Architectural Innovation as a Core Competency Destroyer
What is presented below is a pioneering framework, first articulated by Henderson and Clark in a research paper on "Architectural Innovation." The framework posits that where as firms love to introduce innovations along the blue arrow (from incremental to granular), for their core competencies are built along well set "product architectures," they frequently ignore the architectural dimension
of replacing older architectures with newer ones, as represented by the red arrow below:
The above framework suggests that incremental innovations and even a progressive innovation from incremental to granular along the blue arrow reinforces the core competencies, where as jumping across the comfort zone and going for "architectural innovation" along the red arrow above can destroy a firm's core competencies! Why? For "engineers" and "designers" do recognize when a new design at the component level hits the market. Whenever that happens, they consider that to be a "radical innovation," because they try to come up with better, cheaper, newer, faster, sleeker, smaller components themselves. Frequently, R&D departments within established firms focus on this, i.e., the blue arrow. Since a radical innovation incorporates that, i.e., newer components, a firm does not fail to notice this when it happens, or as it keeps happening; i.e., as better / cheaper / faster / sleeker / smaller / newer components incorporated within a similar product hit the market. However, if a firm is focused only on new components, new designs, overturning core design concepts, it can miss if an "architectural innovation" hits the market. Moreover, as per our framework above, a truly radical innovation is one which has not only newly designed components, but which also incorporates a new product architecture.
In other words, an architectural innovation is more subtle; no new component designs have been introduced; or the core design concepts underlying the components which go into making a product have not been overturned! This can be dangerous to an incumbent, if introduced by a new competitor, because it is a new product innovation. It is "outside the box" of thinking for an established firm, which is set in its ways in terms of building core competencies along the old, stable, established, product architecture. Hence, an architectural innovation being cooked outside your firm can be dangerous to your existing business, if business leaders in your firm are not aware that innovation can happen along this dimension, i.e., along the red arrow in the above framework. To learn more, please listen to the accompanying podcast. This framework is built on top of two older tech strategy frameworks: Dominant Designs, and S-Curves. Listen to the podcast to learn more...
Disruptive Innovations and Technology Invasions
The tech strategy model below depicts a disruptive technology which begins its trajectory of technology invasion at point D. We have placed two baseline frameworks, with which you all must be familiar, if you have used this Open Strategy Portal before: S-Curves and the Ansoff Matrix. In particular, we have placed points A, C, and D from the model with the corresponding points on the familiar S-Curves framework:
When the invasive technology has a gap in terms of performance output from the technology and what is demanded by the existing market (at time T1), the businesses selling the existing technology see no threat from the invasion. But what if the invasive technology is able to become a successful business by courting lead users and creating a new niche market, and make it to point B, where it is able to meet the existing market demand (at time T2)? Typically, it starts taking market share from the older stagnating / mature technology because of its better price / performance metrics... To learn more about this technology strategy model and its applications to current technologies / products (iPad, Google Buzz), listen to the associated podcast...
Dominant Designs and Technology Cycles
If you have listened to our podcast on S-Curves, you are already familiar with terms like Technology ferment, take-off, and mature / stagnate. However,
before a technology is productized / servitized and takes off in the market-place, there is fierce competition, and eventually a dominant design emerges, as depicted
in the following technology cycle.
So, what is a "dominant design?" What might intrigue you, and what the holy grail of product marketing truly is, is this concept called "Dominant Design." Why can your business model be shaky, if you package a product / service around a technology which does not have "dominant design" writtern all over it? Are there exceptions to this rule? Listen to this POCAST to find out more. Relax and enjoy; it is only 32 minutes long!
PODCAST ON TALC (Technology Adoption Life Cycle)
In this podcast, Sam Mishra, the author of Strategic Case Analysis, explains the TALC – Technology Adoption Life Cycle framework from his book. The author begins by explaining the differences between the five user groups of a technology based product, also known as the (1) Innovators, (2) Early Adopters, (3) Early Majority, (4) Late Majority, and (5) Laggards. The author then proceed to explain associated concepts like the following:
- The Chasm: Apparently, a chasm exists between the various user groups, but the chasm that needs to be really crossed for the technology based product to win in the market place is the one that exists between the early adopters and the early majority. There are a lot of reasons why a tech product can’t go past this chasm. For example, if a product is tied to the economy, and the economy sours (as is happening right now at the time of broadcasting this podcast, i.e., mid-2009), then the product can very well fall into the chasm. Another example is the scenario where a bigger competitor with more resources comes and kills your product before you have been able to sell it to any Early Majority users.
- What strategies one should use while selling a technology based product to the early majority (clearly, the early majority will pursue the product / technology if it can given them a competitive advantage) vis-à-vis the late majority (this group can be sold the idea that since everyone else is using it, they should use it too; otherwise they will have a competitive disadvantage).
- Explains how the different stages of the <b>PLC</b> (product life cycle) and the <b>S-Curves</b> frameworks map into the five user groups or the five segments of TALC. For example, mathematically speaking, the S-Curve is the INTEGRAL of the TALC bell-curve, or if you plotted the area under the normal bell distribution, you would get the S-Curve!