Article Digital Transformation

Why do large companies fail to adopt new technologies?

Categories: Digital Transformation
Posted 04 August 2020

In the book ‘The Innovator’s Dilemma’, the author Clayton Christensen found that large companies struggle with reasonably small changes in technology. Christensen claimed that disruption (and related changes in competitive advantage) largely occur not because of the size of technological advancement, but more specifically because of where it occurs on the technology S-curve.

What is a technology S-curve? I hear you ask. Let’s find out.

Technology S-curves

In the early days of any new technology, performance is poor and progress is slow. However, after a period of optimisation and investment, the research & development starts to yield substantial returns and the performance of the new technology ramps up significantly.

Then, as the technology matures, the curve of improvement tapers back off and diminishing returns set in.

This is a technology S-curve.

So where on the S-curve do large companies fail?

As return on investment tapers off in the existing technology, entrepreneurs have an incentive to find and develop new technologies, which starts an adjacent S-curve.

The S-curve of a new technology.

Progress again is slow, but over time, the new technology reaches the ‘jumping off point’ and starts to yield greater returns. It is at this point, that the market may ‘jump S-curves’. This is the point at which a large incumbent company’s failure to adopt new technologies can prove extremely costly.

Established businesses tend to focus on keeping costs down and maintaining existing systems and technologies for as long as possible. They also typically expect the gains in performance of the past to continue ad infinitum. This leaves large companies susceptible to genuine threats from smaller, more innovative operators, who are focused on the possibilities of the new technologies.

The innovator’s dilemma

The big problem that businesses face-into is not only how to prioritise innovation, but when.

At a time when societal change has shifted in a manner that we couldn’t have predicted, investment in and development of future-proofed technology has never been more important to a business. Whether you are facing questions about serverless architecture, digitisation of backend processes, a permanent switch to a remote office or how extended reality can support your customer service teams, we want to hear from you.

Our experts can help navigate technological change and advise on technology challenges, across verticals. We are passionate about mobile and emerging tech and collaborate with our enterprise clients to ensure the jump from one S-curve to the next is as smooth and empowering as possible.