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Business Momentum [Growth
Posted on January 18, 2019 @ 07:37:00 AM by Paul Meagher

Over the last few days as the temperatures have gotten colder, I noticed that the river has become more iced over. There is a particular pattern to how ice forms on the surface of a free flowing river. Ice moves in from the sides and begins on sections of the river with gentler slopes. There is probably a positive feedback cycle as ice begets more ice. It appears that sections of the river that have the most momentum are the last to freeze.

In physics, we use the equation P = M x V to define what momentum is. Momentum P varies as a function the Mass M of the volume and the Velocity V of the volume.

When studying stream behavior it is important to study it under frigid conditions because cold has a major influence on the mass M and velocity V of water in a steam channel. For details, see the classic Determination of stream flow during the frozen season (PDF) by Burrows & Horton.

The concept of momentum gets applied to business in many ways. For the metaphor to make sense in these contexts it should behave in a manner similar to the defining equation.

To increase the momentum P in a business requires increasing the Mass, the Velocity or Both at the same time.

Businesses such as Facebook have alot of momentum. In the early days the increased momentum came more from the rate of new users joining the platform, the Velocity component V. As Facebook has matured, the momentum is coming more from the shear size of the platform, the Mass component M.

How does a business achieve momentum?

Sigmanow offers several suggestions for how to achieve momentum. I like the simple example of adding one new sales person a month to your business. Ideally, this strategy would have the effect of increasing the velocity and mass of sales on a month by month basis. It might be one of the most potent strategies for achieving high levels of momentum quickly. Of course, if you can't deliver on the orders then in the big picture the momentum of the business is alot less than order volume would suggest.

There are lots of other strategies for increasing business momentum that you can find by googling "business momentum". I'm not convinced in many instances that the suggestions would actually lead to an increase in business momentum - they seems like motivational prescriptions with no strong connection to improving business momentum.

Momentum features very prominently in day trading strategies and there are lots of metrics for measuring momentum. If you are looking for momentum metrics studying momentum indicators used in day trading might be useful. The fundamental equation for momentum for day traders looks like this:

M = V - Vx

Where V is the latest price, and Vx is the closing price x number of days ago.

Geoffrey James applies the concept of momentum to personal life and argues that it has helped him achieve business momentum as well.

In conclusion, the concept of momentum has many interesting and useful applications in nature, business and life.




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