Title: Developing complex systems in dynamic environments
Description: Several recent studies highlight the potential failure of established firms when faced with innovations that are "architectural" in nature, that is, they involve major changes to the relationships between components in a complex system. Yet in dynamic environments, established firms are faced with the necessity of routinely developing such innovations, as shifts in technical possibilities open up new trajectories with greater potential performance. This paper describes the challenges that firms face when developing complex systems in such environments, and develops a conceptual framework to highlight the way in which these challenges can be overcome. It then explores this framework using data on a sample of completed projects in the computer workstation and server industry, an industry in which architectural innovation can be a major source of advantage. We provide examples of two such philosophies from our fieldwork.