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The Technology S-Curve
Understanding the S-Curve
S-curves show how a trend or innovation evolves over time. They can show the stages of growth, maturity, and decline of a trend or innovation. The technology S-Curve is a useful framework to describe the substitution of new for old technologies. This focuses on the challenges and benefits of the S-curve framework in managing the development of new component technologies. (Updated 12-4-23)

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February 14, 2021

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I learned about the “S-Curve” from the work of Clayton M. Christensen.

https://www.researchgate.net/publication/229875678_Exploring_the_Limits_of_the_Technology_S-Curve_Part_I_Component_Technologies

Technology S-Curve
Technology S-Curve

And I’ve used it in many ways over the last 30 years.

Essentially, an S-curve is a graph of performance over time for a natural system that demonstrates a “Begin-Growth-Decline” behavior.

We see S-Curves in all sorts of ways. One of my favorite ways is the old saying, “Once an adult, twice a child.” We start off slow as a child, reach peak productivity in middleage and then slow down when we get old.

Clayton used the S-Curve to describe the disk drive market where 5MB sales start slow because they are expensive, then over time they become popular and sales grow, but at some point, large drives are introduced that slow down the 4MB disk sales.

The S-shaped curve helps us to understand the nature and performance of a given project or role, and outcomes can help in the forecast and learning for corporate and personal growth and development.

The S-curve sees the world in three stages:

  • Stage One – product sales are rising slowly
  • Stage Two – product sales are rising quickly
  • Sage Three – product sales slow and begin to decline

S-curves show how a trend or innovation evolves over time. They can show the stages of growth, maturity, and decline of a trend or innovation.

The technology S-Curve is a useful framework to describe the substitution of new for old technologies.

In this reading, I’ll focus on the challenges and benefits of the S-curve framework in managing the development of new component technologies.

Knowing the S-curve allows one to jump on new technology early, before competitors, in order to gain competitive advantages. 

Knowing the S-Curve could help you understand the future so you can make better decisions.

Exploring the Limits of the Technology S-Curve. 

The technology S-Curve is a useful framework to describe the substitution of new for old technologies.

Clayton Christianson used data from the disk drive industry to examine how you can apply the S-curve to planning for new technology development. 

The S-Curve is a theory that the magnitude of improvement in the performance of a product or process occurring in a given period of time or resulting from a given amount of engineering effort differs as technologies become more mature.

The theory states that in a technology’s early stages, the rate of progress in performance is relatively slow. 

As technology becomes better understood, controlled, and diffused, the rate of technological improvement increases. 

However, the theory posits that in its mature stages, the technology will approach natural or physical limits.

The purpose of this post is to enrich our understanding of the uses and limits of technology S-curve theory.

Four propositions about the usefulness of the S-curve

  1. At the industry level, S-curves can provide rather convincing explanations of why alternative technologies have made or have failed to make substantial inroads against currently dominant technology
  2. To achieve improvements in the high-level measures of system performance mentioned in (1) above, managers must conceive and execute a sequence of projects to improve the component technologies used in a product and to refine or revamp it. For engineering or research managers, S-curves will be useful if they aid in planning components and architectural technology development programs.
  3. S-curves may be useful in describing an individual firm’s experience, but the framework has serious shortcomings if used in a prescriptive sense to indicate the direction future research programs ought to take. The industry’s leading incumbent firms were generally the most aggressive in switching to new component technology S-curve, but there is no evidence that they gained any sort of strategic advantage over firms that stayed longer with conventional componentry.  If anything, a strategy of extending or “riding” the S-curve of conventional technology and of switching component technology S-curves behind the industry’s component technology leaders seems to have led to greater success.
  4. Often, first innovations have been architectural in nature. Established firms find these difficult to spot because alternative architectures are often initially deployed in unimportant commercial applications.

Key Concepts

Technology is defined as – a process, technique, or methodology which transforms inputs of labor, capital, information, material, and energy into outputs of greater value. 

I have a simpler definition of technology. I define technology as simply “Tools.” A hammer is a technology. A saw is a technology. Fire is a technology when used as a tool. And, though much more complex than a hammer or a saw, a computer is a technology.

When looking at S-Curves, we define a technological change as a change in one or more such inputs, processes, techniques, or methodologies that improve the measured level of performance of a product or process.

Defining it this way is distinct from knowledge, whose value may not be unique to specific products or processes.

The vertical axis of the S-curve is constructed to measure an important dimension of product or process performance.

The choice of units of the horizontal axis depends on the purpose; it is most often time.

A number of writers have advocated the use of S-curves as a firm-level prescriptive guide in the strategic management of technology. 

These writers urge strategists to identify when the S-curve of the technology has passed its point of inflection, to identify new approaches that are rising from below at a more productive rate and that may, in the future, intersect with the current technology, and to launch efforts to acquire or develop the new technology in time to switch to it when its performance surpasses the capabilities of the present technology.

In other words, prescriptive S-Curve theory would have a firm follow the dotted line in image below.

Although this framework seems sensible, studies of technology maturity to date have not empirically addressed how managers at the firm level might use S-curve analysis as a guide in the strategic management of technology development within their individual firms. 

The view from the trenches is more ambiguous than aggregate views.

Using S-Curves to prescribe the Development of new component technologies

Using S-Curve analysis as a basis for prescribing new component technology development programs can be problematic at several levels.

  1. There are great differences in perceptions – within firms and across firms – about where one is on the S-Curve.
  2. There are great differences in perceptions about the status of new technologies. – Some executives and engineers are enamored with radically new technologies – technological longshots.
  3. No one really knows what the natural, physical performance limit is in complex engineered products.
  4. There are often many ways to overcome natural limits in technology.
  5. The Marketplace is very unpredictable.

There is sometimes a consensus opinion about S-curves in the industry.  In some technical questions, the natural limits of performance may be relatively unambiguous, broadly known, and uniformly understood.

Summary

Although technology S-curves seem to provide useful insights at an aggregate, industry level about the potential for continued improvement of fundamentally different technologies, the application of this framework at a managerial level to planning component technology development seems to be very ambiguous.

Although S-Curve patterns in component technology progress clearly exist, there was no clear evidence of any first mover benefits or “attackers’ advantage.”

Firms that switched late to new technology S-curves successfully matched the product performance of the early adopters.

Clock TimeBlock TimeDescriptionFormat
9:00:15Reading II-3A & II-3B

Exploring the Limits of the Technology S-Curve.  Part II: Architectural Technologies

Discussion
  • Four propositions about the usefulness of the S-curve. (Page 125)

In this article the authors show that it is in architectural, rather than component innovation, that entrant firms exhibit an attacker’s advantage.

A conventionally drawn sequence of intersecting S-Curves is a misleading conceptualization of the substitution process for new architectural technologies, because it characterizes architectural innovations strictly in technical terms.

Innovations in architectural technologies frequently redefine the functionality of products and address product performance needs in new or remote markets, rather then mainstream ones.

In the last reading the authors focused on the challenges and benefits of the S-curve framework in managing the development of new component technologies.

In this reading the authors reach the opposite conclusion about architectural technology change.  That Architectural technologies indeed follow S-curve patterns of improvement.

They say that knowing the S-curve allows one to jump on new technology early, before competitors, in order to gain competitive advantages.  And their research suggests that jumping early into “Architectural” level technology developments does seem to result in competitive advantages.  Hence knowing and following the S-Curve is very useful.

The reason for this is that architectural innovations generally found earliest use in emerging markets.  Entrant, attacking firms succeed with architectural innovations because they were better at attacking these emerging markets, not because they possess superior capabilities to develop the architectural technology per se.

The difference seems to have been in the relative abilities of established versus entrant firms in taking the two types of technologies into the market.

New component technologies generally were the drivers of performance improvement along the dimensions of performance most valued in established markets.  Taking them to market was straightforward – the leading drive makers designed them into new product models and sold to their major customers.

But new architectural technologies tended to redefine the product’s functionality – the parameters by which system performance was assessed.  Because of this, new architectural technologies generally were first deployed in new market applications.  It was failure to innovate in the market, rather then failure to innovate in the laboratory, that seems to underlie the failure of established firms at points of architectural technology change in the history of disk drive industry.

Summary

Identifying new technologies that may supersede existing approaches – a critical job of technology development managers – is always difficult.

S-curves can provide an important perspective on what is happening to performance trajectories at average, aggregate levels.  But, they are less useful when trying to plan technology development at the level of the firm.

T

The Begin Phase shows the early years in an organization, and this phase portrays a slow growth, and at this phase, personal growth is rising at a slow rate. Over time, with training, new skills and personal development, growth in the organization would begin to rise at an increasing rate. This phase is the rapid growth stage that is not permanent and requires constant training, L&D, and the insight to factor the indicators of change in the workplace. The third phase is the growth stage that is rising, but at a constant rate. In this stage, personal growth slows, creating a gradual slope, and this is the stage an individual needs to evaluate his potentials and analyse the needs and requirements in the workplace. This is the phase were we upland, becoming too comfortable with our work processes, and this is often characterized by repetitive task which often results in tasks becoming mundane. Employees often overlook the importance of acquiring new skills, and knowledge that aligns with organizational needs. This is the crucial stage of work life that determines the further growth or decline. This decision stage ultimately determine if the employee will create another S-curve from an inflection point or allow the organization to determine his fate.

Inflection/ Strategic Decision Point

Successful people are able to determine and evaluate every point on the S-curve by analyzing industry trends, organizational requirements, acquiring new skills and knowledge, intraprenuership, training and retraining, and organizational change. Employers also gauge the competence levels of employees by the regular analysis of key performance indicators and appraisals, and by plotting the cummulative S-curves of the employee over time. Faster growth or rise along the S-curve could also be determined by other factors other than rapid self development, and acquisition of new skills. However, every employee will ultimately get to the end of the S-curve or inflection point, and the strategic decision taken at this stage will eventually determine the success and future outcomes of our personal growth and development.

At the inflection point, every individual is faced with the ultimate decision of acquiring new skills, new training, new industry, entrepreneurship, or retiring from work life. Our personal life is massed with inflection points. There are decisions to be made, course of action to be undertaken, and direction to take for our personal growth and to change the direction of our personal lives. These points on the S-curve have the potential to change the direction of our lives, as we are constantly faced with life’s up and down swings. In mathematics, inflection point shows the moment when a line’s curvature or derivative alters. Lines that are normally moving in convex direction, suddenly moves in concave direction. Most individuals do not know how to analyze their S-curves and or determine how, and when they get to the inflection points of their work life. Ultimately, we must change our course of direction to achieve a highly fulfilling, successful, and satisfying life.

In moving through inflection points, employees must constantly evaluate if current roles are providing opportunities and other range of options, or teaching new skills, and providing the knowledge that teaches something new. Inflection points can dramatically alter the direction of our lives and careers, and decisions taken at these points does not often results in successes or failures. However, employees who take the ultimate steps are those who are able to analyze these critical moments, take the bold steps of moving ahead, rather than allowing organizations to determine their fate, and succeed in the area of personal growth and development.

https://economicslearningcommunity.org/economic/economics-foundations/economics-thinkers/friedman-falsely-claims-government-is-always-the-problem/