Our mission is to help leaders in multiple sectors develop a deeper understanding of the global economy. Our flagship business publication has been defining and informing the senior-management agenda since A decade ago, Norwegian media group Schibsted made a courageous decision: to offer classifieds—the main revenue source of its newspaper businesses—online for free.
The company had already made significant Internet investments but realized that to establish a pan-European digital stronghold it had to raise the stakes. During a presentation to a prospective French partner, Schibsted executives pointed out that existing European classifieds sites had limited traffic.
The Innovation S-Curve
Today, more than 80 percent of their earnings come from online classifieds. Annual report, Schibsted,schibsted. About that same time, the boards of other leading newspapers were also weighing the prospect of a digital future.
In the s, steel giants famously underestimated the potential of mini-mills. In the s and s, the personal computer put a stop to Digital Equipment Corporation, Wang Laboratories, and other minicomputer makers. More recently, web retailers have disrupted physical ones, and Airbnb and Uber Technologies have disrupted lodging and car travel, respectively.
The examples run the gamut from database software to boxed beef. What they have in common is how often incumbents find themselves on the wrong side of a big trend. The champions of disruption are far more often the attackers than the established incumbent.
The good news for incumbents is that many industries are still in the early days of digital disruption. Print media, travel, and lodging provide valuable illustrations of the path increasingly more will follow. For a quick guide to assessing your organization's position in the digital disruption journey, see " Digital disruption: A discussion guide for incumbents.
This most often requires acuity of foresight 3 3. We are all great strategists in hindsight. The question is what to do when you are in the middle of it all, under the real-world constraints and pressures of running a large, modern company. It may help to view these stages on an S-curve exhibit.
At first, young companies struggle with uncertainty but are agile and willing to experiment. At this time, companies prize learning and optionality and work toward creating value based on the expectation of future earnings.
The new model then needs to reach some critical mass to become a going concern. As they mature—that is, become incumbents—mind-sets and realities change. The established companies lock in routines and processes. They iron out and standardize variability amid growing organizational complexity. In the quest for efficiency, they weed out strategic options and reward executives for steady results.Do you know how well your organization is positioned to achieve its goals?
Or what elements influence its ability to implement change successfully? Models of organizational effectiveness go in and out of fashion, but the McKinsey 7-S framework has stood the test of time.
They identified seven internal elements of an organization that need to align for it to be successful. In this article, you can explore the seven elements in detail, and learn how to improve performance or manage change in your organization by ensuring that they all work in harmony. Also, we provide a worked example and a downloadable template that you can use to apply the model. You can use the 7-S model in a wide variety of situations where it's useful to examine how the various parts of your organization work together.
For example, it can help you to improve the performance of your organization, or to determine the best way to implement a proposed strategy. The framework can be used to examine the likely effects of future changes in the organization, or to align departments and processes during a merger or acquisition. You can also apply the McKinsey 7-S model to elements of a team or a project.
The three "hard" elements are strategy, structures such as organization charts and reporting linesand systems such as formal processes and IT systems. These are relatively easy to identify, and management can influence them directly. The four "soft" elements, on the other hand, can be harder to describe, less tangible, and more influenced by your company culture. But they're just as important as the hard elements if the organization is going to be successful.
Figure 1, below, shows how the elements depend on each other, and how a change in one affects all the others. All rights reserved. The model states that the seven elements need to balance and reinforce each other for an organization to perform well. You can use it to identify which elements you need to realign to improve performance, or to maintain alignment and performance during other changes. These changes could include restructuring, new processes, an organizational merger, new systems, and change of leadership.
Figure 2 shows a template matrix that you can use to help with your analysis. You can click on the image to download it as a PDF worksheet. We've also developed a checklist of the right questions to askwhich you can find in the next section.
Supplement the questions in our checklist with your own questions, based on your organization's specific circumstances and your own knowledge and experience. You can use the 7-S model to help analyze your current situation Point A in the worksheetyour proposed future situation Point B in the worksheetand to identify gaps and inconsistencies between them.
To examine your where you are now Point Ause the data that you've learned from your checklist questions to fill in the worksheet grid, putting a tick in any box where the two cross-referenced elements work together well.
If the two elements aren't working well together, put a cross. Point B is an agreed endpoint in the future in six months or a year, for example. When you reach Point B, revisit the worksheet and fill it in again.The S-Curve Pattern of Innovation highlights the fact that as an industry, product, or business model evolves over time, the profits generated by it gradually rise until the maturity stage.
As a product approaches its maturity stage, a business should ensure that it has new offerings in place to capture future profit opportunities. These new products are often upgraded or related versions of products approaching the maturity stages of their S-Curves. If an organization can pinpoint its position on the life cycle curve S-curveand it has a sense of the slope of the curve, it has an excellent mechanism for determining where its technology is headed.
Furthermore, the organization can determine the relative rapidity of that movement. It is helpful to consider the numerous S-curves that can explain how a product or industry is changing over time:. If you consider the evolution of a function over time, you may observe S-curves that represent different systems delivering the same function, but based on different scientific principles.
For instance, the function of audio recording was first delivered by mechanical processes, then by electromagnetic processes, and then by photoelectric processes. Each of these technologies is represented by a relevant S-curve and evolves until it meets a barrier established by its underlying principle.
Thus, transitions between S-curves are provided by solutions of levels 3 or 4 from the Five Levels of Solutions framework. Every product, market, and business model goes through a predictable cycle of growth and maturity. Diminishing returns set in as the most attractive customers are reached, price competition emerges, the current product loses its luster, customer support challenges arise, new operating skills are required, and so on.
Sign up below and immediately give yourself a huge advantage. Growth Trajectories of S-Curves If an organization can pinpoint its position on the life cycle curve S-curveand it has a sense of the slope of the curve, it has an excellent mechanism for determining where its technology is headed. Typically, a high-level solution solves a contradiction which delivers a new or potentially more ideal way of delivering an existing function. For example, the solid state transistor led to the semiconductor industry and manufacture of integrated circuits.
Number of Inventions — As an industry evolves over time, the number of inventions within it gradually rises until the decline stage. Performance — As an industry evolves over time, the perceived performance of the products within it gradually rises. In the decline stage, the perceived performance declines relative to competing offerings. Profit — As an industry evolves over time, the profits generated by it gradually rise until the decline stage.
Functions and Principles of Systems If you consider the evolution of a function over time, you may observe S-curves that represent different systems delivering the same function, but based on different scientific principles.
Growth and Maturity of S-Curves Every product, market, and business model goes through a predictable cycle of growth and maturity. Like this: Like Loading Leave a Reply Cancel reply.
Sign up below and give yourself a huge advantage:. Get it FREE! Napoleon Hill's 17 Principles of Success.
Competitive Profile Matrix - How to Implement.One of the most famous concepts in Innovation is the Innovation S-Curve, the technology life cycle. When looking on the technology life cycle, we can distinguish among 4 different stages: Ferment, Takeoff, Maturity, Discontinuity.
Therefore, the competition between the various players in the industry is fierce. As a result, usually at this stage most of the resources are spent on research and development.
The Common Uses of S-curves in Projects
Hence, the market will be characterized with a rapid growth in production, and the product will move quickly towards a full market acceptance. Due to the strong competition among the major players in the market which is clearly defined at this stage, most of the resources at this point are spent on improving the production processes and making them cheaper. Therefore, oftentimes the products at this stage become completely standardized and the innovations at this stage are considered incremental.
Obviously, there is an opportunity for additional S-Curves as the market progresses as occurred in the publishing industry with the Kindle. At start, at the ferment stage, there was the Cassette tape which was invented by Phillips. The Discontinuity phase appeared when Sony and Phillips have developed the compact disk and by doing so, disrupted the market and started a new S-Curve. The S-Curve of Innovation is a robust framework that can be used to analyze various industries at their different stages and to explain their successes and failures.
The model has a lot of empirical evidence and assisted researchers in understanding what occurred in the semiconductors industry, the telecommunications market, the hard drives global market and many more including in the blockchain space nowadays. Can you share an example of an industry that is going through its take-off stage nowadays?
How can incumbents can address this challenge beyond embracing open innovation? Did you enjoy this blog post? Please let us know by leaving a comment below and subscribing to us at the top left of your screen! I have been using Bitcoin as much as possible over the years, not just speculating with it.
In the early days, it was cheap and fast, but with time the network has become expensive, slow, and unpredictable. As both an engineer and entrepreneur, I believe this strategy will fail. Bitcoin Cash, on the other hand, is aiming to expand the network as much as possible.
Even if they run into a block propagation limit at a few hundred MB, the Bitcoin Cash network will still perform much than Bitcoin Core. Arguably there are already many more efficient coins in terms of fast and cheap ways to transfer crypto. Litecoin being a good example.Diffusion of innovations is a theory that seeks to explain how, why, and at what rate new ideas and technology spread. Everett Rogersa professor of communication studiespopularized the theory in his book Diffusion of Innovations ; the book was first published inand is now in its fifth edition The origins of the diffusion of innovations theory are varied and span multiple disciplines.
Rogers proposes that four main elements influence the spread of a new idea: the innovation itself, communication channelstime, and a social system. This process relies heavily on human capital. The innovation must be widely adopted in order to self-sustain. Within the rate of adoption, there is a point at which an innovation reaches critical mass. The categories of adopters are innovators, early adoptersearly majority, late majority, and laggards.
The criterion for the adopter categorization is innovativeness, defined as the degree to which an individual adopts a new idea. The concept of diffusion was first studied by the French sociologist Gabriel Tarde in late 19th century  and by German and Austrian anthropologists and geographers such as Friedrich Ratzel and Leo Frobenius.
The study of diffusion of innovations took off in the subfield of rural sociology in the midwestern United States in the s and s. Agriculture technology was advancing rapidly, and researchers started to examine how independent farmers were adopting hybrid seeds, equipment, and techniques.
Earl Pemberton,   such as postage stamps and standardized school ethics codes. InEverett Rogersa professor of rural sociology, published his seminal work: Diffusion of Innovations. Rogers synthesized research from over diffusion studies across the fields that initially influenced the theory: anthropologyearly sociology, rural sociologyeducationindustrial sociology and medical sociology. Using his synthesis, Rogers produced a theory of the adoption of innovations among individuals and organizations.
His methodologies are closely followed in recent diffusion research, even as the field has expanded into, and been influenced by, other methodological disciplines such as social network analysis and communication. Studies have explored many characteristics of innovations. Meta-reviews have identified several characteristics that are common among most studies.
Potential adopters evaluate an innovation on its relative advantage the perceived efficiencies gained by the innovation relative to current tools or proceduresits compatibility with the pre-existing system, its complexity or difficulty to learn, its trialability or testability, its potential for reinvention using the tool for initially unintended purposesand its observed effects.
These qualities interact and are judged as a whole. For example, an innovation might be extremely complex, reducing its likelihood to be adopted and diffused, but it might be very compatible with a large advantage relative to current tools. Even with this high learning curve, potential adopters might adopt the innovation anyway. Studies also identify other characteristics of innovations, but these are not as common as the ones that Rogers lists above.
Specifically, innovations with a small core and large periphery are easier to adopt. Likewise, innovations that make tasks easier are likely to be adopted. Even when there are high knowledge requirements, support from prior adopters or other sources can increase the chances for adoption. Like innovations, adopters have been determined to have traits that affect their likelihood to adopt an innovation.
A bevy of individual personality traits have been explored for their impacts on adoption, but with little agreement. Unsurprisingly, potential adopters who are motivated to adopt an innovation are likely to make the adjustments needed to adopt it. Finally, potential adopters who have the power or agency to create change, particularly in organizations, are more likely to adopt an innovation than someone with less power over his choices.
Organizations face more complex adoption possibilities because organizations are both the aggregate of its individuals and its own system with a set of procedures and norms.
Organizations can feel pressured by a tension for change.Have you ever wondered why most Project Managers are interested in seeing S-curves in project reports? They show the progress of work over time and form a historical record of project trends and variations.
S-curves are used for different purposes. Some of the most common uses of S-curves are for progress and performance evaluation, cash flow forecasts, quantity output comparison, and schedule range of possibilities.
Want more training? Subscribe to Project Control Academy to receive complimentary training videos and resources delivered to your mailbox. I assume that you already know what an s-curves is. Some of the most common uses of S-curves are addressed below:. For example, a glance look at the above graph reveals that the project is overrunning its budget and is behind schedule.
This simple s-curve quickly reveals any divergence from the baseline plan and allows the progress of a project to be monitored effectively. An example is shown below:. Cash flow is the movement and timing of cash with respect to the events in a project.
Drawing a cash flow curve has several benefits for the stakeholders. One of the primary benefits is to evaluate the need for cash and the timing of payment obligations.
Shaping individual development along the S-curve
It is important to produce a realistic and useful cash flow curve that accurately depict the timing of each cost element. Another common use of S-curves is the quantity s-curves, which can typically be found in the construction and manufacturing industries.
The planned quantity vs. An example of a quantity S-curve is illustrated here:. This way, the progress of work by quantities is monitored and any deviation from the baseline plan is quickly revealed. The software can provide two types of S-curves; one according to the schedule early dates and another according to schedule late dates. The banana shape envelope of the early and late curves represent the range of possibilities that the project can expect if it is to be completed on time.An understanding of S-Curve theory and its analyses will help learners and team members grasp the importance of monitoring the progress and growth of an ongoing project—at a specific stage or percentage of completion.
Outside of the technical jargon, the S-Curve model simply makes use of the projected number of man-hours and costs to complete the project vs. The S-Curve is a form of mathematical theory, which aims to represent the utilization of resources over the proposed time of the project.
Simply stated, the curvature illustrates the side by side comparisons of the actual time and expenditure components vs. As a tracking tool, comparisons of different S- Curves against the standard S-Curve help in monitoring the growth or progress of the project. Data that is simultaneously plotted in graph form will clearly present how efficiently the team has performed so far, in accordance with the time or budget limitations.
This is how most project timelines would be depicted. However, the matter of understanding the significance of its theory and its analyses is of utmost importance.
The S-Curve is constructed using the dates on the X-Axis and the calculated values on the Y-Axis and by plotting data extracted from baseline or production schedules for each task. The Necessary Tools. The Baseline Schedule : It contains information about the actual start date and finish date as well as the information on proposed man-hours and expenditure allocations.
Use the data contained in this schedule to create the Baseline S Curve. The Production Schedule : It contains information of the actual man-hours and expenditures incurred for a particular stage of the project.
The Standard S-Curve Metrics:. Baseline S-Curve :. The Target S-Curve represents the modified Baseline S-Curve figure, inasmuch as the constant monitoring of project performance could result to certain adjustments of the baseline elements.
A new standard will then be calculated and becomes the representative of a new set of metrics. They are, however, called target values, to distinguish them from the originally proposed time and costs. As such, these values now represent the new set of metrics after the original baseline was modified.
They are applicable as bases for analyses of succeeding work performances after the adjustment cut-off date. Comparisons between the Baseline and the Target curvatures denote growth of the project as far as scope is concerned.
The Progress Metrics — This is a comparison between the Target S-Curve and the Actual S-Curve, in which the latter is a measure of the actual man-hours and expenditures of a project on a specific completion stage date. Ordinarily, the Actual S-Curve is expected to run below the lines of the Target S-Curve, since the results of constant monitoring entails compliance and observance of the targeted time and costs.
Hence, the two curved lines are expected to meet or converge towards the end of the project completion. If the curvatures present a graph where the Actual S-Curve runs open-ended above the Target S Curve as of cut-off monitoring date, consider the possibility of errors in the data contained in the production schedules.
A careful review should be made to pinpoint unrealistic values of man-hours and costs incurred for the already completed stage. Image Credit S-curve Asymmetric. Value and Percentage Metrics:. Creating the Cost vs. Time S-Curve. Use the actual cumulative amount of expenditures incurred from baseline start date to cut-off date of progress stage and compare the S curve created against the Baseline S curve for total cost allotment for the same cut-off date.
Creating the Man Hours vs. Time S-Curve:. Use the actual cumulative amount of man-hours worked from baseline start date to cut-off date of progress stage and compare the S curve created against the Baseline S curve for man-hour allotment for the same cut-off date.
As a note, the models and analyses can be used to monitor the different phases or tasks of a project. Since time is of the essence, the convenience of using the most appropriate and multi-faceted project management software allows the application of this theory for different project management scenarios.
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