![]() At this point it is too late for the incumbent to keep up with the new entrant's rate of improvement, which by then is on the near-vertical portion of its S-curve trajectory. By the time the new product becomes interesting to the incumbent's customers it is too late for the incumbent to react to the new product. Meanwhile, the new entrant is deep into the S-curve and providing significant value to the new product. Unfortunately this incumbent innovation is limited to the overall value of the product as it is at the later end of the S-curve. The new entry companies do not require the yearly sales of the incumbent and thus have more time to focus and innovate on this smaller venture.įor this reason, the next generation product is not being built for the incumbent's customer set and this large customer set is not interested in the new innovation and keeps demanding more innovation with the incumbent product. New entry next generation products find niches away from the incumbent customer set to build the new product. Incumbent sized deals: The incumbent has the luxury of a huge customer set but high expectations of yearly sales.So in the middle is the most value, at the beginning and end the value is minimal. ![]() At some point the most valuable improvements are complete and the value per iteration is minimal again. Once the base is created then each iteration is dramatically better than the last. ![]() The first of these iterations provide minimal value to the customer but in time the base is created and the value increases exponentially. Value to innovation is an S-curve: Improving a product takes time and many iterations.Clayton Christensen demonstrates how successful, outstanding companies can do everything "right" and still lose their market leadership – or even fail – as new, unexpected competitors rise and take over the market. ![]()
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