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Architectural Innovation: The Reconfiguration of Existing Product Technologies and the Failure of Established Firms
Abstract
This paper demonstrates that the traditional categorization of innovation as either incremental or radical is incomplete and potentially misleading and does not account for the sometimes disastrous effects on industry incumbents of seemingly minor improvements in technological products. We examine such innovations more closely and, distinguishing between the components of a product and the ways they are integrated into the system that is the product "architecture," define them as innovations that change the architecture of a product without changing its components. We show that architectural innovations destroy the usefulness of the architectural knowledge of established firms, and that since architectural knowledge tends to become embedded in the structure and information-processing procedures of established organizations, this destruction is difficult for firms to recognize and hard to correct. Architectural innovation therefore presents established organizations with subtle challenges that may have significant competitive implications. We illustrate the concept's explanatory force through an empirical study of the semiconductor photolithographic alignment equipment industry, which has experienced a number of architectural innovations.
... When the architecture is modular, such mirroring optimizes the coordination of innovation activities (Baldwin & Clark, 2000). However, the authors do not consider the consequences of this modular mirroring in terms of value capture (Baldwin & Henkel, 2015) and several works point out its drawbacks in the context of technological discontinuities (Chesbrough & Kusunoki, 2001;Chesbrough & Prencipe, 2008;Henderson & Clark, 1990). Given the current acceleration of digital convergence, the mirroring hypothesis must be reexamined considering the new challenges digitization entails in terms of value creation and capture. ...
... As long as they remain stable, they allow for parallel development of each module (Sanchez & Mahoney, 1996) and create areas within the information structure where the information flows are reduced and clearly identified (Baldwin, 2008). They lead the work groups to form in symmetry with the modular architecture: their boundaries mirror those of the modules and their interactions mirror the interdependencies between modules (Henderson & Clark, 1990). ...
... However, some of them point out that modular mirroring can have drawbacks for incumbents when technological discontinuities occur in the system, its modules, or its components (Murmann & Frenken, 2006). When discontinuities occur at the system level, mirroring may prevent the architect firm from adapting due to cognitive constraints resulting from modularity (Fixson & Park, 2008;Henderson & Clark, 1990). This 'mirroring trap' can irreversibly degrade the position of an incumbent leader (Chesbrough & Kusunoki, 2001;Henderson & Clark, 1990). ...
This research questions the mirroring hypothesis in the context of digital convergence. The mirroring hypothesis suggests that the organization of innovation activities tends to mirror the technical architecture of products. When the architecture is modular, such mirroring optimizes the management of innovation activities. But it can also limit the ability of incumbent firms to adapt to technological discontinuities. Digital convergence is a source of discontinuities that transform the conditions of value creation and capture within industries. It leads to new complementarities that push incumbents to collaborate with firms coming from other industries within emerging ecosystems. How does the mirroring between product architecture and organization evolve in the face of the new challenges of value creation and capture brought by digital convergence? This question is addressed through a qualitative case study of the organization of innovation activities between Renault and its partners in the field of embedded automotive electronics. The results show that the automaker ‘breaks the mirror’ through a strategy of selective mirroring that allows it to collaborate with new complementors and to reconfigure its mechanisms of value creation and capture.
... They also prefer 'make' strategy when targeted capabilities do not exist outside the firm or even if they do exist, they cannot be traded through markets or across firms (Capron & Mitchell, 2004), or when suppliers do not want to trade unique and valuable resources (Dierickx & Cool, 1989). So, to remain competitive, firms need to develop the ability to recombine its internal capabilities into new configurations of capabilities (Henderson & Clark, 1990;Galunic & Rodan, 1998). ...
Technological innovation is almost invariably analysed as an economic phenomenon associated with the commercial value and the impact of a specific technology on the market. Consequently, virtually all classifications of different types of technological innovation are mainly based on economic criteria, with the result that the intrinsic technological dimension of innovation is often overlooked or collapsed into economic considerations. We recently formulated a taxonomy of innovations based on the interplay between different forms of uncertainty affecting technological innovation and the nature of social preferences. In our taxonomy, there is no collapse of technological considerations into economic aspects of innovation. Based on this taxonomy, we discuss the nature and the type of innovation that autonomous vehicles represent. We point out that autonomous vehicles are of extreme interest for innovation studies, since they can be considered a radical technology even if it is disputable whether they will turn out to be disruptive (in the sense of being rapidly successful in the market) in a near future.
The value return of the enterprise is based on the satisfaction of the customer’s demand.
Le rôle de e-leader d'opinion dans la décision d'achat des produits innovants Cas du consommateur algérien Résumé : Le leader d'opinion électronique (e-LO) joue un rôle crucial dans le lancement des nouveaux produits. D'une part, ses opinions ont un poids important sur le comportement du consommateur avant et/ou après l'achat d'un produit ou d'un service innovant. Et d'autre part, ses recommandations, ses orientations et ses conseils sont pris en compte par son entourage lors de décision d'achat en comparaison avec la communication traditionnelle (media). Dans cette étude, nous tentons de tester l'influence du (e-LO) sur la décision d'achat et cela à travers l'attitude envers la marque, la nouveauté perçue du produit, le risque perçu et l'innovativité du consommateur qui influencent à leur tour l'intention d'achat. Après une revue de la littérature exhaustive, une enquête a été réalisée auprès de 850 consommateurs de produits innovants en Algérie. Les résultats de l'analyse de données à l'aide de l'analyse de Variance Multivariée (MANOVA) et des Equations Structurelles (PLS), confirment que le leader d'opinion (e-LO) influence positivement l'attitude envers la marque, la nouveauté perçue du produit, l'innovativité et négativement le risque perçu. Ils témoignent également du rôle modérateur de la variable compétence internet.
This paper presents the results of two studies designed to investigate the characteristics of the concepts of threat and opportunity used by organizational decision makers to describe and understand issues. The first study identified the issue characteristics that managers associate with the concepts of threat and opportunity, and the second used an experimental design to demonstrate that the characteristics of issues lead to their being perceived as threats or opportunities. The results suggest the presence of a threat bias, which results in managers being more sensitive to issue characteristics associated with threats than to those associated with opportunities. The implications of the results for understanding how threats and opportunities are identified are discussed, and future research directions are indicated.
A comparative model of organizations as interpretation systems is proposed. The model describes four interpretation modes: enacting, discovering, undirected viewing, and conditioned viewing. Each mode is determined by (1) management's beliefs about the environment and (2) organizational intrusiveness. Interpretation modes are hypothesized to be associated with organizational differences in environmental scanning, equivocality reduction, strategy, and decision making.
This paper focuses on patterns of technological change and on the impact of technological breakthroughs on environmental conditions. Using data from the minicomputer, cement, and airline industries from their births through 1980, we demonstrate that technology evolves through periods of incremental change punctuated by technological break-throughs that either enhance or destroy the competence of firms in an industry. These breakthroughs, or technological discontinuities, significantly increase both environmental uncertainty and munificence. The study shows that while competence-destroying discontinuities are initiated by new firms and are associated with increased environmental turbulence, competence-enhancing discontinuities are initiated by existing firms and are associated with decreased environmental turbulence. These effects decrease over successive discontinuities. Those firms that initiate major technological changes grow more rapidly than other firms.
This paper proposes and empirically tests whether different models are needed to predict the adoption of technical process innovations that contain a high degree of new knowledge (radical innovations) and a low degree of new knowledge (incremental innovations). Results from a sample of 40 footwear manufacturers suggest that extensive knowledge depth (measured by the number of technical specialists) is important for the adoption of both innovation types. Larger firms are likely to have both more technical specialists and to adopt radical innovations. The study did not find associations between the adoption of either innovation type and decentralized decision making, managerial attitudes toward change, and exposure to external information. By implication, managers trying to encourage technical process innovation adoption need not be as concerned about modifying centralization of decision making, managerial attitudes and exposure to external information as would managers trying to encourage other types of innovation adoption, e.g., innovations in social services where these factors have been found to be important. Instead, investment in human capital in the form of technical specialists appears to be a major facilitator of technical process innovation adoption.
Industrial classifications were used as a basis for operational definitions of both industrial and organizational task environments. A codification of six environmental dimensions was reduced to three: munificence (capacity), complexity (homogeneity-heterogeneity, concentration-dispersion), and dynamism (stability-instability, turbulence). Interitem and factor analytic techniques were used to explore the viability of these environmental dimensions. Implications of the research for building both descriptive and normative theory about organization-environment relationships are advanced.
The purpose of this study was to test a model of the organizational innovation process that suggests that the strategy-structure causal sequence is differentiated by radical versus incremental innovation. That is, unique strategy and structure will be required for radical innovation, especially process adoption, while more traditional strategy and structure arrangements tend to support new product introduction and incremental process adoption. This differentiated theory is strongly supported by data from the food processing industry. Specifically, radical process and packaging adoption are significantly promoted by an aggressive technology policy and the concentration of technical specialists. Incremental process adoption and new product introduction tends to be promoted in large, complex, decentralized organizations that have market dominated growth strategies.
Findings also suggest that more traditional structural arrangements might be used for radical change initiation if the general tendencies that occur in these dimensions as a result of increasing size can be delayed, briefly modified, or if the organization can be partitioned structurally for radical vs. incremental innovation. In particular, centralization of decision making appears to be necessary for radical process adoption along with the movement away from complexity toward more organizational generalists. This suggests that a greater support of top managers in the innovation process is necessary to initiate and sustain radical departures from the past for that organization.
This paper develops a conceptual framework for analyzing the sequence of technological changes that underlie the development of industries. The framework examines the interaction between design decisions and the coices of customers. Using examples from autos and semiconductors the paper argues that the logic of problem solving in design and the formation of concepts that underlie choice in the marketplace impose a hierarchical structure on the evolution of technology. The nature of the evolutionary process has implications for the dynamics of competition and the management of innovation.
