The Four Archetypes of the Business Cycle

Following the post ‘Conditional Mastery™ – Getting a Grip on the Business Cycle,’ in which I explained the four stages in the business cycle, known as the Kondratieff longwave or K-wave, I wanted to liven the idea of how an executive team could best respond to each of these stages by introducing The Four Archetypes of the Long Wave Business Cycle.

First, let’s perceive the four evolutionary stages that occur throughout one K-wave (equals one full revolution over a period of about 53 years); beginning with blue (~1971), green (~1998), yellow (~2012), and red (~2024):

As you’ll have noticed, I’ve given a persona to the preferred mode of operation during each of the four evolutionary stages:

• Stage 1 – The CHALLENGER
  There is an irruption of new technology and new business models. Doing things faster, better, and cheaper will disrupt existing players, allowing new players to challenge the status quo.
• Stage 2 – The CONQUERER
  After the debate on the most favorable technologies and business models has finally resettled, entering a stage of frenzy, the battle for market share is on. A new generation of market leaders is rising to the top of the chain.
• Stage 3 – The CAPITALIZER
  As the market saturates, product differentiations become nominal, driving players toward service differentiation. The speed of natural growth starts to decline. Increasing the scale of the operation, to drive down costs and raise productivity, is now essential to remaining profitable.
• Stage 4 – The CONSOLIDATOR
  Products and business models have matured. Although price competition is relentless, the market has decided on the positions. Market barriers are high, given the bargaining power of the ruling champions, however, market size is steadily shrinking. Products have become feature-rich. Meanwhile, new inventions give rise to a new generation of Challengers, often bypassing the entry barriers by devising new business models. While the Consolidators have a hard time making a profit while meeting ever-increasing customer expectations, new entrants, focusing on overlooked or abandoned markets, are being welcomed by a generation of unsatisfied or undemanding buyers.