Week 41, 2020
Architectural Innovation: Dominant Design, Established Process, and Double-Edged Swords
Each week I share three ideas for how to make work better. And this week, I return to the topic that keeps on giving: innovation frameworks.
Why am I writing about this? I wrote about innovation frameworks a few weeks ago (see w372020). Henderson and Clark's innovation model, first introduced in this paper on Architectural Innovation published in 1990, didn’t quite make it into that one. But not because it doesn’t offer anything of value. On the contrary; it provides a perspective worth exploring in more depth:
1. Dominant Design
“[I]n the early days of the automotive industry, cars were built with gasoline, electric, or steam engines, with steering wheels or tillers, and with wooden or metal bodies”. That was before the emergence of a so-called “dominant design” in which the industry settled into a design pattern (in this case, metal-bodied cars with gasoline engines and steering wheels) that fit with the socio-technological times.
2. Established Process
The automotive industry is just one example. Virtually all new technologies go through similar periods of turbulence before coalescing on “a range of basic design choices that are not revisited in every subsequent design.” Focus shifts from exploration to exploitation — from doing the-right-thing to doing-the-thing-right — as industry players double-down on the dominant design in search of efficiency and scale.
3. Double-Edged Swords
Organizations designed for exploration and exploitation exist on opposite ends of the spectrum. And herein lies the rub. Because while the focus on established process does lead to economies of scale, it simultaneously makes the players less able to respond to new technological developments that threaten to upset the dominant design. And when that happens, established process becomes a handicap, turning strength into weakness.
Products consist of component parts and a design that holds them together. And what the Henderson-Clark model attempts to do is categorize innovations based on the degree to which they affect the components (incremental vs. modular) and the design (architectural vs. radical).
In their paper, Henderson and Clark suggest that it’s Architectural Innovation that presents established firms with the biggest challenge. Because while radical innovation “tends to be obviously radical “, architectural innovation is more subtle; it’s easily misinterpreted as incremental change.
Apple’s iTunes ecosystem strikes me as a good example. The combination of hardware and software might look like a marketing gimmick at first blush. But it’s not. iTunes was (and still is) a platform play — the ramifications of which would only become apparent over time.
And to bring this back to the automotive industry:
Tesla can also be considered an Architectural Innovation. Because while electrical power trains are nothing new, there’s more to their vehicles than what first meets the eye. Writes Furr and Dyer in Forbes: “If you peeled the skin off a Tesla and compared it to a comparable combustion engine vehicle or electric vehicle like the Nissan Leaf, you would see that the car’s architecture is completely different because the systems and drive train are engineered from the ground up around the battery.”
In short: Unhindered by established process, Tesla went looking for a new dominant design. Incumbents failed to respond, mistaking Tesla for an incremental (or modular) innovation. And they’ve been on the back foot ever since.
That’s all for this week.