Sample frameDay 226·Innovation · Limits

Morning. Your strongest people are on your hardest problem. That's probably the problem.

Innovation.

The S-Curve

5 min read·Apply by lunch

The question

Take whatever your business has been steadily improving for years — the product, the process, the pitch — and put last year's gain next to the gain the same effort bought three years ago: is the curve still rising for you, or have you been buying slivers at full price with the only people capable of starting something else?

The idea

Richard Foster was a director at McKinsey when he published Innovation: The Attacker's Advantage in 1986 — a book built on one graph. Plot a technology's performance against the cumulative effort poured into it and you don't get a straight line. You get an S: a long slow start where nothing much works, a steep middle where every pound of effort buys a leap, and a flat top where the technology nears its limit and further effort buys almost nothing. Defenders read that flat top as maturity and keep spending on it, because it's the curve they know how to climb; attackers begin a second curve that looks unimpressive for years and then passes them. Foster's running example was tyre cord — DuPont kept refining nylon, close to its ceiling, while Celanese entered on polyester and took the lead. Don't file this next to the experience curve. Same geometry, opposite lesson: that one plots falling unit cost against cumulative output and is good news you bank, this one plots performance against cumulative effort and is a wall you're walking into — and a business can be winning on one while flattening on the other. The trap is that the flat top feels like mastery. Your people are more skilled than they've ever been, the process is clean, the improvements are real — they're just smaller each year, and nobody's measuring the size of the improvement against the size of the bill.

The framework

01
The two axes most people get wrong.
The S-curve is not a timeline. The horizontal axis is cumulative effort — the money, engineering hours and attention spent to date — and the vertical is performance on the dimension a customer would actually notice. Plotting against time hides the story, because effort rarely holds steady; a business usually pours more in each year while the returns shrink, and a time chart makes that look like calm progress. Rebuild the picture with spend along the bottom and the flattening shows up immediately. It's an afternoon's work with three years of budget lines and one honest measure.
02
Where on the curve are you, honestly?
Foster's diagnostic was the marginal return, and it leaves fingerprints you can read without drawing anything. Improvements arrive later and smaller. The specifications your team argues about internally are ones no customer can perceive. Your differentiation quietly migrates from the product itself to service, delivery and price. Recruitment gets easier, because the skills are now common. Any one of those can mean something else, but three together mean you're near the top of a curve, and the honest response is to stop congratulating people for climbing it faster.
03
The new curve always looks worse than the old one.
A curve at its base is worse than a curve at its top — the comparison is fair, and it's the wrong one. What matters is slope: how much better the new approach got in the last twelve months against how much better yours got. This isn't Christensen's disruptor, which turns up worse on your measure and better on one you don't track; Foster's attacker turns up on the measure you already compete on, just younger and steeper. Something improving thirty per cent a year from a low base overtakes something improving two per cent from a high base, and the crossing date is arithmetic you can do before lunch.
04
Move your best person before the flattening is obvious.
The scarce resource isn't budget, it's the handful of people who can genuinely start something. Businesses default to putting them where the revenue is, which is the top of the old curve, where their talent buys the smallest increments available anywhere in the company. Set a rule instead: when a line of work shows shrinking returns two years running, its strongest person moves and its budget gets capped rather than cut. Capping keeps the business running; moving the person is what starts the next curve. Do it while the numbers still look respectable, because that's the only time it's affordable.

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