Architectural Innovation: The

Reconfiguration
Existing Product Technologies and
the Failure of Established Firm(1990)

Rebecca M. Henderson
John and Natty McArthur
University Professor
Harvard University

Kim B. Clark
George Fisher Baker Prof
of Administration, Emerit
Harvard University

The Phenomenon

The Xerox 914copierwas

introduced at a trade
show in New York City, on
September 16, 1959.
Establishing Xerox as a
leader in copier

In the mid-1950s
engineers at RCA's R&D
developed a prototype of
a portable, transistorized
radio receiver. The new
product used technology

The Decline
Xerox
Competition from smaller copiers
Took Xerox eight years of mis-steps and false starts to
introduce a competitive product into the market.
Lost half of its market share and suffered serious
financial problems

RCA
Sony, a small, relatively new company, used the small
transistorized radio to gain entry into the U.S. market
RCA remained a follower in the market as Sony
introduced successive models
Sony's radios were produced with technology licensed
from RCA

What explains the disastrous

effects on industry incumbents
of seemingly minor
improvements in technological
products?

Innovation: Traditional
Categorization
Radical innovation establishes a new dominant
design and, hence, a new set of core design
concepts embodied in components that are
linked together in a new architecture
Incremental innovation refines and extends an
established design. Improvement occurs in
individual components, but the underlying core
design concepts, and the links between them,
remain the same

But are they sufficient to explain the

Architectural Innovation
Unit of Analysis: Manufactured product sold to an end user
and designed, engineered, and manufactured by a single
product-development
Architectural innovation: Innovations that change the way
in which the components of a product are linked together,
while leaving the core design concepts (and thus the basic
knowledge underlying the components) untouched
Architectural innovation destroys the usefulness of a firm's
architectural knowledge but preserves the usefulness of
its knowledge about the product's components
A component is defined as a physically distinct portion of
the product that embodies a core design concept and
performs a well-defined function.
This is the kind of innovation that confronted Xerox and

Product as a System vs.

Product as a set of Components
Successful product development
requires two types of knowledge
Component knowledge: knowledge about
each of the core design concepts and the
way in which they are implemented in a
particular component
Architectural knowledge: knowledge
about the ways in which the components
are integrated and linked together into a

Framework For Defining Innovation

Innovation Type and Firm

Knowledge

Incremental innovation reinforces the

competitive positions of established firms,
since it builds on their core competencies
Radical innovation creates unmistakable
challenges for established firms, since it
destroys the usefulness of their existing
capabilities

Architectural innovation: what the firm knows

is useful and needs to be applied in the new
product, but some of what it knows is not only
not useful but may actually handicap the firm

Management of Architectural and

Component Knowledge
Dominant design: Technical evolution
is usually characterized by periods of
great experimentation followed by
the acceptance of a dominant design
Organizations build knowledge and
capability around the recurrent tasks
that they perform which are shaped
by the organization's experience with
an evolving technology

Managing Architectural Knowledge

Channels, filters, and strategies

Organizational communication channels

embody its architectural knowledge of the
linkages between components
Organization develops filters allow it to
identify immediately what is most crucial
in its information stream
Organization's problem-solving strategies
summarize what it has learned about
fruitful ways to solve problems in its
immediate environment
Emerge to cope with

Problems Created by Architectural

Innovation
Information about architectural
innovation screened out by information
filters
rely on old beliefs about the world that a
rational evaluation of new information
should lead them to discard

Switch to a new mode of learning and

then invest time and resources in
learning about the new architecture

Because architectural knowledge is embedded in

channels, filters, and strategies, the discovery
process and the process of creating new
information (and rooting out the old) usually

Empirical Testing
Context: photolithography alignment equipment
industry
Empirical context different from the one where theory
was evolved

Data: Panel data set consisting of research and

development costs and sales revenue by product
for every product development project conducted
between 1962 and 1986
Supplemented by a detailed managerial and
technical history of each project
Amassed data cross validated by informed
managers

Photolithography Alignment
Technology

The Kasper Saga

1. Kasper introduced the first contact aligner to
be equipped with proximity capability in 1973
2. The widespread use of proximity aligners
occurred with the introduction and general
adoption of Canon's proximity aligner in the
late 1970s.
3. Kasper conceived of the proximity aligner as a
modified contact aligner.
The firm "knew
The Canon aligner was pronounced to be "merely a
copy" of the Kasper aligner

Future Research
How the formulation of architectural
and component knowledge are
affected by factors such as the firm's
history and culture
Examine the extent to which these
insights are applicable to problems of
process innovation and process
development.