Key Figures Explained – Schilling (7th Edition)
Innovation Funnel
Chapter 1 | Page: p. 5
This figure illustrates the innovation funnel, a visual representation of how ideas move
through the stages of the innovation process — from initial conception to final
commercialization. At the wide end of the funnel, thousands of raw ideas are generated
through brainstorming, research, or observation of customer needs. As these ideas progress
through successive stages such as research and development (R&D), technical feasibility
analysis, prototyping, testing, and market validation, many are discarded or fail to meet the
required criteria.
The funnel narrows because only a small percentage of ideas survive these screening stages.
Each stage eliminates concepts that are too costly, too risky, technologically infeasible, or
misaligned with the firm’s strategy. By the time an idea reaches the end of the funnel — the
commercialization stage — only a few viable projects remain, and even fewer will become
successful, profitable products in the market.
This figure highlights the high attrition rate of innovation projects: out of thousands of
ideas, perhaps only one will generate meaningful commercial success. It emphasizes the
need for firms to manage their innovation pipeline efficiently, apply rigorous evaluation
criteria, and balance creativity with disciplined project selection and resource allocation.
Technology S-Curve (Performance vs. Effort)
Chapter 3 | Page: p. 53
,The technology S-curve illustrates the typical relationship between the effort invested in
improving a technology (such as research and development time, money, or
experimentation) and the resulting performance gains achieved. When this relationship is
plotted on a graph, performance (on the Y-axis) increases slowly at first despite
considerable effort, then accelerates rapidly during a phase of technological maturity, and
finally slows down again as the technology approaches its natural or physical limits—
producing an S-shaped curve.
In the early stage, progress is slow because the underlying scientific principles are not yet
fully understood and experimentation dominates. Incremental improvements require
significant effort but yield small performance increases.
During the growth or acceleration stage, knowledge accumulates, design approaches
become standardized, and improvements occur rapidly with relatively less effort. This is
when most firms in the industry adopt the technology and invest heavily to refine it.
In the maturity stage, the technology begins to approach its theoretical or physical ceiling
—further improvements require disproportionately large amounts of R&D investment for
very small gains in performance. This flattening of the curve signals diminishing returns.
From a strategic point of view, this figure helps managers decide when to shift resources
toward emerging technologies. When performance gains from the existing technology
become marginal, firms may need to explore or adopt a new technological trajectory that
offers greater future potential. Recognizing where a technology lies on the S-curve is
therefore essential for timing innovation, avoiding stagnation, and sustaining long-term
competitiveness.
Technology S-Curves with Discontinuities
Chapter 3 | Page: p. 55
,This figure expands on the basic technology S-curve concept by comparing two or more
competing technologies over time. Each technology follows its own S-curve of
performance improvement — starting slowly, accelerating during the growth phase, and
eventually leveling off as it reaches its natural limits.
A technological discontinuity occurs when a new technology emerges that is
fundamentally different from the dominant existing one and introduces a new
performance frontier. At first, the new technology typically performs worse than the
established one on key metrics that current users care about. It may be unreliable,
expensive, or incompatible with existing systems. However, as research continues and
cumulative knowledge grows, the new technology’s performance begins to improve
rapidly — eventually surpassing the older technology and redefining the basis of
competition in the industry.
This transition creates a disruption in the market and is often accompanied by uncertainty,
resistance from incumbent firms, and opportunities for new entrants. The old technology’s
curve flattens out, indicating that further investment yields little improvement, while the
new curve rises steeply, signaling superior long-term potential.
Examples include the shift from analog film to digital imaging, from typewriters to word
processors, or from internal combustion engines to electric vehicles. Each of these
, transitions marks a discontinuity — a break in the smooth trajectory of technological
progress that reshapes industry structure and competitive advantage.
From a strategic perspective, the figure teaches managers that firms must monitor
emerging technologies closely and recognize the inflection point when the new technology
begins to outperform the old. Failing to adapt in time can leave incumbents trapped on a
declining curve, while early adopters of the new technology can seize leadership in the next
technological era.
S-Curve of Technology Diffusion
Chapter 3 | Page: p. 60
This figure illustrates how a new technology is adopted and diffused among consumers or
organizations over time. When plotted as a cumulative percentage of adopters (on the Y-
axis) versus time (on the X-axis), the adoption curve takes on an S-shape—starting slowly,
accelerating rapidly, and then leveling off as the market becomes saturated.
Innovation Funnel
Chapter 1 | Page: p. 5
This figure illustrates the innovation funnel, a visual representation of how ideas move
through the stages of the innovation process — from initial conception to final
commercialization. At the wide end of the funnel, thousands of raw ideas are generated
through brainstorming, research, or observation of customer needs. As these ideas progress
through successive stages such as research and development (R&D), technical feasibility
analysis, prototyping, testing, and market validation, many are discarded or fail to meet the
required criteria.
The funnel narrows because only a small percentage of ideas survive these screening stages.
Each stage eliminates concepts that are too costly, too risky, technologically infeasible, or
misaligned with the firm’s strategy. By the time an idea reaches the end of the funnel — the
commercialization stage — only a few viable projects remain, and even fewer will become
successful, profitable products in the market.
This figure highlights the high attrition rate of innovation projects: out of thousands of
ideas, perhaps only one will generate meaningful commercial success. It emphasizes the
need for firms to manage their innovation pipeline efficiently, apply rigorous evaluation
criteria, and balance creativity with disciplined project selection and resource allocation.
Technology S-Curve (Performance vs. Effort)
Chapter 3 | Page: p. 53
,The technology S-curve illustrates the typical relationship between the effort invested in
improving a technology (such as research and development time, money, or
experimentation) and the resulting performance gains achieved. When this relationship is
plotted on a graph, performance (on the Y-axis) increases slowly at first despite
considerable effort, then accelerates rapidly during a phase of technological maturity, and
finally slows down again as the technology approaches its natural or physical limits—
producing an S-shaped curve.
In the early stage, progress is slow because the underlying scientific principles are not yet
fully understood and experimentation dominates. Incremental improvements require
significant effort but yield small performance increases.
During the growth or acceleration stage, knowledge accumulates, design approaches
become standardized, and improvements occur rapidly with relatively less effort. This is
when most firms in the industry adopt the technology and invest heavily to refine it.
In the maturity stage, the technology begins to approach its theoretical or physical ceiling
—further improvements require disproportionately large amounts of R&D investment for
very small gains in performance. This flattening of the curve signals diminishing returns.
From a strategic point of view, this figure helps managers decide when to shift resources
toward emerging technologies. When performance gains from the existing technology
become marginal, firms may need to explore or adopt a new technological trajectory that
offers greater future potential. Recognizing where a technology lies on the S-curve is
therefore essential for timing innovation, avoiding stagnation, and sustaining long-term
competitiveness.
Technology S-Curves with Discontinuities
Chapter 3 | Page: p. 55
,This figure expands on the basic technology S-curve concept by comparing two or more
competing technologies over time. Each technology follows its own S-curve of
performance improvement — starting slowly, accelerating during the growth phase, and
eventually leveling off as it reaches its natural limits.
A technological discontinuity occurs when a new technology emerges that is
fundamentally different from the dominant existing one and introduces a new
performance frontier. At first, the new technology typically performs worse than the
established one on key metrics that current users care about. It may be unreliable,
expensive, or incompatible with existing systems. However, as research continues and
cumulative knowledge grows, the new technology’s performance begins to improve
rapidly — eventually surpassing the older technology and redefining the basis of
competition in the industry.
This transition creates a disruption in the market and is often accompanied by uncertainty,
resistance from incumbent firms, and opportunities for new entrants. The old technology’s
curve flattens out, indicating that further investment yields little improvement, while the
new curve rises steeply, signaling superior long-term potential.
Examples include the shift from analog film to digital imaging, from typewriters to word
processors, or from internal combustion engines to electric vehicles. Each of these
, transitions marks a discontinuity — a break in the smooth trajectory of technological
progress that reshapes industry structure and competitive advantage.
From a strategic perspective, the figure teaches managers that firms must monitor
emerging technologies closely and recognize the inflection point when the new technology
begins to outperform the old. Failing to adapt in time can leave incumbents trapped on a
declining curve, while early adopters of the new technology can seize leadership in the next
technological era.
S-Curve of Technology Diffusion
Chapter 3 | Page: p. 60
This figure illustrates how a new technology is adopted and diffused among consumers or
organizations over time. When plotted as a cumulative percentage of adopters (on the Y-
axis) versus time (on the X-axis), the adoption curve takes on an S-shape—starting slowly,
accelerating rapidly, and then leveling off as the market becomes saturated.
