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Architectural Innovation is the changing of the way components of a product are connected together. Firms that ignore Architectural Innovation would gradually be deemed obsolete. Marketing strategies are equally important in helping a company remain competitive.
Architectural Innovation is the changing of the way components of a product are connected together. Firms that ignore Architectural Innovation would gradually be deemed obsolete. Marketing strategies are equally important in helping a company remain competitive.
Architectural Innovation is the changing of the way components of a product are connected together. Firms that ignore Architectural Innovation would gradually be deemed obsolete. Marketing strategies are equally important in helping a company remain competitive.
Architectural Innovation (Henderson and Clark, 1990) Individual report
Sim Keng Ying, School of Business, 30
th September 2014
In Architectural Innovation: The Reconfiguration of Existing Product Technologies and the Failure of Established Firms, Rebecca M. Henderson and Kim B. Clark talks about how architectural innovations is the changing of the way of how components of a product are connected together, while not altering the core design concept. This results in the architectural knowledge of the firm to be redundant, although the knowledge of the products components is useful. In this paper, Clark and Henderson argued that established firms will face subtle challenges which may result in significant competitive complications without architectural innovation. This is very pertinent in todays context. The rapid increase in technological innovations, where new products are entering into the market at an increasingly fast pace, forces firms to grasp any advantages or improvements that can let them stay in the competition. Firms that ignore architectural innovation would gradually be deemed obsolete, as they are unable to compete effectively with other emerging competitors. This is especially relevant in todays telecommunications industry. Fixed phone line was a popular major architectural innovation just two decades ago, replacing the inconvenient and old pager that people relied on for communication. However, it soon became outdated in less than a decade, with the rise of mobile phones, which is another architectural innovation derived from home fixed phone. It would not be long before mobile watches take over the phone industry too. Hence, companies who do not constantly engage in architectural innovation would gradually lose their market dominance, as technology is moving at a faster pace than ever in history. Although architectural innovation do play a role in keeping a firm on its competitive edge, it is not the only main factor. Marketing strategies are equally important in helping a company to remain competitive. In the mobile technology industry, there are many speculations going around about how Xiaomi, an emerging China mobile company, might gradually be on par with Samsung, which is currently the largest android-based phone company. Xiaomis smartphones are similar with Samsungs both operate on Android. There is barely any architectural difference between them. However, Xiaomis low pricing strategy is helping it gain a competitive edge. Although they are cheap, their phones quality are comparable with Samsungs. Their latest mi3 phone specifications are comparable to that of Samsung Galaxys s5. Furthermore, their marketing strategy of releasing only a limited number of phones on their website weekly keeps customers in suspense, making them eager to buy the hard-to-get phone. Hence, architectural innovation is not the only factor in keeping companies competitive. Good pricing and marketing strategies are equally important too. In another argument, Henderson and Clark argued that established firms will experience problems in building and applying new architectural knowledge effectively. This will hence hinder the growth of the company. I agree that organisations will have difficulty building new architectural knowledge in the context in which some of the old architectural knowledge may be relevant. Most established organisations are so used to their own ways designs and architecture, resulting in them having a tendency to centralize their innovation around the same form of architecture. A classic example would be Nokia. Nokia had always been implementing incremental innovations to its phone products from a conventional 12 buttons keypad to QWERTY keypad (Nokia Communicator 9000) to butterfly phone (Nokia 6800) and etc. Although Architectural Innovation (Henderson and Clark, 1990) Individual report
Sim Keng Ying, School of Business, 30 th September 2014
Nokia had been constantly innovating and improving their product, most of their innovations revolves around incremental innovation, which did not get them very far in the mobile phone industry. This thus proves Henderson and Clarks argument, which argued that established companies tend to be hindered in their progress due to their stabilised architectural knowledge, making them more resistant to major architectural change. However, this argument, where established firms growth may be hindered by their own implicit architectural knowledge, might not be true. There are many instances where companies, despite the implementation of architectural innovation on their products, did not meet the popularity cut. This might be due to negligence of the company on some aspect of their new product, or it might be due to the companys poor marketing strategy. Take Nokia for example again. In the past decade, Nokia did indeed undergo several architectural innovations on their product. However, they were not popular, and died out quickly. In 2004, Nokia introduced the lipstick phone (Nokia 7280). This phone had no number pad, and neither was it a touchscreen phone. Although it was an innovative product that is thin and portable, it did not receive much sales. Nokia subsequently went on to experiment and introduce touchscreen phones (Nokia 7710), touchscreen Internet Tablet (Nokia 770), as well as an all-in-one smartphone cum camcorder (Nokia N93). However, they were not well received at all. In this case, the companys growth was not hindered by its old architectural knowledge. Their newly introduced products simply did not suit consumers tastes and preferences. This thus shows that architectural innovation itself is not enough to bring about great competitive consequences. Conducting appropriate market research as well as implementation of the right marketing strategies according to consumers needs and wants, as well as great customer service and in-store experience, are crucial in determining the companys success too. Also, incremental innovation itself might not be necessary be a hindrance to a companys growth and competitiveness. It is useful for companies as long they innovate while having consumers best interests in mind. Although Nokia did not make a breakthrough through incremental innovation, Apple did. Apple was not the inventor of MP3, smartphone or tablet. The company merely reinvented these products - applying incremental innovation accordingly to suit consumers tastes and preferences. This is one of the reasons why their products are popular. Hence, incremental innovation is not to be underestimated. The rapid advancement of technology nowadays is mainly due to the continuous incremental innovation on existing products, to better suit consumers needs. Examples include the evolvement from non-touchscreen to touchscreen phones and laptops, as well as the evolvement of PCs software, where one is now able to download applications too through the latest Windows store on their laptops (Windows 8.1). In conclusion, I agree that architectural innovation do play a role in determining a companys competitive consequences. However, Henderson and Clarks paper is a little bias towards architectural innovation, as they fail to address the importance of other types of innovations, such as incremental innovation, as well. Architectural innovation should not be seen as a standalone. It can only bring success to a company along with appropriate market research and strategies. One is not able to gain a competitive edge if it only builds architectural knowledge without considering other external factors.