Thursday, December 18, 2014

Survivorship Curves for Businesses

Survival Curves in Organisms

Ecologists classify survivorship curves for organisms into three types. The first type is where organisms have high survival rates from the start of their lives and throughout their lives then such survival rates tend to drop abruptly by the end of their lifespan. The second type is organisms that tend to have more or less constant survival rates and tend to die with a constant rate from the beginning till the end of their lifespan. The third category is organisms that have very low survival rates at the beginning of their lives then those that actually survive enjoy high survival rates throughout their lifespans.

Examples of organisms belonging to the third category are fish that produce huge numbers of eggs, a small percentage of which survive. Some organisms also show different survivorship curves depending on their density. If their are in very high density they show type 3 curves where they have low survival rates at the beginning of their lifespans, same as with fish. If they are in low densities then they show type 1 curves where they enjoy high survial rates from the beginning of their lifespans.

Survival Rates in Businesses

It would be interesting to apply similar sets of survivorship curves to businesses. Businesses that 'grow' in high densities of other competing businesses tend to have low survival rates at the beginning of their lives. Once they establish themselves after the initial dangerous period, they tend to enjoy high survival rates.

Businesses that grow in low densities of other competing businesses tend to enjoy high survival rates right from the start of their lifespans and continue to enjoy such high survival rates throughout their lifespan.

Another way to get inspiration from survivorship curves of organisms is to apply them to an individual person who is attempting to start many businesses. A person might have a great number of business ideas (seeds) and attempt to 'sow' such ideas and start new businesses. Such high rate of ideas or startups might witness a high rate of mortality at the beginning of their lifespans. Those ideas that survive may then enjoy high survival rates throughout their lifespans.

In contrast, a different approach might be followed by another business person. He or she might carefully tend for only a few (one or two) business ideas through carefully planning and continued support. Such ideas, which would turn into businesses, may enjoy high survival rates from the onset of their lifespans.