As corporate communicators, our job is to be able to break down complex ideas and connect the dots for the public. But it can be challenging to break through the jargon that serves as business shorthand for everything from a company’s projected growth to its sustained economic vitality. Whether you’re interpreting a company’s market cap, a stock’s beta, or a P&L statement, it is essential to understand what these terms mean and how they impact your communications strategy.
The Hockey Stick
The hockey stick is a common term used for the idealized growth of of new business ventures. Essentially a graph of performance over time, its name is derived from what it looks like: a hockey stick with the blade facing left and the handle tapering sharply upwards. The horizontal x-axis (the bottom of the chart) represents time, while the vertical y-axis (the side of the chart) represents the growth indicator, usually revenue, but it can also measure other things, such as subscribers, widgets sold, or number of franchise locations. Having a hockey stick growth trajectory is the holy grail for new businesses as it indicates rapid growth after a period of steady, but marginal, gains.
The hockey stick depicts the business cycle from new venture to extreme success. When a business starts out, its growth is flat. The business may be breaking even or experiencing modest growth, but the bulk of focus is on solidifying a space in the marketplace.
But as market space is carved out, the line begins to turn upward as growth increases. The steeper the line the more dramatic, and exponential, the increase. What started as modest gains gives way to explosive growth. Hence, why it is the goal for new business ventures—it’s endgame is market dominance or, at the very least, a highly profitable pursuit. Some businesses that have experienced hockey stick growth include Facebook, Netflix, and Amazon. Most people will recognize that these companies seemingly came out of nowhere and became ubiquitous in a short period of time. That’s the hockey stick.
Limitations of the Hockey Stick
Hockey Stick growth doesn’t mean that a business will grow forever. It is possible for a company to enjoy rapid gains and then lose favour in the marketplace, whereby the growth trajectory levels off or even plunges. Nor does every business experience the same growth trajectory—the blade of the stick and be longer or shorter depending on individual circumstances. And a business venture may never reach the point of upward growth—leaving the handle unrealized. Finally, until impactful growth is achieved, the hockey stick remains just a model and should be seen as a goal rather than an inevitable outcome.
How Communicators Can Use the Hockey Stick
Communicators will want to be cognizant of a few things as they relate to the hockey stick. As noted above, without supporting data, the hockey stick is just an idealized model without grounding in fact. You will want to maintain a realistic perspective on bold statements about growth based on empty projections. You will also want to be aware where your company is at “on the stick” when communicating with shareholders, the public, and the media. You can use the model to normalize modest gains, highlight when the business has turned the bend, and celebrate the wins when the handle is reached. The hockey stick makes it easy to recognize the various stages of a company’s growth, which can help you frame your message and effectively field inquiries.
The Hockey Stick is one of the core models of business growth—and often the goal of new ventures. Understanding how the model works, its limitations, and where your company fits in can help you communicate more effectively with business-focused stakeholders.