Definition According to Richard N. Foster (1985), S-curves are a phenomenon showing the typical paths of product performance in relation to investment in R&D. Technology S-curves are usually showing the performance of technology against time. Technology S-curve is different from product life cycle curve because its fluctuation is hardly predictable and highly dependable on the technological product or service improvements. According to Clayton M. Christensen (1992) in Exploring the limits of the technology S-curve, the technology S-curve is a useful framework describing the substitution of new for old technologies at the industry level.
Christensen examines the usefulness of S-curve framework for managers at a firm level in planning for new technology development while using the information from the technological history of the disk drive. In most cases technology S-curve is used for high-tech products where the innovation of technology is main success factor directly influencing demand for that product. While using this framework we must always remember diffusion of innovations theory, pioneered by Everett Rogers, which posits that people have different levels of readiness for adopting new innovations and that the characteristics of a product affect overall adoption.
Rogers classifies individuals into five groups: innovators, early adopters, early majority, late majority and laggards. In terms of the S-curve, innovators occupy 2. 5%, early adopters 13. 5%, early majority 34%, late majority 34%, and laggards 16%. Such theory makes technology S-curve less flexible because the real effect for the demand is lagged (Figure No. 1) Figure No. 1. A graph of Everett Rogers Technology Adoption Lifecycle model. Describe two different types of technology S-curves. Explain how they differ and why they have the shape they do?
There are two different types of S-curves which differ in fluctuation intensity and shape depending on what kind of product or service company is providing and what strategies are used to introduce or improve that product/ service. Those S-curves can be separated as ‘rugged’ (Figure No. 2) and ‘smooth’ (Figure No. 3). Rugged S-curves have more intense fluctuation because companies innovate by using high risk – high return tightly coupled strategies such as shotgun sampling. Such strategies have some randomness which makes them very risky and affordable only for big companies because costs of such strategies are accordingly high.
Of course, they are only random to some extent because those companies already have a good knowledge of their industry and technologies but invention of something absolutely new requires taking some trials. In most cases, such products or services are highly independent and hard to copy. Such strategies were used by Merck which is one of the biggest pharmaceutical companies in the world. They developed methods to screen and test huge numbers of potential drugs simultaneously. In their case the research was too slow especially because researches were not fully aware of the business environmental conditions.
Another big company, BMW, conducted tests on their cars and motorcycles in virtual environment conditions with the goal of stability and safety improvements. Such technology was efficient because they managed to cut costs by creating realistic situations in virtual environment. When using such strategies company must be a veteran in its industry and have perfect knowledge of their technology limitations, industry standards and requirements. . Figure No. 2. Example of ‘rugged’ S-curve. Another type of S-curves is ‘smooth’.
Its fluctuation is more stable because companies use modular strategies which are not so risky and are oriented to product improvements rather than installments. Moreover, products or services which are developed by such strategies are more easily copied so company should either be innovator or try to find other solutions on product’s/ service’s lifecycle peak. Despite that, it is always possible to undo one or other change of some particular module and, by this, make improvements until the highest realized peak point. One example of innovator using modular strategies for their products is Sony.
Since 1979, Sony under the Walkman brand started to introduce portable audio and video playback devices and improve according to customer needs and by implementing newest technologies. Competitors couldn’t cope with such rapid changes that Sony was making because all they could do was copy and Sony was one step ahead of them because by the help of ‘smooth’ S-curve they could easier evaluate their technological achievements and mistakes. Figure No. 3. Example of ‘smooth’ S-curve. Both types of S-curves reflect what kind of technological strategies companies apply for their products or services.
The biggest difference between them is the shape which is caused by the before mentioned factors of risk, intensity and amount of improvements. My above given examples show how demand for products or services is affected by change in technology in time. There may be another type of S-curves which show how new products or services are adopted depending on the group of customers provided by E. Rogers. As it can be seen in figure 4, then different products or services appear on the S-curve. Figure No. 4. Percentage of different products adoption depending on the customer type.
Such type of S-curves represent how different products/ services are taken-up depending on one or more factors such as complexity of use, compatibility with environment, expedience and other. Figure 4 shows that fixed line and digital TV were adopted by the majority of customers because those products have had long lifecycle and no subsidiaries in market. All products from figure 4 have their own technological S-curves which may be very different. This type of S-curve is useful to project and see the tendencies of market and not product/ service alone.
By having a good knowledge of market tendencies it is easier to foresee how your product/ service will be taken-up and which stage of adoption will be reached. Where is your product/service located on the technology S-curve? What insights can you draw from that, and what implications does it have for developing your business idea? According to the seven stages of business life, our business is in the seed stage because this is just an idea. It is possible to choose from two alternatives – either to start our own technology S-curve from scratch or to copy a part of it from already existing similar businesses.
In my opinion, the best choice would be to copy already evolved technology of making soup as ready to sell product and leave variables of menu variability, interior and exterior design, staff, etc. for our own judgment. By such start-up strategy we would evade costs of possible trials for finding the most efficient combination of technology. In our case, using modular strategy would be more appropriate. For example, finding the best combination of the menu would require a series of trials but we cannot afford to use shotgun sampling strategy because it would dramatically increase needed technological resources which we do not have.
We may add or change one soup at a time and leaving the rest of the menu untouched and observe if there is any demand for it. If results are not satisfactory, it is easy to undo changes on the ‘smooth’ S-curve and keep on repeating such trials. It is also important not to make decisions too quickly because according to before mentioned E. Rogers new product adoption curve, customers tent to accept new products differently in time manner. The goal would be to fill at least the early majority group of customers.
Anyway, until soup restaurant is not introduced in Odense, it is impossible to place it on such type S-curve which is shown in figure 4. Moreover, the demand for this product depends more on marketing activities and marketing mix than on its technology, so putting it on market S-curve is even harder. Despite that, our goal is not to cover all the population demand but to aim at particular target market which may be relevant to innovators and early adopters. Discuss the concepts of modular and integral or coupled design and how it relates to your business idea (even in an abstract form).
What could be the effects of modularity for your business in terms of: a. Structuring the tasks of designing and bringing your product or service to the market? As I mentioned before, usage of modular design is not so risky and results can be reversed. All the tasks of preparing, making and serving the soup and getting customer feedback should be structured because only then it would be possible to implement modular design strategies and use findings to get benefits. Furthermore, modular design strategy would make respective tasks more structured. b.
Variety and flexibility of product/services offered? It is crucial to find the best combination of product variety in order to attract the biggest possible and supplyable amount of customers. It is impossible to have that combination at the very beginning but structured tasks and customer feedback should help to achieve that in long-term. c. Knowledge your business idea draws on? I see the knowledge notion very broad because it covers a lot of sections which are crucial when starting new business. It is important to have at least market and technology knowledge.
As I mentioned before, it is possible to copy technology knowledge but market knowledge is usually achieved only by working in that particular market. Despite that, it is possible to have ‘experts’ who would help us to get knowledge of doing business and not to get into the same situation that Merck did get into. If we would copy the technological side of making soup, keeping it warm and serving, we still must have a structured system which would guarantee that all soups are made accordingly to receipts, kept in certain temperature and served with appropriate manners.
To have that we must have people who have experience in this industry and do not work on their own insights. Such attention to human resources would require more costs but would definitely make inside processes more standardized and image of the restaurant more stable and reliable.
References * Richard Foster (1986), Innovation: The Attacker’s Advantage; * Clayton M. Christensen (1992), Exploring the limits of the technology S-curve; * Everett M. Rogers (2003), Diffusion of innovations;