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Tan Kam Wei, Eldwin (G11)

Paper Review Architectural Innovation


Incremental and radical innovation have always been the centerpiece and basis of a
companys innovation strategy. Henderson and Clark (1990) however, attempt to bring
another categorization of innovation to the foreground. Termed as architectural innovation,
they define it as innovations that change the way in which the components of a product are
linked together, while leaving the core design concepts untouched. This type of innovation
serves to make established architectural knowledge, knowledge of how individual
components interact with each other, obsolete.

In their paper, they established that organizations that are deeply entrenched in existing
architectural knowledge have high levels of inertia to change when there is architectural
innovation. Firms tend to resist such changes due to the high costs for an overhaul of existing
systems or their inability to recognize such innovation. Without recognising and acting upon
it, established firms may decline despite being the inventor of the core technologies in a
system, much like in the case of Xerox. New entrants, on the other hand, have a greater
advantage as they are not encumbered by existing but partially irrelevant architectural
knowledge. That being said, it is not easy to recognize such innovation since the core
technologies doesnt change and this could lead firms to mistakenly believe that they are able
to comprehend the new technology.

This new concept, or rather category, paved a new outlook on technological innovations.
Despite being a dated paper published way back in 1990, it still remains relevant till this day.
With the unparalleled speed with which companies innovate and churn out new technologies,
particularly in the Information Technology and electronics industry, this new way of
distinction produce valuable insights. Firms have a greater ability to recognize and hence act
Tan Kam Wei, Eldwin (G11)
upon architectural innovation, ensuring that their position in the market is not compromised.
Embracing instead of discarding such architectural innovation is crucial for a firms survival.
Furthermore, understanding architectural innovation provides a new direction for a
companys Research & Development department. Instead of just focusing on improvements
to components or searching for the next big breakthrough, firms can now study how
components interact as a means of innovating.

However, the paper is not without flaws. To validate their thesis, Henderson and Clark
conducted a study on photolithographic alignment equipment. Results of the study
corroborated with their argument, showing how existing companies are impeded by their
reliance on outdated architectural knowledge. These findings however, cannot be taken as
conclusive as the authors fail to weigh in other factors which could impact the outcome. For
example, the authors did not take into account the ease of imitating the photolithographic
alignment equipment. In general, the possibility of other companies exploiting existing
architectural knowledge increases with the ease of imitation. Furthermore, their study is also
based on empirical data from interviews with the companys employees and product-
development team, whose affiliations might diminish the value of their contribution to the
study.

To conclude, this paper establishes the reasons for existing companies failure to adopt new
architectural knowledge. The authors show how existing theories of innovation are
sometimes inadequate in demonstrating why seemingly minor advancements could have such
substantial repercussions in the industry. Instead of just incremental and radical innovation, a
firm should take into account all four types of innovation in its innovation strategy.