3. S-Curve
The S-Curve emerged as a mathematical model and
was afterwards applied to a variety of fields including
physics, biology and economics. It describes for
example the development of the embryo, the diffusion
of viruses, the utility gained by people as the number
of consumption choices increases, and so on.
In the innovation management field the S-Curve
illustrates the introduction, growth and maturation of
innovations as well as the technological cycles that
most industries experience. In the early stages large
amounts of money, effort and other resources are
expended on the new technology but small
performance improvements are observed. Then, as the
knowledge about the technology accumulates,
progress becomes more rapid.
4.
5. Consider the supercomputer industry, where the
traditional architecture involved single
microprocessors. In the early stages of this technology
a huge amount of money was spent in research and
development, and it required several years to produce
the first commercial prototype. Once the technology
reached a certain level of development the know-how
and expertise behind supercomputers started to spread,
boosting dramatically the speed at which those
systems evolved. After some time, however,
microprocessors started to yield lower and lower
performance gains for a given time/effort span,
suggesting that the technology was close to its
physical limit (based on the ability to squeeze
transistors in the silicon wafer). In order to solve the
problem supercomputer producers adopted a new
architecture composed of many microprocessors
working in parallel.
6.
7. The Teece Model
• David Teece clarified that two factors –
imitability and complementary assets – will have a
strong influence in determining who will ultimately profit
from an innovation. Imitability refers to how easily
competitors can copy or duplicate the technology or
process underpining the innovation. There are many
examples of barriers a company could use to protect itself
from imitation, including intelectual property rights,
complex internal routines or tacit knowledge.
• Consider the case of RC Cola, it was the first firm to
introduce a diet cola on the market, but since it could not
protect itself from imitation soon Pepsi and Coca-Cola
jumped in, and using their complementary assets
(distribution channels, brand name, etc.) they
appropriated all the profits of the segment.
Complementary assets, therefore, are equally important.
agreements, among others.
8.
9. The Abernathy – Utterback
Model
• The first phase they called Fluid phase, where
technological and market uncertainties prevail, a great
deal of changes take place conteporaneously and
outcomes may vary significantly. It is almost a large
experimentation game in the market place. The
manufacturing process relies on high-skilled labour and
general purpose equipment, there is almost no process
innovation and the many, small firms competing will
base their advantage on differentiated product features.
Competition will not be as fierce as in later phases
because companies have no clear idea on potential
applications for the innovation, nor on what direction
the market might grow. There is low bargaining power
from suppliers since no specialised materials are used in
the production. The major threats come from the old
technology itself and from the entrance of new entrants
if the innovation was radical and competence-
destroying.
10. Variable Fluid Phase
Innovation
Product changes/radical
innovations
Product
Many different designs,
customization
Competitors
Many small firms, no direct
competition
Organization
Entrepreneurial, organic
structure
Threats Old technology, new entrants
Process Flexible and inefficient
11. Transitional Phase – as producers start to learn more
about the technology application and about customer’s
needs some standardization will emerge. Usually by this
time the acceptance of the innovation starts to increase
and the market starts growing, signals that we are
entering into what the authors called the transitional
phase. The convergence pattern in this phase will lead to
the appearance of a “dominant design”, which is a
product degisn whose main components and underlying
core characteristcs do not vary from one model to
another, it often comes out as a new product syntethised
from individual innovations introduced independtly in
previous product variations.
12. Variable Transitional Phase
Innovation Major process changes, architectural innovations
Product Less differentiation due to mass production
Competitor
s
Many, but declining after the emergence of a dominant
design
Organizatio
n
More formal structure with task groups
Threats Imitators and successful product breakthroughs
Process More rigid, changes occur in large steps
13. Specific Phase – after the appearance of the dominant
design competition will shift from differentiation to
product performance and costs. Companies now have
a clear picture of market segments and will therefore
concentrate on serving specific customers.
Manufacturing will use highly specialised equipment
and employing high-skilled labour become less
important since there is a commoditisation taking
place, which in turn means that bargaining power of
both suppliers and customers will increase.
Competition becomes more intense and the market
moves towards an oligopoly. As a consequence
incumbets are able to secure their position through
supplier relations, distributtion channels and other
complementary assets that will create entry barriers to
new entrants.
14. Variable Specific Phase
Innovation
Incremental innovations,
improvements in quality
Product
Heavy standardization in
product designs
Competitors Few, classic oligopoly
Organization
Traditional hierarchical
organization
Threats
New technologies and firms
bringing disrupting innovations
Process
Efficient, capital intensive and
rigid
