Henderson Clark (1990) - Architectural Innovation

• This page is referenced in BPP Field Exam Papers

Reference

• Henderson R.M. & K.B. Clark (1990), "Architectural Innovation: The Reconfiguration of Existing Product Technologies and the Failure of Established Firms", Administrative Science Quarterly. pdf

Abstract

None available at this time.

Innovation Types

Incremental Innovation

Incremental innovation introduces relatively minor changes to an existing product:

• It exploits the potential of the established design
• It often reinforces the dominance of established firms
• It draw from no dramatically new science
• It often does require skill and ingenuity
• It can have very significant economic consequences
• It refines and extends an existing design
• It is component based

Radical Innovation

Radical innovation, by constrast, is based on a different set of scientific or engineering pricipals (to the established paradigm) and it opens up new markets and potential applications:

• It often creates great difficulties for established firms
• It can be the basis for successful new entry
• It establishes a new dominant design
• New components are linked together in a new architecture

Modular Innovation

This type of innovation is barely convered in the paper.

• It replaces a core component, but leaves the architecture untouched.

Architectural Innovation

Achitectural innovation leaves the existing components, and the core design concepts, essentially untouched, but changes the ways in which the components are linked.

• It destroys the firm's architectural knowledge
• It leaves product component knowledge untouched - the core design behind components remains unchanged
• It may be triggered by a change in a component that progates through the system
• Interaction between components is key
• It presents established firms with subtle challenges:
  • To recognise that archectural innovation has taken place (this is difficult because of the changes to the organization of the firm that are required)
  • It is hard to build and apply new architectural knowledge effectively (a firm is handicapped by its existing architectural knowledge, and its organization capabilities) - the firm needs to search for a new stable architecture.
• An entrant may be able to search for a better solution to the effects of an architectural innvoation that an incumbent.

Table of Innovation Types

                       Core Concepts
               Reinforced       Overturned
           -------------------------------------
           |                 |                 |
 Unchanged |   Incremental   |     Modular     |
           |                 |                 |
           -------------------------------------
           |                 |                 |
 Changed   |  Architectural  |     Radical     |
           |                 |                 |
           -------------------------------------

Note that although this is depicted as a distinct categorization, in actuality each axis is continuous.

Other Important Definitions

A component is a physically distinct portion of a product that embodies a a core design concept and performs a well defined function.

A channel is a formal or informal communication channel within a firm

A filter allows a firm to ignore information that is not relevant (or not compatible with its capabilities), and to immediately identify what is crucial in its information stream.

A problem solving strategy is employed by engineers and designers inside of the firm. These strategies become limited (or specialized) over time to match the channels and filters of the organization and are a part of the firm's organizational capabilities.

Dominant Design

Technological evolution is characterized by periods of experimentation, followed by the emergence of a dominant design. A dominant design:

• Is characterized by a set of core design concepts that correspond to major functions performed by the product
• As well as the ways in which these components are intergrated
• Often emerges because of economies of scale or externalities.
• Consists of a set of basic choices that are not revisted in every subsequent redesign
• Once achieved, allows firms to concentrate on refining and elaborating components within a framework of a stable architecture.

Organizational Capabilities

Organizational capabilities are loosely the skills and problem solving abilities of a firm, including it's communication channels, filters and strategies.

• Are costly the adjust and difficult to create
• Firm's build their knowledge and communication patterns around the tasks that they perform
• May well have been developed in the context of dominant design.

Case Studies

The paper applies the above concepts to a two year field-based study of the photolithographic alignment (semiconductor device manufacture) industry. The results can be summarized as follows:

"In nearly every case, the established firm invested heavily in the next generation of equipment, only to meet with very little success... reliance on architectural knowledge derived from experience with the previous generation blinded the incumbent firms to critical aspects of the new technology."