The “S” Curves of radical and incremental innovation

The “S” curves of radical and incremental innovation-StratoServe

Following a 2014 LinkedIn piece Sharpen the Saw, cut the Tree or look for non-Trees?, here is some more detail on the “S” curves of innovation (first published in 2014 and updated 2020). The “S Curve” innovation thinking is attributed to Richard Foster (1986) and made famous by Clayton Christensen in the book “Innovator’s Dilemma,” where he discusses how each successive computer hard drive industry got wiped out.

What are the “S” curves? Each of the above S curves represent a technology platform. Movement up an “S” curve is incremental innovation while stepping down on a lower new “S” curve now, may lead to radical innovation, as the new “S” curve surpasses your existing “S” curve. There is a risk that the lower “S” curve does not get better. We only hear of technologies that won and we don’t remember those that lost. So trying out a new technology when you are doing great in your current technology is scary!

The Cost and Performance Y axis, Time on X Axis: If you look at the Y axis you see performance going up and cost coming down. Just as time goes on. In other words over time a particular S curve and technology platform gets improved. This improvement is through factors such as experience, techniques like 6 Sigma, more adoption by customer. The adoption by customer mean higher sales volumes and costs keep going down. However there is a catch for each S curve.

And that is the limit to improvement on the same technology platform. This has happened in numerous industries where dominant players in one “S” platform refused to jump down to a lower “S” curve. And became extinct.

Why is it so difficult /scary to jump onto a lower “S” curve? No one wants to come down in life by choice. And a lower “S” curve can mean less efficient performance and higher cost. It sometimes means a complete rethink of your revenue model. In the example of the music industry records,cassettes, CD’s were sold in stores and a large number of people found employment just in the sales side of the industry. With streaming music on Spotify and Apple the distribution channel and employees have disappeared.

The music industry, as shown in the image above , is a great example to understand “S” Curves:

  • 1970’s Cassette Tapes: You had workers who specialized on manufacturing cassette tapes, there were specialized suppliers and of course the Sony Walkman that made music cassettes so special. Cassettes came in 60 minutes and then 90 minute formats. Avid listeners (the final consumers) tried getting the 90 minute cassette that must have involved a lot of incremental innovation by suppliers and personnel in the plastic music cassette industry. You can visualize six-sigma and total quality programs at cassette factories, that reduced waste and defects in the product.
  • 1980’s Music CDs :The next “S” curve involved CD’s.. Suddenly you had music on CD’s that improved quality a whole lot and “Sony Discman” became popular as the cassette industry started dying, just as vinyl records had died before that. The CD industry had its own players and supply chain. CD’s went on improving and you could buy rewritable CD’s. Cars had CD players and around 2006-7 had both a Cassette player and a CD player.
  • 1990’s MP3 Player: Next off course you have the MP3 player, iPod and literally thousands of songs on your device and then the iTunes store on the cloud. The MP3 players and cloud also require a new set of employee skills and a differently skilled supply base. This is not shown in the picture.
  • 2007…. iPhone, Music Cloud of Spotify and Apple: As Tom Friedman points out in his book, Thank You For Being Late, 2007 was a tectonic shift year starting with the iPhone. If you work in any part of the music supply chain you need to adapt to the new “S” curve of cloud music. Today’s new cars do not have CD players and will allow you to connect the car audio to your phone. Or your Spotify account.

If you think about each industry, it ignored the march of technology and refused to get started on the next technology “S” curve from the current technology “S” curve. This reluctance was because at the early stages, each new “S” curve looked unattractive from the existing “S” curve.

You see that the dominant players in each technology type became extinct just because they thought that the upcoming technology was too much behind- and will never catch up. And there was a lot of resistance to change from within. By the time the new technology ( second and third curves) became really comparable in performance and cost – the incumbents of older “S” curves were too far behind.

The takeaway for all types of organizations is to have the courage to invest time, energy (more than merely money) at successive “S” curves that seem less attractive today but have the potential to vastly surpass what you offer your market today. About StratoServe.

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