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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 However, it soon became outdated in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.

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