Good ol’ Sigmoid

Yes I did spell that correctly and no I am not referring to Sigmund. I am referring to a mathematical function called the Sigmoid curve and no I am not going to try to put together a mathematical blog – I treasurer the readers I have too much.

The Sigmoid curve is an S shaped curve which shows a progression from small beginnings that accelerates to a climax over time. Many markets show such progressions, company products do and economies do.

Let’s take some examples. Microsoft! Slowly developed, accelerated very quickly and at one time was rumoured to take over the world. Then they had to grapple with the next market which was taking over the world, the market of Google. Now both of them are frantically looking at how to catch up with the next one, Facebook.

So what does this have to do with anything? Well I was introduced to the Sigmoid curve when I was a Governor of a local secondary school. A consultant had been called in to improve three secondary schools in the area and he told us the story about education in Singapore.

Singapore apparently has the best education system in the world. Twenty five or so years ago the country looked at the evidence and decided that Maths was going to be the central educational driver to economic success. So the education system in Singapore focused on Maths and the economy has never looked back.

The Singaporian government believes it is reaching the top of the S of the Sigmoid curve. After the top the S may curve down, so before reaching that top they decided to review the situation and the country has come to the conclusion that the next Sigmoid curve for the economy will be driven by creativity. So despite the undoubted success of the nation and its education they have embarked on a total change focussed on creativity.

Now let’s bring that theory back to our own businesses and the UK economy. At some point the wise folk in Whitehall decided that finance and banking were the drivers of the success of the economy. Actually I don’t think they thought about it at all – it happened. Whether by luck or by judgement they were right. Where they went wrong is that they simply celebrated success, rather than acknowledging that every market will follow that S curve. In our case the dropping of the S was vast, virtually destroying the economy.

In their obsession to celebrate the success of what they had the politicians worked on their expenses and forgot to work on the next Sigmoid curve. Maybe they had never heard of it. So now the financial markets have tumbled, there is nothing else. Dave and Nick are hoping Enterprise Britain will do it for them, but in the meantime they are sucking it dry and putting so many blockages in, they will have to get really lucky.

Sigmoid’s curves apply as much to our businesses as they do to the economy or even education. In fact, most investors in my experience ask about the market etc etc and then will say, “what comes next?” Have your next Sigmoid curve ready.

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