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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.
... Porter's three generic strategies-cost leadership, differentiation, and focus-are widely recognized in this domain. These strategies provide a framework for companies to achieve a sustainable competitive advantage [21]. ...
This review explores the key disciplines within strategic management, including corporate strategy, business policy, strategic leadership, competitive strategy, international business strategy, strategic decision making, and innovation and entrepreneurship. Through an extensive analysis of existing literature, this paper provides significant insights into strategic planning and implementation, innovative approaches to competitive advantage, and empirical research that tests the effectiveness of strategic interventions.
... Disruption can appear on the supply side, when "new innovations are especially difficult for incumbents to adopt and offer competitively because they involve changes in the entire architecture of a product (that is, how components link together) rather than in the components themselves". Gans associate this type of disruption to the theory of architectural innovation (Henderson and Clark 1990). Here a reconfiguration in the structure of interdependence among the components of a product or technology presents added challenges to incumbent companies that can count less on the complementary assets they accumulated before the architectural innovation arrives. ...
This chapter is about radical innovation and disruptive technological change. Discovering the nature and mechanisms of disruptive technological change can help to understand the long-run dynamics of innovation and map profound transformation in socioeconomic systems. The chapter considers four concepts essential for the understanding radical and disruptive technological change: long waves, techno-economic paradigms, general purpose technologies (GPTs), and disruptive technologies. We conclude with some insights on the emerging technologies in the latest techno-economic paradigm. The tools and concepts given here remain the cornerstone of a useful theory of innovation and change even in our current complex socio-technical landscape.
Invention is a core component of innovation, but it is not the same as innovation, and the inventor does not have to be party to, or involved in any way in the subsequent innovation that exploits their invention. The two are separate processes with innovation dependent on invention but invention not being dependent upon innovation. Invention is dependent upon creativity, novelty and utility and so questions are asked about the role of creativity in invention and how this is influenced by circumstance and the different classes and origins of opportunity that drive subsequent innovation and whether innovation is wholly research dependent? The chapter also addresses how innovation is best categorised, given a multitude of approaches and parties engaged in its delivery; what institutional factors influence success, and why is priority given to product and process innovation when the economies of so many advanced nations are service-based?
Scholars studying engineering design have long identified three essential, interacting elements: the artifact being designed, the actors designing it, and the actions they take to do so. However, concerns about tractability and the effort required to capture data on all three have often led to studies examining only one or two at a time, potentially obscuring important (and explanatory) dynamics. Addressing this gap, Computer-Aided Design (CAD) platforms can observe all three elements simultaneously, unobtrusively, over the entire duration of the design process, and across many different contexts. Whether the research is inductive, abductive, or deductive, these platforms can improve a study’s internal, external, construct, and face validity if wielded wisely. As such, we advocate CAD as the central research instrument to study micro-level engineering design.
The hidden champion concept has received much interest in practice. As market leaders in niche markets, hidden champions represent the success of the (German) Mittelstand. Innovation is a key element of their strategy and their focus and niche market strategy are associated with specific technological capabilities. However, thus far, little quantitative empirical evidence exists about the innovation output of hidden champions. Drawing on a capability perspective and using patent data, the present study analyzes differences between hidden champions and comparable non‐hidden champion firms in their technological innovation. Our results show that hidden champions have a significantly larger technological innovation output but do not have a higher efficiency in their innovation creation compared to other firms from the same industry, size, and age. Moreover, the innovations produced by hidden champions show higher levels of technological depth and indicate lower levels of technological breadth. The sources of technological knowledge of hidden champions seem to be more inward oriented. Finally, innovations of hidden champions have similar technological impact, novelty and quality compared to those of other firms. Overall, our study supports many of the anecdotal beliefs about the innovation of hidden champions contributing to a better understanding of what makes hidden champions different from other Mittelstand firms. Practical implications for hidden champions and Mittelstand firms are discussed.
By the end of the 20th century, the development of information technologies and globalization led to significant changes in the economy, stimulating the emergence of innovative processes. The growing role of scientific knowledge and information as factors of economic development became central in the concepts describing the innovative activities of this period. The article analyzes various concepts of innovations of domestic and foreign authors, including S.Yu. Glazyev, N.I. Ivanova, L.M. Gokhberg, E. Rogers, M. Porter, R. Henderson, K. Clark, G. Chesbrough, C. Christensen, D. Brown, M. Rutt, D. Tiss, A. Schlesinger Jr., G. Itskovich, L. Leydesdorff, S. Konvez, F. Stewart, R. Ayres, K. Fukuda, and K. Watanabe. The article explores the concept of technological paradigms, national innovation systems, the theory of diffusion of innovations, the model of open innovations, the ecosystem and other approaches to innovative activities. The author systematizes and summarizes the ideas of various authors to identify key aspects and trends of innovative processes in the economy.
Purpose
This study explores the global phenomenon of BangTan Sonyeondan (BTS), a Korean singing group, from an under-researched art and entertainment market perspective. We introduce a research model to delineate the impacts of leadership motivation, socio-technological practices and global prominence outcomes.
Design/methodology/approach
The theoretical foundation clarifies the research context, justifying the relevance of key concepts, linking them to primary research questions and forming the basis for a well-structured empirical investigation. Our research model presents the flows of leadership influence, training practices, technology use and global prominence outcomes. Utilizing a survey instrument, we gathered data from BTS fans and analyzed the empirical findings.
Findings
BTS’s success is attributed to unique factors: (1) upstream flow of leadership influence; (2) process flow of internal service training and technological excellence, fostering stakeholder enthusiasm. The results indicate that service empowerment leadership is crucial in driving talent development and appropriate technology use, enhancing brand reputation. Fan loyalty and collective passion are key moderators in these dynamics.
Research limitations/implications
While focused on BTS, our findings have broader applicability in entertainment organizations, underscoring the relevance of socio-technological theory in understanding phenomena similar to BTS’s success.
Practical implications
Long-term brand performance in service organizations extends beyond financial metrics and necessitates empowering service leadership, training for key performers, technological infrastructure and managing personal interactions and group dynamics.
Originality/value
This study is unique in applying a leadership motivation perspective and socio-technological theory to BTS’s long-term success, utilizing BTS fans’ views to examine and assess their success factors and outcomes.
The chapter explores how small and medium-sized enterprises (SMEs) can enhance competitiveness and innovation in a constantly evolving business environment. SMEs face significant challenges to remain relevant amid rapid technological evolution, shifts in consumer preferences, and increasing global competition To adapt, innovate, and thrive, SMEs must develop dynamic capabilities, comprising a set of skills, processes, and knowledge that enable them to integrate, build, and reconfigure their internal resources in response to environmental changes. To improve competitiveness and innovation, SMEs should foster a culture of innovation that values experimentation and creative thinking, promote collaboration through strategic alliances and agile methodologies, and manage organizational well-being by addressing mental health and stress management. These strategies collectively enhance resilience and adaptability, essential for navigating BANI environments
Innovation is widely recognized as a critical driver of business success and competitive advantage. While disruptive innovations—those that radically transform industries or create entirely new markets—often capture the spotlight, incremental innovation plays a fundamental and often underappreciated role in driving sustained growth and efficiency. Incremental innovation refers to the process of making gradual, iterative improvements to existing products, services, processes, or business models (Christensen, 1997; Tidd & Bessant, 2018).
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.
