Utterback's Innovation Curve

Utterback proposes a three-phase model of product innovation and evolution. The figure illustrates these phases and the activities that occur in each. This is a modified version of the figure given by Utterback (1996).

Innovation in business begins with an explosion of new product ideas. This forms the fluid phase in which there are many alternatives designs for a product and a number of different implementations. Companies compete with each other based on their own unique formulation of the technology and are willing to experiment with new ideas rapidly in order to discover a dominant product.

This is followed by a transitional phase in which one dominant design begins to emerge. Standardization begins to crystallize around that one standard, as when the movie industry began to release more material in VHS format than in Betamax. The preferred design will incorporate the needs of a number of different classes of customers and create a basis from which future incremental changes will be applied. Once this occurs, there is a noted drop in product innovation as firms rush to improve on the accepted or standardized products. At this point, the competition for product designs is over and the competition for the best processes for innovation and production begin. Companies that are able to manufacture or deliver products at low cost, on short schedules, with acceptable quality will win in this phase.

The transitional phase is followed by the specific phase in which many competitors drop out and a few remain. Those that remain share the market and each tries to focus on a unique adaptation of the dominant design.

This model predicts that radical product innovation can only occur at the beginning of the product lifecycle. It is only at that point that there is sufficient latitude in research, market demand, and emerging new features that a number of different designs can exist. Following the transitional phase, a standard emerges and defines the boundaries around the product. Those that do not fit within this boundary are no longer acceptable. Therefore, this becomes a period of incremental product innovation.

Reference:

Utterback, J. (1996). Mastering the Dynamics of Innovation. Harvard Business Press.