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CH. 2, THE S-CURVE

CH. 2, THE S-CURVE. I. THE S-CURVE Shows progress of technological development Horizontal axis: time and investment in tech. changes Vertical axis: product performance; or cost At first, new technology improves performance a lot Later, hard to make improvements, curve flattens

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CH. 2, THE S-CURVE

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  1. CH. 2, THE S-CURVE • I. THE S-CURVE • Shows progress of technological development • Horizontal axis: time and investment in tech. changes • Vertical axis: product performance; or cost • At first, new technology improves performance a lot • Later, hard to make improvements, curve flattens • Then new technology, rival technology comes in • Not as good as old technology, unresolved issues • Ex. Roll film vs. glass plates in photography • Ex. Early word processing vs. typewriting

  2. Problems with new technology are gradually solved • Process slow at first, then picks up speed • Rival technology matches performance of old technology then surpasses it • Ex. Digital imaging • New technology serves niche markets • Lead users • As new tech. develops, sales expands • II. THREE LESSONS • Lesson 1: defenders face difficult choices • Abandon business • Make old business better • Make old business better AND invest in new technology • Best choice

  3. Reasons why companies don’t make best choice • Company does not have competency for new technology • Culture may not welcome new technology • Existing customers pressure company to stay in old business • “Tyranny of served markets” • Customers have investment in old technology and want continued technical support • III. SET UP AUTONOMOUS ORGANIZATION • Only instance in which firms have succeeded in face of disruptive technologies: • They set up autonomous business unit • Separate from rest of organization • Ex. IBM skunkworks in Boca Raton developed PC • Ex. GM set up Saturn far from Detroit

  4. IV. LESSON 2: LEADERS IN ONE GENERATION OF TECHNOLOGY ARE SELDOM LEADERS IN THE NEXT • Managers defend their jobs, business units • Managers attack the lack of certainty, profitability • Managers point out high risk of new technology • Ex. Small fuel efficient cars gained SOM in 1970s • Ex. Swiss watch makers disappeared • Ex. Mini-computer Digital Equipment took SOM away from mainframe producer IBM • Defenders can • Leapfrog attacker’s technology with better technology • Acquire the attacker

  5. V. LESSON 3: ATTACKERS ENJOY IMPORTANT ADVANTAGES • Undivided focus • Ability to attract talent • Not captives of powerful customers • Little bureaucracy • No need to protect investment in unrelated assets • VI. LIMITS TO THESE LESSONS • Nothing about innovation is predictable • Many innovations fail

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