I am sure all of you must have heard this term ‘S-Curve’ before. Now, we use this term often in every walk of life (management, technology, product life cycle and even biology). So what is exactly S-Curve all about? What relation does it have with Technology Management? Don’t worry, I am going to explain everything in detail. In this blog, I will talk about the S-Curve, its uses, the advantages and even the disadvantages of using it. So put your attention caps on start reading!
What’s in it for me?
- What is the S-Curve?
- Why is S-Curve used?
- Organizational usage of S-Curve
- The significance of S-Curve
- Managerial implications of S-Curve
- Major advantages of the S-Curve
- Major Disadvantages of the S-Curve
What is the S-Curve?
Also known as growth curves, S-curves have emerged from an analogy with biological life. To illustrate, it is essential to describe the life cycle of a phenomenon or a new technology in the market. It describes the adoption and demand of an innovative technology over time. As a result, we can take better, data-driven decisions for our organizations using S-curves. Hence, plotting S-curves is fundamental in forming technological strategies and gaining competitive advantage.
Why is the S-Curve used?
In terms of acquisition, the analysis of S-curves shows managers where their technologies stand in the curve and how they should invest in technology over time. So, if the technology in hand is mature and in decline, managers can decide to terminate all R&D in this area. In addition, we can identify an emerging technology which has a lower risk of failure. Hence, S-curves show the importance of technologies in a life cycle concept – the entire life cycle of a product/technology from its conception, through design and manufacture to service and disposal.
The S-curve is helpful for exploitation capabilities since it maps growth of revenue or productivity against time. Earlier, growth rate is slow as the product is new and establishes itself. After some time, the customer demand increases and the product growth increases rapidly. Firstly, new iterative improvisations or changes lead to product growth. Secondly, at the end of its life cycle, growth slows and may even begin to decline. Finally, in the later stages, no amount of new investment in that product will yield a normal rate of return, so new approaches need to be tested such as focusing on user innovations.
Organizational usage of S-Curve
Also, the S-Curve is used to analyze the status of the company’s products and services within its market so the firm can react more quickly to growing or new markets. In addition, S-Curves help firms to analyze the adoption rate of new technologies, so they can organize launching and marketing activities of their products. Also, S-Curves can highlight the threats in exploitation as well.
Furthermore, we can use the S-Curve to identify and forecast technology, the core activity for identification phase. In addition, the S-curve is also useful to identify the future trends of its existing technologies as well as new technologies that might become critical for the company. As a result, these S-curves are used to gain insight into the relative payoff of investment in competing new technologies. Also, they are used for providing some insight into when and why some technologies overtake others in the race for dominance.
Example: It took Samsung Electronics 9 years to learn and fabricate 64K DRAM (Dynamic Random Access Memory) with the help of Micron. But, using S-Curve, it took Samsung Electronics only 2 years to develop and fabricate 1M DRAM independently.
The significance of S-Curve
| Phase | Symptoms | Implications |
| Embryonic | Experimental phase. Direction of technology advancement unclear, building up knowledge about the area; bringing together the right capabilities | Invest in technology development |
| Growth | Dominant technology emerges. Market volumes rise. Focus on overall architecture. | Invest in marketing |
| Maturity | Little technology advancements are observed. Product markets are saturated. | Invest in next generation technology |
| Decline | Market volumes decline | Introduce products based on new technology |
Managerial implications of S-Curve
S-curve helps Managers answer the following questions:
- What are the dimensions of performance in your industry?
- Are there natural limits to performance improvement?
- Where are our competitors on the S-Curve? Which dimensions of performance are they working on?
- What does the available data tell you about what stage the industry is at and how much further it can go?
- How reliable are your estimates & what are the key assumptions that justify your opportunity definition?
Major advantages of the S-Curve
- Suitable for evaluating the different stages of a technology
- Points out the importance of being ready for technological discontinuities
- Gives your company the opportunity to be the first mover within a market
Major Disadvantages of the S-Curve
- The S-Curve does not provide suggestions on how strategists should react to discontinuities in their technology.
- The advantage to be gained from new technologies cannot be quantified by the model. So, it is hard to conclude when to invest and dispose off current technologies.
- The S-Curve does not reveal how the new technology could be foreseen by others or by whom it will be introduced.
- S-Curves might not reflect the dynamic product or market changes.
Conclusion:
To conclude, I would like to say that the common perception that S-Curve is just a management jargon or fad is absolutely false. It is a powerful tool used by experts in several walks of life including scientists, marketers, technology managers, and product managers as well. Also, each phase in the curve has its own characteristics and its own implications as explained. To summarize, I would like to say that if used wisely and effectively, this tool is can prove to fruitful and useful for your organization’s Technology management activities. If you wish to learn more about technology management tools you can check out my blog on Tools in Technology Management.
