Architectural innovation and dynamic competition
Subtitle: the smaller "footprint" strategy
By: Carliss Y. Baldwin, Kim B. Clark
Contributors: Clark, Kim B.; Harvard Business School. Division of Research
Edition: Version 1.0.
Series: Working paper / Division of Research, Harvard Business School -- 07-014; Working paper (Harvard Business School. Division of Research) -- 07-014
Publisher: Division of Research, Harvard Business School
Published: 2006
Place of publication: Boston]
Language: eng
Number of pages: 53
Description: We describe a dynamic strategy that can be employed by firms capable of architectural innovation. The strategy involves using knowledge of the bottlenecks in an architecture together with the modular operator "splitting" to shrink the "footprint" of the firm's inhouse activities. Modules not in the footprint are outsourced--module boundaries are redrawn and interfaces designed for this purpose. The result is an invested capital advantage, which can be used to drive the returns of competitors below their cost of capital. We explain how this strategy works and model its impact on competition through successive stages of industry evolution. We then show how this strategy was used by Sun Microsystems against Apollo Computer in the 1980s and by Dell against Compaq and other personal computer makers in the 1990s
Notes: "August 2006."

Includes bibliographical references.