The S-Curve@WisnuDewobroto

The S-Curve

• The course of successful technological innovation is often described through an S-shaped curve like..

The S-curve : An Established Technology and

Terminology...

Companies associated with the established technology

Advocates of the emerging technology...

Lessons

Lesson 1: Defenders Face Difficult Choices

• Abandon the business they already own, with all its cash flow and certainty, in favor of the rival technology

• Hold onto what they have and work hard to make it better, or useful to more customers

• Hold onto the existing business and begin investing in the new technology as a hedge against the future

Lets Discuss

• Abandon the business they already own, with all its cash flow and certainty, in favor of the rival technology

• Hold onto what they have and work hard to make it better, or useful to more customers

• Hold onto the existing business and begin investing in the new technology as a hedge against the future

Which one is the best choice for your company? why?

Option 1

• The first is the most difficult and is almost always impractical. How could any company afford to walk away from its current investments in skills and physical assets?

• Dropping everything to jump onto the new S-curve would be financial suicide in most cases

Option 2

• Is the easiest choice for decision makers. In the short run it produces no severe disruption, and it is quite possible that improvements to the current technology may extend its competitive life for a number of years.

• In the long run, sticking with an aging technology almost guarantees that the company will experience declining fortunes

Option 3

• Often the most promising course of action.

• The company can continue to operate the existing business and serve current customers as the new business develops.

The choice seems logical?

However...

It has Practical Problems...

The company may not have the competencies to develop new technology...

The culture of the organization may not welcome the new technology

Existing customers may pressure the company to stay in old business

Comparison of Management concerns for New and Mainstream Business

New Business

“Innovation, Risk taking, Market acceptance”

Mainstream Business

“Control, Predictability, Operating efficiency, Profit margins

Lesson 2: Leaders in One Generation of Technology are Seldom Leaders in the Next

Defenders can enlist various strategies to defeat upstart technical challengers ...

Leapfrog the attacker’s technology!

Acquire the attacker!

Lesson 3: Attackers Enjoy Important Advantages

New technologies and innovative business models are often introduced through small,

entrepreneurial firms...

Here are the most important for Attackers!

An undivided focus. “Managers of startup companies spend little time on

internal operations and people issues: There are very few of either. Instead, they devote most of their attention to

development of the new technology or business model”

An Ability to attract talent. “Capable technical and managerial talent are often attracted to new ideas with promising futures..”

They are not captive of powerful customers. “Many established companies fail to make the leap to the new technology because powerful customers persuade

them to continue doing what they are doing”

Little bureaucracy. “Small entrepreneurial companies are unencumbered by

the bureaucracy that burdens their larger rivals. That makes them them fast and flexible”

No Need to protect investment in unrelated skills or assets.

“Established companies can find many reasons to not adopt new technology or business models....”

We can’t sell it through our exising distribution network

The question is :

“Where do you stand on the S-Curve?”

“Is your company being challenged by a new technology?

Decline?

• Get on board the rival technology - perhaps by acquiring the innovator company

• Leapfrog the rival technology with something better

• Look for a breakthrough that will give your technology a lease on life

• Stick with your current technology, but expand it into different markets

Limits to these lessons!

• S-Curve is a useful thinking tool for managers

• But use it with this important caution :

• Nothing about this paths is preordained

• Not every innovation overcomes its established rival