Architectural Innovation
What is presented below is a pioneering framework, first articulated by Henderson and Clark in a research paper on "Architectural Innovation." The framework posits that where as firms love to introduce innovations along the blue arrow (from incremental to granular), for their core competencies are built along well set "product architectures," they frequently ignore the architectural dimension of replacing older architectures with newer ones, as represented by the red arrow below:
The above framework suggests that incremental innovations and even a progressive innovation from incremental to granular along the blue arrow reinforces the core competencies, where as jumping across the comfort zone and going for "architectural innovation" along the red arrow above can destroy a firm's core competencies! Why? For "engineers" and "designers" do recognize when a new design at the component level hits the market. Whenever that happens, they consider that to be a "radical innovation," because they try to come up with better, cheaper, newer, faster, sleeker, smaller components themselves. Frequently, R&D departments within established firms focus on this, i.e., the blue arrow. Since a radical innovation incorporates that, i.e., newer components, a firm does not fail to notice this when it happens, or as it keeps happening; i.e., as better / cheaper / faster / sleeker / smaller / newer components incorporated within a similar product hit the market. However, if a firm is focused only on new components, new designs, overturning core design concepts, it can miss if an "architectural innovation" hits the market. Moreover, as per our framework above, a truly radical innovation is one which has not only newly designed components, but which also incorporates a new product architecture.
In other words, an architectural innovation is more subtle; no new component designs have been introduced; or the core design concepts underlying the components which go into making a product have not been overturned! This can be dangerous to an incumbent, if introduced by a new competitor, because it is a new product innovation. It is "outside the box" of thinking for an established firm, which is set in its ways in terms of building core competencies along the old, stable, established, product architecture. Hence, an architectural innovation being cooked outside your firm can be dangerous to your existing business, if business leaders in your firm are not aware that innovation can happen along this dimension, i.e., along the red arrow in the above framework. To learn more, please listen to the accompanying podcast. This framework is built on top of two older tech strategy frameworks: Dominant Designs, and S-Curves; these and other frameworks and applications thereof, as presented through our writings and podcasts, use as their foundation Sam Mishra's first book, titled Strategic Case Analysis.
Franteractive Insight: Building new core competencies, while your existing cores are working well, may not be easy. If your engineers are focused only on progressing along the blue arrow as depicted above, if your business unit leaders are working in tandem and solidifying their processes along old product architectures; you might be getting unwittingly disrupted, your core competencies might be getting destroyed, you "Sun might be setting." Awake, arise, see the danger of architectural innovations by hungrier new-bee start-ups who can kill your beautiful business; just as clustered Linux servers killed big Sun-Fire servers from Sun Microsystems. To understand this and more, you do have to listen to the podcast in its entirety. Architectural innovations can kill an entire company, as the recent demise of Sun Microsystems shows. What is troubling is that there is always an element of human angst when this happens; while Scott McNealy of Sun and his sidekick Jonathan Swartz walked away with 10 million dollars or more each in severance package, more and more of their ex-employees who are now on Oracle's payroll would keep getting the axe for the next many years.
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