The S-Curve of Technological Evolution: Marketing Law or Self-Fulfilling Prophecy?

Abstract

Conventional wisdom is that the performance of a new technology starts below that of an exiting technology, crosses the performance of an older technology once and ends up at a higher plateau, so tracing a single S-shaped curve. As such, to stay competitive, managers need to switch from an old technology to a new one before the former matures. We test this premise in 23 technologies across six markets. The results strongly refute the existence of a single S-shaped curve of technological evolution. We find that technologies evolve through a series of jumps, whose pattern and frequency is intrinsic to a technology but increasing over time. Most importantly, jumps occur even after a long plateau of no improvement or apparent maturity. The results suggest that managers vigilantly study the internal dynamics of their technology rather than use simplistic rules of thumb for investing in technologies.

Keywords: innovation