the S-curve

Topics: Investment, Innovation, Better Pages: 2 (420 words) Published: October 30, 2014
S-curve describes how the performance or cost characteristics of a technology change with time and continued investments. While the horizontal axis shows the history (time and investment) of technical innovations, the vertical axis shows some problems of product performance or cost competitiveness. The pace of improvement slows when the established technology is improved and approaching its maturity. Many problems which a new technology has to face with are solved over time and with investment. Unlike established technology, a new one has plenty of chances for continued improvement. However, it cannot challenge its established rival directly. Successful innovations can gain markets by circulation from military to civilian applications, from professional to customer uses and from technical adopters to non-technical ones. There are three lessons in which we use the expressions describing companies associated with the established technology as “defenders” and supporters of emerging technology as “attackers”. The first lesson is “defenders face difficult choices”. The first option is abandoning the business they already own, with all its cash flow and certainty, in favor of the rival technology. This is the most difficult and impractical option because the new technology usually requires new internal competencies and new manufacturing facilities. The second option is holding onto what they have and work hard to make it better or useful to more customers. It is the easiest one for decision makers. But in long run, the company will experience declining fortunes. The last option is holding onto the existing business and begin investing in the new technology as a hedge against the future. It is the most promising one but has practical problems, such as: lacking competencies to develop new technology; the culture of the organization’s disapproval; the pressure from existing customers. So, in order to solve these practical problems is to develop the new technology within...
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