What is the S-Curve? Description
S-Curves are a phenomenon showing the typical path of product performance
in relation to investment in R&D. At first, performance rises fast and from
then on, once a decline in the slope occurs the productivity is unlikely to
increase much by heavy R&D expenses. More likely, a technological discontinuity
will occur where an innovative technology is introduced and rapidly creates
massive gains in productivity. At the start of the curve, a significant effort
is needed to get an achievement, but once this basic learning has been done,
productivity can advance significantly with little marginal effort. After
a few years further advances get more and more fractional. As technology generations
change, few incumbents survive because of a lack of adapting to the new technology.
Origin of the S-Curve. History
The method was introduced as a result of several studies on technologies
and firms performances.
Usage of the S-Curve. Applications
- Technology life cycle assessment.
- Industry maturity.
- Assignment of the necessity of strategic refocusing.
Steps in the S-Curve Process
- Analyze technology expenditures (both financial and economic) and the
achieved gains in productivity.
- Observe the development of this relation over time and prepare for strategic
realignment when the process slows down from rapid growth.
Rules of thumb for detection:
- Feeling among management the R&D productivity is declining.
- More and more missed R&D deadlines.
- Sales-growth shifts to minor segments.
- Trend of small firms in industry to invest in radically new technology.
- Overall loss of productivity in industry.
Strengths of the S-Curve. Benefits
- Allows for an assessment of different stages of technology.
- Indicates the necessity to watch out for technological discongruities.
- Indicates the necessity for strategic alignment when productivity gains
- Creates clear incentives for first-mover behavior.
Limitations of the S-Curve. Disadvantages
- The model does not give any clear hints to managers on how to act/react
in the face of technological discontinuity
- It cannot be inferred from the model, how big the gains will be from
- The model does not imply when to invest in new technologies and abolish
the current one.
- The model does not imply how a new technology will look like and by
whom it will be introduced.
- The model is a generalization of observed technology paths. In reality,
the size and structure of the S can vary
Book: Richard N. Foster
- Innovation: The Attacker's Advantage -
S-Curves Special Interest Group
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Principles of the Network Economy |
Bass Diffusion Model
| Blue Ocean Strategy
| Positioning |
Curve | Marketing Mix
| Forget Borrow
of Industry Change |
Special Interest Group Leader