RealTime CEO Blog 
J Curves – The Risks
In our last posting on J Curves, we discussed ownership of J Curve investments and the problems involved if ownership is not managed effectively. Now I am sure you all realize that there are other risks associated with J Curves, so what are they?
No J Curves
Whenever I come across a company with no J Curve investments, I know I’m seeing a company that isn’t going to stay in business for the long haul. How can you adapt to the constant changes in the market (opportunities and threats) without J Curves?
Failed J Curves
When a company has a J Curve that fails, the financial losses and/or negative publicity can damage the business, sometimes fatally.
Too many J Curves
Even forward-thinking companies, seeking to innovate and stay ahead of the market, can have difficulties with too many J Curve investments. Having too many J Curves at once can sink a booming company.
When Rolls Royce, a company known for engineering and quality, declared bankruptcy in 1971, most of the blame was attributed to the technical problems of the RB-211 jet engine. Using lightweight carbon fibers in the fan blades to reduce engine weight caused the blades to shatter when hail or birds were sucked into the seven-foot fans. Deadlines were missed and production costs skyrocketed – common occurrences with J Curve investments. Despite the issues with this one engine (which, in the next ten years became one of the world’s most popular jet engines), the biggest problem was the company having too many costly developments running simultaneously. At the time of Rolls Royce’s bankruptcy, almost forty percent of its employees were working in engines that were not yet profitable.
Too many J Curves was a major factor in the company’s bankruptcy.
J Curves are vitally important to a company, however too many, too few or failed J curves can be fatal.
By properly managing your J curve investments, you can eliminate much of this risk.
Come back for my next post, when I’ll start to share my rules for managing J Curves. In the mean time, you can find out more by contacting us. It is easy.
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