does, the public looks to the company as only protecting its own interest and not those of its customers. The company can claim that it loves its customers but suspicion seeps in and people get cynical about such claims.

I would venture that Google is currently in that stage as people start worrying about its dominance in the search space while making fun of its attempt at trying to get more social so it can go back to mainstreaming mountain. Questions around its privacy practices, mentions of antitrust around search and advertising, and other negatives seem to be applied to it with increasing frequency.

Canyons of Cultural Irrelevance

Of course, Google doesn’t have to worry as much as Microsoft, a company now steeply going down the hill of cultural irrelevance. At that stage, a company’s product are no longer seen as relevant to large swath of people.

Companies that reach this stage were once seen as the most important companies in the world. Oftentimes, such companies also suffered legal setback as they were taken to court and found guilty of monopolistic practices. Such was the case for IBM in the 80s and Microsoft in the 90s.

To say that a company is in that space is not the same as saying the company cannot be profitable. In fact, Microsoft an IBM are still very large players with established customer bases and diversified product portfolios. But their impact on the industry is mainly felt when they acquire a company positioned in one of the earlier mindset stages. Their ability to deliver internally-created product to an audience that finds a particular attachment to such products seems hindered and the companies take a cautious approach, offering product that attempt to mirror features created by other players (eg. Zune v. iPod, Windows phones vs. iPhones, Microsoft Kinect vs. Wii).

This stage can last decades or even centuries but, at that point, the company is no longer having a significant impact on consumers’ mindsets.

Plains of Corporate Death

In some cases, a company can flash through a lot of the earlier stages, be seen as extremely relevant for a while and then disappear because their products and ideas are no longer valid in the marketplace at all.

This is a case where companies have cash or assets that are no longer valuable in any ways (eg. Buggy Whip manufacturers) and, in those cases, companies completely fold and return money to their shareholders, stopping to exist due to cultural irrelevance.

Few companies enter that stage as the previous one allows them to morph into something different (eg. Nokia comes to mind, changing from being a fishing boots manufacturer to a phone company; or WPP going from being a wire and plastics company to one of the largest advertising groups in the world).

Takeaway

There are many stages in the cultural impact of successful companies but ultimately, every large tech company has found itself displaced and replaced. Today, Apple sits at the apex of the tech industry, having achieved economic and cultural dominance, but the Antennagate brouhaha (around claimed issues that the iPhone 4 antenna fails when the phone is held without a bumper) and the gizmodo incident seems to point to some anxiety within the early adopter community. Perception of the company appears to be turning and, for the first time since Steve Jobs came back to Apple, there seems to be some level of unhappiness with its products. Will the release of free bumpers help the situation? Only time will tell.

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15 Comments. Leave new

RalfLippold
July 17, 2010 4:53 pm

Sounds like the story of “The Pyramid & The Plum Tree” (by GordonMacKenzie in “Orbiting the Giant Hairball”) and the rise and fall of the corporation.

Corporations are living systems and so the once fixed structure, business model or market share will have to change over time – allow your folks to adapt and you will prosper as a whole 🙂

What is the first icon? I’m in Australia – maybe it hasn’t reached here yet?

    Simone,

    The first icon on the chart is foursquare, the currently hot new location service. I suspect you are correct in that it may not have made it to Australia yet…

      hmmm very unlikely – I am even using it in South Africa; which is usually the arse end of the technological world.

Very practical and useful information about Cultural Impact Cycle trend of IT companies. I also learned the same during my weekend MBA classes this summer. – Ajay

Tristan, it was “Entrepreneurship”.

Sorry, for not being clear earlier. I am doing weekend MBA in Budapest (Hungary) at CEU (Central European University). CEU website is http://business.ceu.hu/. During this course the school invites leading entrepreneurs, top C-level executives from the small to medium size businesses to motivate and inform students about the challenges/excitements/success stories of their respective industries/fields.Also we had very detailed case study about Google and Facebook. Best regards-Ajay Soni(Budapest, Hungary)

Just one point. cultural impact!=corporate success

To wit: IBM are pretty fucken far away from “corporate death” which kind of invalidates your whole article.

    Mark,

    Very true that cultural impact does not equal corporate success. As you point out, IBM is doing very well in the enterprise market and, as a result, the company’s shareholders must be pretty happy. However, realize that the IBM that exists today is far from being the IBM that was relevant to the consumer market (maybe a point that I should have made clearer in my post). But don’t forget that IBM grew to be the behemoth it became because of its initial cultural impact. My graph also shows Microsoft and Google to be on the declining side of the curve but that doesn’t mean that they are any less successful financially (a different set of metrics).

This is a very nice concept that draw on the age old paradigm that, there is no champion forever. And since innovation and public perception are the barn of technology, a company that loses public perception and fails to innovation definitely loses market to the ones that could. The media is also a major player in making a company relevant or otherwise. If you innovate and are fortunate to have the media by you, then you can easily climb the mountain.

    I disagree that the climb is easy. The slide down is a lot easier than the climb. I would warrant that most companies do no make it all the way to the top. Few even make it past stage 1.

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