Architectural Innovation: The Reconfiguration of
Existing Product Technologies and the Failure of
Established Firms
Rebecca M. Henderson and Kim B. Clark, 1990.
Administrative Science Quarterly, 35(1)
Special Issue: Technology, Organizations, and Innovation
Presented by Wenting (Christy) ZHU
Research Question
• Incremental innovation
 introduces relatively minor changes to the existing product
 exploits the potential of established design
 reinforces the dominance of established firms
• Radical innovation
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based on different set of engineering and scientific principles
opens up whole new markets and potential applications
creates great difficulties for established firms
leads to Successful entry of new firms or redefinition of an industry
• However, numerous technical innovations involve apparently modest
changes to the existing technology but have quite dramatic competitive
consequences, e.g. the case of Xerox and small copiers and the case of RCA
and the American radio receiver market.
• Why can minor innovations in technological products have disastrous effects
on industry incumbents?
Conceptual Framework
• Component and Architectural Knowledge
 unit of analysis: a manufactured product sold to an end user and
designed, engineered, and manufactured by a single productdevelopment organization
 Successful product development requires component knowledge and
architectural knowledge
 “architectural innovation” refers to innovation that change the way in
which the components of a product are linked together, while leaving
the core design concepts untouched.
 An electric motor is a design concept one could use to deliver power
 A component refers to a physically distinct portion of the product that
embodies a core design concept, e.g. a particular motor in the fan
 Architectural innovation destroys the usefulness of architectural knowledge
but preserves the usefulness of its component knowledge.
 The firm’s existing architectural knowledge may actually handicap the firm.
Conceptual Framework
• Types of Technological Change (continuous)
 Horizontal dimension captures an innovation’s impact on components
 Vertical dimension captures innovation’s impact on the linkages between
components
Refines and extends
established design
Changes only the core
design concepts
Improvements on blade
Design and power of motor
Replacement of analog with
digital telephones
Reconfiguration of an
established system
A new dominant design
From room air fan to
portable fan
From room air fan to
central air conditioning
Conceptual Framework
• The Evolution of Component and Architectural Knowledge
 Technical evolution is usually characterized by periods of great experimentation
followed by the acceptance of a dominant design (obtain economies of scale or
take advantage of externalities)
 Organizations build knowledge and capability around the recurrent tasks that they
perform.
 Dominant design >> stable architectural knowledge (implicit)>> more attention to
new component knowledge>> learn a lot about the dominant design
 The role of channels, information filters, and strategies in managing architectural
knowledge
 Channels implicit in its formal and informal organization (e.g. those working on the
motor and the fan blade report to the same supervisor and meet weekly) embody the
firm’s architectural knowledge.
 Information filters allow the firm to identify immediately what is most crucial in its
information stream
 Problem-solving strategies summarize what it has been learned about fruitful ways to
solve problems in its immediate environment
Conceptual Framework
• Problems created by architectural innovation
 Established organizations require significant time (and resources)
to identify a particular innovation as architectural.
 The need to build and to apply new architectural knowledge
effectively (difficulty in switching from one learning mode to
another and build new architectural knowledge in a context in
which some of its old architectural knowledge may be relevant)
 Easier for new entrants to build the organizational flexibility
(abandon old architectural knowledge and build new requires)
Innovation in photolithographic alignment
equipment
• Data
 two-year, field-based study of the photolithographic alignment
equipment industry (characterized by much smaller firms and a much
faster rate of technological innovation; several examples of the impact of
architectural innovation on the competitive position of established firms)
 Panel data set consisting of research and development costs and sales
revenue by product for every product development project conducted
between 1962 and 1986, supplanted by a detailed managerial and
technical history of each project.
 Secondary sources (trade journals, scientific journals, and consulting
reports) were used to identify the companies and products and to build
up preliminary picture of the industry’s technical history
 Data were collected about each product-development project by
interviewing at least one of the members (Senior design engineer for
each project and a senior marketing executive from each firm, from Mar
1987 to May 1988)
Innovation in photolithographic alignment
equipment
• Technology
Innovation in photolithographic alignment
equipment
• a reliance on architectural knowledge derived from experience
with the previous generation blinded the incumbent firms to
critical aspects of the new technology.
• The case of Kasper Instruments and its response to Canon’s introduction of
the proximity printer
Discussion and Conclusions
• assume that organizations are boundedly rational >> explore the
ways in which the formulation of architectural and component
knowledge are affected by factors such as firm’s history and culture
• Assume that architectural knowledge embedded in routines and
channels becomes inert and hard to change. >> explore the extent
to which this can be avoided
• An architectural innovation’s effect depends in a direct way on the
nature of organizational learning. >> what drives effective learning
about new architectures and how learning about components may
be related to it?
• Architectural innovation at the firm level
• The effect of technology on competitive strategy