Common Sense Business # 15

By Stan Rosenzweig

Tipping Points to Ponder

"Stop rocking on those chairs or you'll kill yourselves!"

My friends and I would be sitting around the kitchen table and rocking back on the kitchen chairs to see how far back we could go without losing it, while mom would get pretty steamed. Thus began my earnest introduction to risks and rewards.

At one specific point of leaning back in a chair, its occupant can no longer be saved from continuing to a spectacular crash and possible concussion as we go flying into the dishwasher amidst wild, cheering approval from our peers.

Going from controlled leaning back to uncontrollably tipping over is called "tipping point". It's where you lose control and, for better or worse, can no longer go back to where you started.

History is replete with changes that, once made, could never be undone. Gun powder was around for a long time. Then it became readily available to the masses creating a tipping point for success in war, bank robbery and some divorces.

When Alexander Bell and company reached the telephone distribution tipping point, he assured the death of the telegraph. Now, new technology that merges all communications is reaching a tipping point for businesses as well as at home

The paradigm has shifted for those selling telephone and internet access simply looking to sell at lower long distance rates. They are rocking back on that kitchen chair and not listening to mom. Tipping points don't help when there is no pricing power.

Vonage and CoVad are spending heavily to take an early lead in the new telephony, but deep pocket AOL will supply it's 30 million users with free calls, sucking the air out of Vonage's pricing model, out tipping the tipper.

Besides telephone service, how many other business tipping points can you think of? How about:

• Overnight delivery cannibalizing first class mail.
• High quality color desk top printers taking profit away from corner printer shops.
• Overseas labor destroying US manufacturing.
• High oil prices killing the Hummer business.

GM and Ford are working on a new tipping point of their own for energy efficient vehicles using hybrid and hydrogen fuel technology. If successful, they can dry up demand for middle east oil, end our balance of payments deficit and create a new manufacturing boom for the next century.

Tipping points are well worth reaching in any industry. Take a look around yours and see if you can find a good one. In the meantime, stop rocking on those chairs.