Clark Harvard University This paper demonstrates that the traditional categorization ot itoovation as either incremental or radical is incomplete and potentially misleading and does not account or the sometimes disastrous effects on industry incumbents of seemingly minor improvements in technological products. We examine such innovations more closely and, distinguishing betwbetween74;Ђ? the components of a product and the ways they are integrated into the system that is the product “architecture,” define them as innovations that change the architecture of a product without changing its components.
We show that architectural innovations destroy the usefulness of the architectural knowledge of established firms, and that since architectural knowledge tends to become mbedembeddedthe structure and information-processing procedures of established organizations, this destruction is difficult for firms to recognize and hard to correct. Architectural innovation therefore presents established organizations with subtle challenges that may have significant competitive implications.
We illustrate the concept’s explanatory force through an empirical study of the semiconductor photphotomicrographgnment equipment industry, which has experienced a number of architectural innovations. e ThE distinction between refining and improving an existing esigsign introducing a new concept that departs in a significant way from past practice is one of the central notions in the existing literature on technical innovation (Mansfield, 1968; MochMooch Morse. 1977; Freeman, 1982).
Incremental innovation introduces relatively minor changes to the existing product, exploits the potential of the established design. and Anden reinforces the dominance of established firms (Nelson and Winter. 1982; EttlTitleidges. and AndeCoffee84; Dewar and Dutton. 1986; TushDustman Anderson. 1986). Although it draws from no dramatically new science. it oIten calls for considerable skill and ingenuity and. ver Evere, has very significant economic consequences (Hollander. 1965). Radical innovation, in contrast. s based on a different set of engineering and scientific principles and often opens up whole new markets and potential applications (DessDoes Beard, 1984; EttlTitleidges. and AndeCoffee84; Dewar and Dutton. 1986). Radical innovation often creates great difficulties for established firms (Cooper and scheascended76; Daft, 1982; RothRetellвЂ?6; TushDustman Anderson. 1986) and can be the basis for the successful entry of new firms or even the redefinition of an industry. This research was supported by the Division ot Rtoearch Harvard Business School.
Their support is gratefully acknowledged. We would like to thank DataDatasets VLSIVEILSearch Inc for generous permission to use their published data. the Theffs at Canon. GCA.CAkoNixonrkPerkinger and UltrAltercated And those individuals involved with photphotomicrographgnment technology who gave so generously of their time. We would also like to thank the editors of this Journal and three anonymous reviewers who gave us many helpful comments. Any errors or omissions remain entirely our responsibility.
Radical and incremental innovations have such different competitive consequences ecaucausey require quite different organizational capabilities. Organizational capabilities are difficult to create and costly to adjust (Nelson and Winter, 1982; HannHannah Freeman, 1984). Incremental innovation reinforces the capabilities of established organizations, while radical innovation forces them to ask a new set of questions. to dTow on new technical and commercial skills. and Andemploy new problem-solving approaches (Burns and Stalker, 1966; HageWage0; EttlTitleidges. and AndeCoffee84; TushDustman Anderson. 1986). 1990 by Cornell University. 0001-8392190/3501-0009/$1. 00. /Administrative Science Quarterly, 35 (1990): 9-30 The distinction between radical and incremental innovation has produced important insights, but it is fundamentally incomplete. There is growing evidence that there are numerous technical innovations that involve apparently modest changes to the existing technology but that have quite dramatic competitive consequences (Clark, 1987).
The case of Xerox and small copiers and the case of RCA and the American radio receiver market are two examples. Xerox, the pioneer of plain-paper copiers, was confronted in the mid-1970assesh competitors offering copiers that were uch suchller and more reliable than the traditional product. The new products required little new scientific or engineering knowledge, but despite the fact that Xerox had invented the core technologies and had enormous experience in the industry, it took the company almost eight years of missteps and false starts to introduce a competitive product into the market.
In that time Xerox lost half of its market share and suffered serious financial problems (Clark, 1987). In the mid-1950assesineers at RCA’Arc’sporate research and development center developed a prototype of a portable, transistorized radio receiver. The new product used technology in which RCA was accomplished (transistors, radio circuits, speakers, tuning devices). but But saw little reason to pursue such an apparently interior technology.
In contrast, Sony, a small, relatively new company, used the small transistorized radio to gain entry into the U. S. markMarketen after SonySonny’scess was apparent, RCA remained a follower in the market as Sony introduced successive models with improved sound quality and FM capability. The irony of the situation was not lost on the R&D engineers: for many years SonySonny’sios were produced with technology licensed from RCA, yet RCA had great difficulty matching SonySonny’sduct in the marketplace (Clark, 1987).
Existing models that rely on the simple distinction between radical and incremental innovation provide little insight into the reasons why such apparently minor or straightforward innovations should have such consequences. In this paper, we develop and apply a model that grew out of research in the automotive, machine tool, and ceramics industries that helps to explain how minor innovations can have great competitive consequences. CONCEPTUAL FRAMEWORK Component and Architectural Knowledge In earlier drafts of this paper we referred o this type of innovation as “generational. We are indebted to Professor Michael TushDustman his suggestion of the term architectural. In this paper, we focus on the problem of product development, taking as the unit of analysis a manufactured product sold to an end user and designed, engineered, and manufactured by a single product-development organization. We define 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, as “architectural” innovation. This is the kind of innovation that onfrunfrostedox and RCA. It destroys the usefulness of a firm’s architectural knowledge but preserves the usefulness of its knowledge about the product’s components. 10/Asa,Asrch 1990 Architectural Innovation This distinction between the product as a whole- the system-and the product in its parts-the compcomponentsong history in the design literature (MarpMarbles61; Alexander, 1964). For example, a room fan’s major components include the blade, the motor that drives it, the blade guard, the control system, and the mechanical housing.
The overall architecture of the product lays out how the components will work together. Taken together, a tan’s architecture and its components create a system tor torting air in a room. A component is defined here as a physically distinct portion of the product that embodies a core design concept (Clark, 1985) and performs a well-defined function. In the fan, a particular motor is a component of the design that delivers power to turn the fan. There are several design concepts one could use to deliver power.
The choice of one of them-the decision to use an electric motor, for example, establishes a core concept of the design. The actual component-the electric motor-is then a physical implementation of this design concept. The distinction between the product as a system and the product as a set of components underscores the idea that successful product development requires two types of knowledge. First, it requires component knowledge, or knowledge about each of the core design concepts and the way in which they are implemented in a particular component.
Second, it requires architectural knowledge or knowledge about the ways in which the components are integrated and linked together into a coherent whole. The distinction between architectural and component knowledge, or between the components themselves nd tND links between them, is a source of insight into the ways in which innovations differ from each other. Types of Technological Change The notion that there are different kinds of innovation, with different competitive effects, has been an important theme in the literature on technological innovation since SchuSchumacher42).
Following SchuSummerset’shasis on creative destruction, the literature has characterized different kinds of innovations in terms of their impact on the established capabilities of the firm. This idea is used in Figure 1, which classifies innovations along two dimensions. The horizontal imenemissiontures an innovation’s impact on components, while the vertical captures its impact on the linkages between components. 2 вЂўThere are, of course, other ways to characterize different kinds of innovation.
But given the focus here on innovation and the development of new products, the framework outlined in Figure 1 is useful because it focuses on the impact of an innovation on the usefulness of the existing architectural and component knowledge of the firm. 2 We are indebted to one of the anonymous ASQ ASSiewers for the suggestion that we use this matrix. Framed in this way, radical and incremental innovation are xtreextrements along both dimensions.