The_Innovators_Dilemma__Clayton

Source: Data are from company annual reports and personal interviews with executives from several
representative companies in each network.
In sum, the attractiveness of a technological opportunity and the degree of difficulty a producer will
encounter in exploiting it are determined by, among other factors, the firm’s position in the relevant
value network. As we shall see, the manifest strength of established firms in sustaining innovation and
their weakness in disruptive innovation—and the opposite manifest strengths and weaknesses of entrant
firms—are consequences not of differences in technological or organizational capabilities between
incumbent and entrant firms, but of their positions in the industry’s different value networks.
TECHNOLOGY S-CURVES AND VALUE NETWORKS
The technology S-curve forms the centerpiece of thinking about technology strategy. It suggests that
the magnitude of a product’s performance improvement in a given time period or due to a given
amount of engineering effort is likely to differ as technologies mature. The theory posits that in the
early stages of a technology, the rate of progress in performance will be relatively slow. As the
technology becomes better understood, controlled, and diffused, the rate of technological improvement
will accelerate. 12 But in its mature stages, the technology will asymptotically approach a natural or
physical limit such that ever greater periods of time or inputs of engineering effort will be required to
achieve improvements. Figure 2.5 illustrates the resulting pattern.
Many scholars have asserted that the essence of strategic technology management is to identify when
the point of inflection on the present technology’s S-curve has been passed, and to identify and develop
whatever successor technology rising from below will eventually supplant the present approach. Hence,
as depicted by the dotted curve in Figure 2.5, the challenge is to successfully switch technologies at the
point where S-curves of old and new intersect. The inability to anticipate new technologies threatening
from below and to switch to them in a timely way has often been cited as the cause of failure of
established firms and as the source of advantage for entrant or attacking firms. 13
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