Innovation: Mapping the winds of creative

destruction *
William J. ABERNATHY
Graduate School of Business Administration, Harvard University, Cambridge, MA 02138, USA

Kim B. CLARK
Harvard University
and
National Bureau of Economic Research, Cambridge, MA 02138, USA

Final version received April 1984

This paper develops a framework for analyzing the competi- been c u s t o m a r y to treat technological i n n o v a t i o n
tive implications of innovation. The framework is based on the as something that h a p p e n e d to the economic sys-
concept of transilience - the capacity of an innovation to
tem b u t was not d e t e r m i n e d within it [1]. S o m e
influence the established systems of production and marketing.
Application of the concept results in a categorization of innova- recent work has e x a m i n e d the d e t e r m i n a n t s of
tion into four types. Examples from the technical history of the innovation, with e m p h a s i s on the role of m a r k e t
US auto industry are used to illustrate the concepts and their d e m a n d a n d the influence of m a r k e t structure. T h e
applicability. The analysis shows that the categories of innova- focus has not been on the process of i n n o v a t i o n
tion are closely linked to different patterns of evolution and to
itself, b u t rather on those aspects of the firm's (or
different managerial environments. Special emphasis is placed
on the role of incremental technical change in shaping competi- industry's) e n v i r o n m e n t that spur or retard techni-
tion and on the possibilities for a technology based reversal in cal a d v a n c e [2].
the process of industrial maturity. In contrast to the bnlk of economic analysis,
the work of technologists a n d behavioral scientists
has focused on what goes on inside the black box
I. Introduction o f technology. In this line of work, i n n o v a t i o n is
viewed as a sequence of activities involving the
Technological i n n o v a t i o n has been a p o w e r f u l acquisition, transfer a n d utilization of i n f o r m a t i o n
force for industrial development, p r o d u c t i v i t y [3]. A l t h o u g h the i m p o r t a n c e of activities o u t s i d e
g r o w t h a n d indeed, our rising s t a n d a r d of living the firm (or project) is often recognized, the orien-
t h r o u g h o u t history, b u t intense study of its in- tation of these studies is internal. Of p r i n c i p a l
dustrial role and influence is a relatively recent concern are p e r s o n a l i t y traits of individuals, the
p h e n o m e n o n . In t r a d i t i o n a l economics, it has l o n g origin of innovative ideas a n d the way that a d m i n -
istrative practices a n d o r g a n i z a t i o n structure in-
* Support for research underlying this paper was provided by fluence their d e v e l o p m e n t . In this work, however,
the Division of Research, Harvard University Graduate the internal traits of the firm have not been well
School of Business Administration, whose contribution is linked to the c o m p e t i t i v e requirements of firms or
gratefully acknowledged. Appreciation is also expressed to industries.
those colleagues who provided encouragement and ideas,
M o r e recently studies by Porter, R o s e n b l o o m ,
especially George White, Alan Kantrow, Richard
Rosenbloom, and Robert Hayes. Special appreciation is ex- Rosenberg, N e l s o n and Winter, and others, have
pressed to John Corcoran for extraordinary research assis- begun to illuminate some of the i m p o r t a n t aspects
tance. of the relationship between i n n o v a t i o n and c o m p e -
tition [4]. While earlier w o r k t e n d e d to deal with
Research Policy 14 (1985) 3-22 the effect of structural characteristics (i.e. levels of
North-Holland hierarchy, firm size, c o n c e n t r a t i o n ) and a d m i n -

0048-7333/85/$3.30 © 1985, Elsevier Science Publishers B.V. (North-Holland)

4 W.J. Abernathy and K.B. Clark / Innovation

istrative practices on innovation, these new studies representation of the whole economy, but rather
have begun to ask questions about innovation's see it as a source of useful examples. Further, the
role in shaping the competitive environment. use of an historical perspective in explaining the
Regrettably however, the conclusions Rosen- framework is deliberate. We are interested in the
bloom drew in his comprehensive review of the pattern of technological development and compe-
literature on innovation are largely as applicable titive rivalry over time. In our emphasis on the
today as they were ten years ago [6]. Notwiths- pattern of development over time and our concep-
tanding some interesting findings, he concluded tion of competition as a contest among rivals
that results from this field offered little guidance (actual and potential) with different capabilities,
to either the public policy maker or the business the model we develop is evolutionary in spirit.
manager who must contend with practical aspects The paper is divided into three parts. In section
of technology investment and use. 2 we develop criteria for categorizing innovation in
As a remedy for this plight, Rosenbloom called terms of its competitive significance. The criteria
for the development of a conceptual framework are based on the notion that competitive ad-
that would integrate knowledge concerning tech- vantage depends on the acquisition or develop-
nology to other policy arenas of the firm (i.e. ment of particular skills, relationships and re-
marketing, finance, operations, etc.). Without a sources. How innovation affects those require-
schema that managers might apply to develop and ments can be used to gauge its significance. Build-
c o m m u n i c a t e perspectives on t e c h n o l o g y ing on these concepts, section 2 further identifies
throughout their organizations, it is not surprising four different "modes" of innovation, and uses
that technology and its management have received examples from the auto industry to illustrate them.
little systematic attention in the formulation and In section 3 we relate the different kinds of in-
implementation of policy. novation to the pattern of industry evolution. Spe-
The challenge of formulating such a framework cial emphasis is placed on the role of incremental
for technology policy marks the point of departure technical change in shaping competition, and on
of the present work. Our purpose in this paper is the possibilities for a technology based reversal in
to develop a descriptive framework that may be the process of industrial maturity. The paper con-
useful in categorizing innovations and analyzing cludes (section 4) with observations on implica-
the varied role they play in competition. The tions for practice and further research.
framework recognizes that innovation is not a
unified phenomenon: some innovations disrupt,
destroy and make obsolete established com- 2. Identifying the role of innovation in competition:
petence; others refine and improve. Further, the The transilience map
effects of innovation on production systems may
be quite different from their effects on linkages to The first step in developing a categorization of
customers and markets. The framework reflects innovation is to get straight the question of per-
these differences, as well as the important notion spective. Technological innovation may influence
(developed in the work of Burns and Stalker, and a variety of economic actors in a variety of ways,
others) that different kinds of innovation require and it is this variety that gives rise to differing
different kinds of organizational environments and views of the significance of changes in technology.
different managerial skills. Our intent is thus to What may be a startling breakthrough to the en-
develop concepts that may prove useful in the gineer, may be completely unremarkable as far as
effort to incorporate technological considerations the user of the product is concerned. In this paper
into business strategy, and perhaps in developing we shall evaluate innovation in terms of its impli-
appropriate public policies. cations for the success (or failure) of the innovat-
We explicate the model through intensive anal- ing firm in its rivalry with competitors. We are
ysis of the technical and competitive history of the thus concerned with how, and to what extent,
US auto industry. An in-depth look at a particular innovation affects the relative advantages of actual
industry provides a level of detail that seems es- and potential competitors.
sential in making the kinds of distinctions we are The notion of competitive advantage that we
after. We thus do not offer the auto story as a use here is broader than the differences in costs
 W.J. Abernathy and K,B. Clark / Innovation 5

a m o n g competitors. W i t h o u t minimizing the im- tion rests on a set of material resources, h u m a n

p o r t a n c e of cost in competition, we p r o p o s e to skills and relationships, a n d relevant knowledge.
c o n s i d e r the competitive position of a firm in These are the c o m p e t e n c i e s or competitive ingredi-
terms of a variety of dimensions. W e assume there- ents from which the firm builds the p r o d u c t fea-
fore that p r o d u c t s are not homogeneous, and that tures that appeal to the marketplace. Thus, the
firms c o m p e t e by offering p r o d u c t s that m a y differ significance of i n n o v a t i o n for c o m p e t i t i o n d e p e n d s
in m a n y aspects: p e r f o r m a n c e , reliability, availa- on what we shall call its " t r a n s i l i e n c e " - that is,
bility, ease of use, aesthetic a p p e a r a n c e , and image its c a p a c i t y to influence the firm's existing re-
( a m o n g others), as well as initial cost. A firm gains sources, skills and k n o w l e d g e [6].
a c o m p e t i t i v e a d v a n t a g e when it achieves a posi- T a b l e 1 presents a list of the major competitive
tion in one of these featured dimensions, or a ingredients divided into two groups. In the t o p
c o m b i n a t i o n of them, that is both valued by half of the table we have p l a c e d the factors that
c u s t o m e r s a n d superior to that of its competitors. d e t e r m i n e the capabilities of the firm in technol-
It is i m p o r t a n t to note that the p r o d u c t features ogy and production. F o r ease of notation, we shall
themselves, and the firm's position with them, are refer to this set as the " T e c h n o l o g y " side of the
n o t in a n d of themselves the f u n d a m e n t a l source firm, but m e a n it to include p r o d u c t i o n and o p e r a -
o f advantage. Such a p o s i t i o n is the i m m e d i a t e , tions as well. The resources, skills and k n o w l e d g e
outward manifestation of a more fundamental, within this d o m a i n are linked to c o m p e t i t i o n
internal reality. The f o u n d a t i o n of a firm's posi- through their effect on the physical characteristics

Table 1
Innovation and firm competence
Domain of innovative activity Range of impact of innovation
I. Technology~Production
Design/embodiment of technology improves/perfects offers new design/radical
established design departure from past embodiment
Production systems/organization strengthens existing makes existing structure obsolete
structure demands new system, procedures,
organization,
Skills (labor, managerial, extends viability of destroys value of existing
technical) existing skills expertise
Materials/supplier relations reinforces application extensive material substitution;
of current materials/ opening new relations with new
suppliers vendors
Capital equipment Extends existing capital extensive replacement of existing
capital with new types of equipment
Knowledge and experience base builds on an rein- establishes links to whole new
forces applicability scientific discipline/destroys
of existing knowledge value of existing knowledge base
I1. Market~Customer
Relationship with customer base strengthens ties with attracts extensive new customer
established customers group/creates new market
Customer applications improves service in creates new set of applications/
established application new set of customer needs
Channels of distribution builds on and enhances requires new channels of distri-
and service the effectiveness of bution/new service, after market
established distribution support
network/service organi-
zation
Customer knowledge uses and extends customer intensive new knowledge demand
knowledge and experience of customer; destroys value of
in established product customer experience
Modes of customer communication reinforce existing totally new modes of communication
modes/methods of required (e.g. field sales
communication engineers)
6 W.J. Abernathy and K.B. Clark / Innovation

of the product - its performance, appearance, makes existing channels of distribution more at-
quality, and so on - and through its cost. The list tractive and effective. Further, innovation in pro-
includes traditional factors of production like cess technology may require new procedures in
materials, people, building and equipment, as well handling information, but utilize existing labour
as knowledge relevant to design and production. skills in a more effective way. Such changes con-
This not only includes links to scientific, engineer- serve the established competence of the firm, and
ing and design disciplines, but it also includes the if the enhancement or refinement is considerable,
knowledge embedded in the systems and proce- may actually entrench those skills, making it more
dures used to organize production. difficult for alternative resources or skills to achieve
In this formulation we make a distinction be- an advantage. Such innovation may have an effect
tween the skills and the knowledge embodied in on competition by raising barriers to entry, reduc-
individuals and the collective understanding shared ing the threat of substitute products, and making
among groups of employees, and partly incorpo- competing technologies (and perhaps firms) less
rated into teamwork routines, procedures, prac- attractive.
tices, and so forth. We make a further distinction On the radical end of the scale, the effect of
between the factors of production - labor, capital innovation is quite the opposite. Instead of en-
and materials - and their organization and de- hancing and strengthening, innovation of this sort
ployment. We assume that a given set of inputs disrupts and destroys. It changes the technology of
can be combined and organized in a variety of process or product in a way that imposes require-
ways to achieve different results, either technically ments that the existing resources, skills and knowl-
in terms of the sequencing of operations and fac- edge satisfy poorly or not at all. The effect is thus
tor combinations, or organizationally in terms of to reduce the value of existing competence, and in
systems for acquiring and processing information. the extreme case, to render it obsolete. This kind
The infrastructure of production - e.g. organiza- of change is at the heart of Schumpeter's theory of
tion, system, procedures - thus merits separate innovation and economic development in which
consideration. "creative destruction" is the vehicle of growth [7].
The second half of table 1 is devoted to markets Its effect on competition works through a redefini-
and linkages to customers. Of central importance tion of what is required to achieve a competitive
in this domain is the relationship with the customer advantage. In strong form, where disruption is
base. We include in this category both the strength both deep and extensive, such innovation creates
of the relationship, as well as the composition of new industries.
the customer group. The other items in this do- In the framework laid out in table 1 the signifi-
main affect the way in which customers relate to cance of an innovation for competitive advantage
the product. We make a distinction between the depends on more than technical novelty or scien-
applications the product serves, and the knowledge tific merit. In an age of gene splicing and other
and experience required in the product's use. Fur- scientific marvels that do indeed create new in-
ther, we have included both the way in which dustries and destroy old ones, it is easy to develop
customers obtain the product and related services, a stereotype of innovation that may obscure judge-
and the way in which they obtain information ments about technical change and its significance
about its characteristics. for competition. One need only take the effects
Each item listed in the table is accompanied by listed on the right hand side of table 1 to obtain
a scale that depicts the range of effects an innova- the following exaggeration:
tion might have. In each case the range is defined
by polar extremes, the one conservative, the other An innovation is the initial market introduc-
radical. On the conservative end of the scale are tion of a new product or process whose
those innovations that serve to enhance the value design departs radically from past practice.
or applicability of the firm's existing competence. It is derived from advances in science, and
Clearly, all technological innovation imposes its introduction m.akes existing knowledge in
change of some kind, but change need not be that application obsolete. It creates new
destructive. Innovation in product technology may markets, supports freshly articulated user
solve problems or eliminate flaws in a design that needs in the new functions it offers, and in
 W.J. Abernathy and K,B. Clark / Innovation 7

practice demands new channels of distri- each domain as the axes of a two-dimensional
bution and aftermarket support. In its wake diagram. In fig. 1 we have positioned the market
it leaves obsolete firms, practices, and factors transilience scale in the vertical dimension, and the
of production, while creating a new industry. technology transilience scale in the horizontal. This
creates a "transilience map", with four quadrants
This is a stereotype of an ideal that is both representing a different kind of innovation. Work-
rarely encountered in practice and misleading. ing counter clockwise from the upper righthand
Novelty and connection with scientific advance corner, the categories of innovation are: Architect-
may have little to do with an innovation's compe- ural, Niche, Regular, and Revolutionary. We shall
titive significance. The entry of the Timex Corpo- illustrate each category using examples from the
ration into the watch industry provides a useful US automobile industry; specific innovations in
example [8]. Its success in the market was based on each group are presented in table 2. Further, in
refinements of an old technology (pin lever move- section 3 we show that the categories are closely
ment), that was applied in upgraded styling and linked to patterns of industry development, and
offered through new channels of distribution (drug that the four quadrants represent phases of in-
stores, discount houses). Using standardization of novative development. Moreover, this categoriza-
parts, mechanization, low skilled labor and preci- tion of innovative effects is linked to other dif-
sion tooling, Timex produced a consistent, durable ferences in the evolution of firms and industries,
product, at very low cost. Its use of hard alloy so that the four quadrants also represent different
bearings avoided the need for jewels, and its sim- managerial environments.
ple design made complex adjustments unneces-
sary. Further, the company employed a cadre of 2.1. Architectural innovation
engineers and technicians to design and build its
own tooling and production equipment. In combi- New technology that departs from established
nation with modern styling and an aggressive systems of production, and in turn opens up new
marketing strategy, the refinements in product and linkages to markets and users, is characteristic of
process design gave Timex a significant competi- the creation of new industries as well as the refor-
tive advantage. mation of old ones. Innovation of this sort defines
The refinements in technology undertaken by the basic configuratiod of product and process,
Timex in conjunction with an appropriate business and establishes the technical and marketing agen-
plan provided competitive leverage out of propor- das that will guide subsequent development. In
tion to the technical changes involved. In so doing, effect, it lays down the architecture of the in-
they provided the basis for an assault on estab- dustry, the broad framework within which compe-
lished barriers to entry that had been built through tition will occur and develop. We have thus labelled
franchise sales, service and repair, and status con- innovation of this sort "Architectural"; it is
nected imagery. Thus, what were a series of rela- graphed in the upper right hand quadrant of the
tively mundane changes in technology, came to transilience map.
have major ramifications in the market. Whether it creates a new industry like xerogra-
The Timex example reinforces the notion that phy or radio, or whether it reformulates an estab-
the competitive significance of an innovation de- lished industry as with photo typesetting in the
pends on what it does to the value and applicabil- printing industry, architectural innovation seems
ity of established competence - that is, on its to involve a process and an organizational climate
transilience. But the example also illustrates the that is distinctive. The Charpie report, the work of
importance of distinguishing between effects on Burns and Stalker, and research by Jewkes, Sawyers
markets and effects on technology or systems of and Stillerman, suggest that entrepreneurial action
production. A given innovation may affect the two occurs in a unique managerial climate and with
domains in quite different ways. It is the particular firms whose organizational structure is not
combination or pattern of technology and market bureaucratic and rigid [9]. The potential for
transilience that is important in determining com- stimulating architectural innovation seems to hinge
petitive impact. One way to depict the pattern of on the juxtaposition of individuals with prior ex-
effects is to use composite transilience scales for perience in relevant technologies and new user
8 W.J. Abernathy and K.B. Clark / Innooation

disrupt existing/create
Niche Creation ]
new linkages
l Architectural

._c
Ford
o Model T
(1908)

Ford Model A
(1927)
Technology/Production
II

conserve/entrench disrupt/obsolete
existing competence existing competence

Ford V-8 Engine

(1932)

Electric Starter
(1912)

closed steel
body
Lacquer Painting (1923)
System
(1923)

conserve/entrench
J Regular I existing linkages t Revolutionary

Fig. 1. Transilience map and selected automotive innovations.

environments latent with needs. These insights are presents a list of some of the major technological
well illustrated in the case of the early develop- innovations in the architectural era with special
ment of the US automobile industry [10]. emphasis on the design concepts embodied in the
The early years of this century marked a turbu- Model T.
lent era in the technological development of the Three themes are evident in this architectural
motorless carriage. Early cars were made by bi- pattern of innovation. The first is the importance
cycle manufacturers and wagon makers, and the of breaking the grip of the prior industries on the
designs reflected each prototype's origin. Technol- technological structure of the new industry. Sec-
ogies from these industries as well as locomotive ond is the durability of the concepts. The designs
manufacturing and the electrical industry were that constitute the creative synthesis in this period
competing to serve an emerging market for per- stand for a very long time in the industry's future.
sonal transportation. What developed out of the The third theme is the role of science. Although
contest among diverse design concepts was a crea- science-based innovations are apparent as under-
tive synthesis that established the architecture of pinnings of the dominant design, the overall de-
product and process. The dominant producer in sign itself is not stimulated by science. These ob-
that development was Ford, and the dominant servations find support in the specific innovations
product, the Model T. The first panel in table 2 in table 2. From 1903 to 1907, the spark advance,
 W.J. Abernathy and K.B. Clark / Innouation 9

Table 2
Selected automotive innovations
Innovation Year Company
I. Architectural innovations
Left hand steering 1990 G and J Jeffrey
Front mounted engine 1900 most producers
Planetary transmission 1902 Northern
Unitary engine and transmission 1902 Northern
Magneto integrated into flywheel 1908 Ford
Removable cylinder heads 1908 Ford
Vanadium crankshaft 1908 Ford
I1. Market Niche innovation
Safety glass 1926 Rickenbacker, Stutz
Streamlined bodies 1934 Chrysler
Station wagon 1923 Star
Hardtop convertible 1946 Chrysler
Bucket seats 1959 GM
Wide-track chassis 1959 GM
Low-priced sports car (Mustang) 1965) Ford
III. Regular innovation
Electric starter 1912 GM
Moving assembly line 1913 Ford
Lacquer finish (DUCO-pyroxolin) 1924 GM
Rubber engine mounts 1922 N ash
Constant temp. inspection room 1924 Ford
Automatic welding 1925 Budd
Thin wall gray cast iron engine 1959 Ford
IV. Revolutionary innovation
Closed steel body 1922 Hudson
V-8 engine cast en-bloc 1934 Ford
Automatic transmission 1940 G'M
Cast steel cam and crankshaft 1934 Ford
Independent suspension 1934 GM
Unit body construction 1936 Ford

Source: W.J. Abernathy et al., Industrial Renaissance (Basic Books, New York, 1983), Appendix D, pp. 150 179.

the longitudinal mounting of engines, torque tubes dustries not only influenced technical develop-
for drive shafts and bevel gear systems were intro- ment, but also opened up new possibilities in
duced in successive Ford models. They were sup- linkages to markets and customers. The market
ported by a series of innovations in manufacturing implications of the innovations of this period are
processes: multiple machining, new assembly well illustrated in the case of the flywheel magneto
methods and so forth. Many of these concepts and vanadium steel alloy. The flywheel magneto
remained the industry standard for decades, and provided an electrical power source for firing the
part of their success lies in their departure from spark plugs that was built into the engine. This
the design rules of wagon makers and locomotive ingenious integration of new electrical technology
manufacturers. The spark advance and the torque with engine design meant that the car could be
tube, for example, marked a mating of technolo- used in remote locations and would not be vulner-
gies - electrical control concepts to the thermody- able to the life of the dry cell or other batteries for
namics of engine design, and the dynamics of ignition. In similar fashion, the application of
torque in motored propulsion to chassis design - vanadium steel alloy in engines and chassis com-
that advanced and displaced the conventions of ponents was an important part of the development
carriage makers. of a lightweight vehicle. When Ford and his en-
Breaking out of the confines of established in- gineers found an alloy that afforded three times
10 W.J. Abernath)' and K.B. Clark / Innovation

the design strength of traditional materials, it freed technical systems is to conserve and strengthen
them to apply new concepts of lightweight design established designs. There are numerous examples
to many parts. As a result they were released from of niche creation innovation, ranging from the
many old constraints that had been adopted from Timex example referred to earlier, to producers of
carriage technologies. The engine and the chassis fashion apparel, and consumer electronics prod-
came to be based on concepts of flexible ucts. The mating of light weight earphones and a
lightweight structural design as opposed to the portable radio or casette player in Sony's Walk-
more traditional designs that sought durability man, used established technologies to create a new
through stout rigidity. niche in personal audio products. Makers of wo-
Improved reliability and lightweight design were men's apparel have traditionally used changes in
important elements in the creation of a rugged, ornamentation, color, configuration, fabrics and
durable vehicle, able to withstand the rigors of finishes to create profitable if transitory market
rural operation, and yet sufficiently low cost to niches. Innovation of this sort represents what
permit the development of a mass market. Techno- Utterback has called "sales maximization", in
logical innovation thus gave Ford the kind of which an otherwise stable and well specified tech-
product he needed to open up a new market and nology is refined, improved or changed in a way
establish a new set of applications. Design con- that supports a new marketing thrust. In some
cepts like the integrated flywheel and new alloys instances, niche creation involves a truly trivial
were essential to the development of a rural market change in technology, in which the impact on
for basic transportation - for a people's utilitarian productive systems and technical knowledge is in-
vehicle that could go anywhere and was relatively cremental. But this type of innovation may also
easy to maintain. This was a product concept that appear in concert with significant new product
made possible new distribution channels and new introductions, vigorous competition on the basis of
types of aftermarket support, and thus broke many features, technical refinements, and even techno-
of the marketing conventions of the day. logical shifts. The important point is that these
Our location of the Model T in the Architecture changes build on established technical com-
quadrant of fig. 1 reflects the fact that its transili- petence, and improve its applicability in the
ence was greater in the market dimension. Though emerging market segments.
there were some disruptive elements in its technol- It is clear that successful niche creation innova-
ogy, its genius lay more in a creative synthesis of tion requires the matching of customer needs with
technology innovated by its diverse predecessors. refinements in technology. But the evidence sug-
The Model T experience thus suggests that archi- gests that such an alignment is in and of itself not
tectural innovations stand out as creative acts of sufficient to establish a long term competitive ad-
adapting and applying latent technologies to previ- vantage. Innovation that helps to create a niche
ously unarticularted user needs. It is the insight may be important, even essential, to the continued
and conception about fresh roles for existing in- existence of the innovating firms. But if the in-
ventions and technologies that mark this kind of novation is readily copied, its competitive signifi-
innovation. Scientific work plays a part in freeing cance may be greatly diminished. Such was the
thought, and relaxing old rules of thumb. The experience of Ford with the introduction of the
challenge lies in linking understanding of technical Model A in 1927.
possibilities to insights about unarticulated needs. By 1926 Ford had sold more 15 million Model
Ts, and had driven the price as low as $290 on
some models. Yet the Model T was a 20-year-old
2.2. Innovation in the market niche phase
product whose basic design could not economi-
cally accommodate the range of new features and
Using new concepts in technology to forge new levels of performance demanded in the marketp-
market linkages is the essence of architectural in- lace. The market was no longer dominated by
novation. Opening new market opportunities rural buyers interested in rugged durability. Em-
through the use of existing technology is central to phasis in the market was moving towards urban
the kind of innovation we have labelled "Niche customers and the Model T's competitors offered
Creation", but here the effect on production and improved power, increased comfort and conveni-
 W.J. Abernathy and K.B. Clark / Innovation 11

ence, and easier operation. Though Ford had new customer base, and defined new applications.
created the world's largest industrial complex and These changes in market segment composition and
had reduced costs significantly, demand for the definition has a further effect in changing methods
Model T declined in the mid-1920s. With no new of customer communication and influenced the
products in the pipeline, Ford decided in 1926 to delivery of aftermarket services. The Model A was
shut down the giant Rouge River facility for nine thus moderately transilient in the market dimen-
months and develop the Model A. sion, while building on and strengthening technical
With little time for development, and with a competence. Its introduction was critical to Ford's
need to meet the demands of an emerging new survival and enabled the company to regain market
market, it was almost inevitable that Ford would leadership from GM. But the triumph was short
rely on established technology and thus move into lived. By 1929, Chevrolet had developed new mod-
a niche creation mode of innovation. Where GM els that were a little bigger, a little faster, and a
had approached the changing market with new- little more comfortable and stylish. That pattern
concepts in design and in product development continued in the 1930s as GM consolidated its
(i.e. constantly upgraded product technology), market position.
Ford responded with a major model change, but The Model A's market share gains were not
not with a technologically dynamic strategy (see durable because competitors were able to copy
fig. 1). and even advance the design quite easily. Unlike
The Model A was introduced in late 1927 and the Model T, the new design was not based on
was a great success. Ford's first completely rede- company developed innovations. The techno-
signed model in 20 years aroused great public logical advances in the car involved either the
interest. Its appeal stemmed from the combination application of new materials developed by others,
of features, the refinements and improvements in small changes to existing components or features,
existing design concepts, and major advances in or manufacturing advances that could be copied or
performance and styling. The new engine was light, that failed to lead to unique product features of
but powerful. The car was capable of high speed, value in the market. The Model A offered a tech-
yet offered a smooth and quiet ride. Craftsman- nical configuration that was on target in the
ship was evident in the fit of the body and the market, but that gave Ford no unique competitive
appearance of the interior and trim. And as far as strength on which t~ build a sustainable ad-
styling was concerned, the Model A was lower and vantage. A similar conclusion applied to the other
sleeker than the Model T, and color coordinated market niche innovations listed in the second panel
paint and fabrics were offered. of table 2.
In its basic design, the Model A was a synthesis The experience of the Model A seems to be
and refinement of concepts that had been intro- characteristic of niche creation innovation. Such
duced by other manufacturers. There was a margin changes in technology may be associated with
of innovation in technology (e.g. mushroom valve highly visible and transilient changes in the market,
stems, laminated safety glass, resistance welding), but any competitive gains from one particular
and a creative improvement and packaging of innovation are likely to be transitory. No matter
existing elements. Much of the improved engine how well the new design meets the current de-
performance, for example, came from improve- mands of the market, the lasting significance of an
ments in existing machining processes. Smooth- innovation will be greatly reduced if the new tech-
ness and quietness of ride came from design nology is insufficiently unique to defy ready
changes that eliminated joints, the liberal use of acquisition by competitors. But that does not im-
sound deadening material, and the introduction of ply that innovation is of no importance in markets
hydraulic shock absorbers. characterized by niche creation. Rather, it suggests
In its overall configuration, the Model A gave that the advantage derived from a given innova-
definition to an emerging market segment (the tion will be temporary, and that long term success
moderately priced family car - good performance, in this mode will require a sequence of new prod-
modern styling, comfortable, convenient) through ucts and processes to counter the moves of rivals.
incremental innovation. It was sold through exist- It appears that in niche creation innovation, tim-
ing channels of distribution, but forged links to a ing and quick reaction are everything.
12 W.J. Abernathy and K.B. Clark / Innovation

2.3. Regular innovation ever, are more subtle and indirect; it is these
effects that we explore in detail in section 3. Here
The creation of niches and the laying down of a it suffices to note that incremental change in pro-
new architecture involve innovation that is visible cess technology tends to both raise productivity,
and after the fact apparently logical. In contrast, and increase process capacity, often through mech-
what we call "Regular" innovation is often almost anization. This has the effect of increasing econo-
invisible, yet can have a dramatic cumulative ef- mies of scale and the capital required to compete.
fect on product cost and performance. Regular In addition, refinements in product design and in
innovation involves change that builds on estab- processes reinforce increases in scale economies by
lished technical and production competence and enlarging the amount of product variety that a
that is applied to existing markets and customers. given technology can support. Though the changes
The effect of these changes is to entrench existing imposed by a given innovation in the regular mode
skills and resources. may not be dramatic, a sustained pattern of such
Research on rocket engines, computers and syn- change can transform the business, altering sub-
thetic fibers has shown that regular innovation can stantively what must be done well to achieve com-
have a dramatic effect on product cost, reliability, petitive advantage.
and performance. Although the changes involved
2.4. Revolutionary innovation
may be minor when examined individually, their
cumulative effect often exceeds the effect of the Innovation that disrupts and renders estab-
original invention. This same pattern is evident in lished technical and production competence ob-
the dramatic declines in price and the improved solete, yet is applied to existing markets and
reliability of the early Model T. From 1908 to customers, is the fourth category in the transilience
1926, the price of the car fell from $1200 to $290, map and is labelled "Revolutionary". The re-
while the productivity of labor and capital in- ciprocating engine in aircraft, vacuum tubes, and
creased markedly. These reductions in cost were mechanical calculators are recent examples of
the result of numerous changes in the process, established technologies that have been over-
most of which Ford himself thought to be too thrown through a revolutionary design. Yet the
insignificant to recount. While improvements in classic case of revolutionary innovation is the com-
casting, welding and assembly, and material petitive duel between Ford and GM in the late
substitution helped to reduce cost, they also inter- 1920s and early 1930s.
acted with changes in the product to improve While Ford's competitive moves with the Model
reliability and performance. Electric lights, enamel A were based on imitative use of technology, the
finishes on the body, rubber engine mounts and an behavior of competitors was a different case en-
integral brake drum and hub, are examples of the tirely. For the industry as a whole, the mid-1920s
kinds of changes in product design that improved marked the beginning of a revolutionary phase of
the Model T's appeal in the market. innovation. Ford was focused on volume produc-
Regular innovation can have a significant effect tion of its established design, while GM began
on product characteristics and thus can serve to investing in new concepts in suspensions, body
strengthen and entrench not only competence in forming and transmissions. Studebaker and
production, but linkages to customers and markets. Chrysler contributed in important ways to ad-
It is important to note that these effects tend to vanced body, suspension and engine technology.
take place over a significant period of time. They In contrast to Ford's pursuit of volume and lower
require an organizational environment and cost through the Model T, GM, Chrysler and other
managerial skills that support the dogged pursuit producers developed new designs in suspensions,
of improvement, no matter how minor. The effects bodies, and transmissions that redefined the na-
of a given regular innovation on competition are ture of the automobile. The innovation that con-
thus of less concern than the cumulative effects of tributed more than any other to this change in
a whole series of changes. competitive and technical emphasis was the closed
Some of these effects are quite direct and in- steel body.
volve advantages due to improvements in the First marketed by Hudson in its 1921 Essex, the
product's existing technology. Other effects, how- closed body made of steel was a clear departure
 W.J. Abernathy and K.B. Clark / Innovation 13

from the open (no solid top or sides) wooden In the depression era of 1932, a performance en-
bodies then dominant in the market Chevrolet's gine for the workingman was not a concept for the
Model K perfected the concept and GM intro- times. To make matters worse, the extra engine
duced process changes that made the closed steel performance brought with it extra stress on relia-
body an affordable feature in mass production bility. Problems with knocking, thrown rods and
vehicles. The innovation raised new criteria for burning oil were more visible in a period of tight
automotive design passenger comfort, room, budgets.
heating and ventilation - and deepened and While the Model 18 enjoyed some market
broadened the appeal of the product to the success, it did not captivate the market; its power
American consumer by making it more conveni- for change was moderate. It thus seems clear that
ent, enjoyable and useable. the power of an innovation to unleash Schum-
The closed steel body strengthened market lin- peter's "creative destruction" must be gauged by
kages, but its impact on manufacturing was dis- the extent to which it alters the parameters of
ruptive. Steel bodies depended on sheet metal for- competition, as well as by the shifts it causes in
ming technology rather than the craft skills of the required technical competence. An innovation of
wooden body maker, or the metal removal tech- the most unique and unduplicative sort will only
nologies used in engine and transmission produc- have great significance for competition and the
tion. What was required was new machinery, new evolution of industry when effectively linked to
skills in labor and management, and new relation- market needs.
ships with suppliers. Moreover, the new technol-
ogy increased minimum economies of scale, as
giant presses and expensive dies were used to form 3. The transilience map and industry evolution
the metal parts.
The closed steel body came to dominate the Our application of the transilience map to the
industry, and in so doing substantially altered the history of the auto industry shows that all four
nature of competition. Along with other changes kinds of innovation have shaped the industry's
in technology it formed the basis for Chevrolet's development in subtle and diverse, but powerful
sustained attack on Ford and the Model T. It ways. A similar conclusion as to the role of in-
weakened the relative position of small firms, at novation emerges from detailed studies of a variety
the same time that it changed the product char- of other products and markets. The historical evi-
acteristics on which competition had been pursued. dence suggests further, that innovations of a given
Convenience, performance and comfort became type appear in clusters, and that the temporal
the central theme in subsequent competition and pattern of innovation is closely linked to the over-
technical innovation. all evolution of the industry. The transilience map
Not all innovations that fall in the revolution- is thus much more than a simple categorization of
ary quadrant have a profound competitive impact. technical change; it provides a framework within
Some fail to meet market needs, while others en- which one can examine the relationships among
counter problems in production. And others, like innovation, competition and the evolution of in-
Ford's 1932 V-8 engine, are poorly timed. In 1932 dustries, as well as develop insight about the
Ford introduced the Model 18 with a new V-8 strategies of specific competitors.
engine. Through a stunning engine design and Existing models of industry evolution posit a
unique manufacturing process based on Ford's life cycle of development in which new products
own casting and machining technology, the Model (and industries) emerge, are developed, defined,
18 offered a high performance engine in a popular and mature [11]. Framed in terms of the transili-
price range. Here was an example of an innovative ence map, models based on the product life cycle,
design with high technological transilience applied or the "fluid-to-specific" stage model of Abernathy
to an existing market position. In contrast to the and Utterback, are dominated by the transition
Model A, product features were dependent on a from architectural to regular innovation. In fact, it
technology in which Ford played a leadership role is useful to conceive of the traditional life cycle as
and in which the company had a sustainable lead. a development vector describing the firm's transi-
But the launch of the product was not well timed. tion from one innovative phase to another. Our
14 W.J. Abernathy and K.B. Clark / Innovation

discussion of the different types of innovation, this reason that the transition to regular innova-
however, suggests that vectors of industry develop- tion can thus be seen as a "strategic vector" in the
ment may be richer and more varied than simple transilience map, leading out of architecture into a
life cycle notions might suggest. In particular, the phase of refinement and improvement. The transi-
implicit (or sometimes explicit) biological life cycle tion is thus not a move from one well defined
metaphor seems to be misleading; the reversal of "state" to another; it is more like charting a new
an older industry to embrace the emergence of path through an emerging environment.
revolutionary or architectural innovation may serve In section 2 we noted some of the more obvious
as the basis for renewal in its pattern of industry effects of regular innovation. But there are other
development. Kuhn's The Structure of Scientific subtle effects which a strategic vector in the regu-
Revolutions suggests that the advancement of sci- lar direction may create. Consider, for example,
ence is characterized by long periods of regular the effects of typical improvements in processes.
development, punctuated by periods of revolution Innovation of this sort is often little more than the
[12]. Historical evidence suggests that a similar act of taking the skill that workers or managers
pattern characterizes the development of technol- use in performing tasks and embodying it into the
ogy. Furthermore, even within the traditional ar- design of a machine. The innovation may replace
chitecture-regular pattern, the role of innovation elements of the task, or eliminate the need for the
in competition may be more important, albeit worker (or manager) entirely. Examples of such
subtle and indirect, than traditional approaches embodiment are prevalent in the three innovations
have assumed. in the early auto industry as listed in table 2:
In this section of the paper we re-examine the mechanized welding, moving assembly lines, and
regular phase of innovation, and its implications enamel finishes.
for the evolution of the industry's competitive Electric welding of metal parts was used before
environment. Our focus is on how regular innova- welding was mechanized. However, reliable perfor-
tion contributes to the embodiment of labor and mance in high-volume applications was not
managerial skills in capital equipment; to increas- achieved until Ford developed a mechanical seam
ing rigidity in processes and products; and, some- welder that could be operated by an unskilled
what paradoxically, to increased versatility in operator. This was an important early step in the
established designs. We then explore transitions development of extensive welding in the body-
out of the regular phase of innovation. Such moves building process. It is important to note, however,
result in technological ferment and form a varied that the automatic welding device became linked
set of complex but important strategic vectors of to a particular model. In order to promote ef-
industrial development. ficiency, its design was so specialized that, for
example, an automatic welding machine of Model
3.1. Regular innovation, capital embodiment and A vintage was not usable on the next model. Thus,
technical rigidity the embodiment but not the concept of the tech~
nology became vulnerable to change.
The transition from architectural to regular in- Mechanized welding illustrates the embodiment
novation is often associated with the emergence of of labor skills and the "shaping" effect that accrues
a dominant design in the product. With this the from incremental innovation as it renders the pro-
focus of innovation shifts from meeting emerging cess for a given product more specific and rigid in
needs with new concepts, to refining, improving nature. The moving assembly line illustrates the
and strengthening the dominant design and its same phenomenon in managerial skills. Just before
appeal in the market. It is important to recognize the moving assembly line was adopted in January
that this transition is but the search for a strategic of 1914, Ford had developed a method of assem-
advantage over competitors. Where advantage in bly involving team scheduling with stationary
the architectural phase rests on enhanced product product and roving teams that offered the same
performance that may be gained through creativity degree of work force specialization as the moving
in linking new technology to latent needs, exploit- assembly line. The team method, however, re-
ing the advantage inherent in a dominant design quired much more careful supervision and a close
demands a change in strategic orientation. It is for eye on inventory control. The moving assembly
 WJ. Abernathy and K.B. Clark / Innooation 15

line in contrast, simplified the supervision and embodiment and appropriability. In new in-
inventory management problems in one stroke dustries that are based upon innovative technolo-
through the imposition of a novel conveyor tech- gies, the skills which are critical to competitive
nology. This made the task of management much success initially are usually not capital embodied.
less demanding although not necessarily more effi- Entry in this phase involves much more than the
cient - if the quality of management was other- acquisition of capital assets; witness the experience
wise excellent. With less demanding tasks, the of many large firms who tried to enter the semi-
range of experience to which the supervisor was conductor industry during its formative years.
exposed became limited. The moving assembly line There is evidence that scarcity of technical and
decreased opportunities for training managers to management talent was the single most important
cope with nonstandardized production such as reason that large vacuum tube producers failed to
small-scale stall build systems. Small lot or stall buy their way into a successful semiconductor
build became an anathema to the industry. As business during the 1960s and 1970s [13]. These
with the welding innovation, the innovation left skills in management and technology were not
the industry more rigid and limited in the range of appropriable through traditional means of merger
unanticipated change it could accommodate. or capital acquisition. Logically under these condi-
A third case, the adoption of new finish coat- tions the most important mode of competitive
ings on steel body parts, illustrates the role of industrial propagation was by spin-off.
regular innovation in achieving mass production.
The Model T was initially offered only in black 3.2. Regular innovation and market-niche versatility
because a satisfactory colored finish required re-
peated sanding, rubbing and polishing operations Regular innovation that embodies skills in
between many successive coats of finish. By one equipment serves to increase minimum economies
estimate, 106 days were required to produce a car of scale and to make established processes more
body with a superior color finish. Most of this specific and rigid. Yet, somewhat paradoxically,
time was in drying. Such skill, care and time were regular innovation may also increase the versatility
required that mass production was unthinkable. of technology. Once again, the development of the
The innovative new application and finish technol- Model T provides a fruitful example.
ogies of the 1920s changed all of this by requiring At the end of its life, the Model T was a far
only that operators perform short duration tasks different car than its early'predecessor. The car of
that were quite teachable, that demanded less 1926 started electrically, had electric lights, a closed
training, that were machine paced, and that in- colored body, and sold for less than one half the
volved much less inventory. The innovation made earlier price. Furthermore, it was much easier to
possible and reinforced mass production of col- use and appealed to a much wider range of market
ored bodies. The new technique could not be segments. As the grand old product evolved it
scaled down very well to handle low production simultaneously became more versatile and appeal-
rates and in this sense, the innovation raised ing to a broad range of market segments, while the
minimum economies of scale. supporting productive unit became more rigid and
What Ford gained from capital embodiment vulnerable to unanticipated change. This ex-
was an ability to more rapidly expand its capacity panded versatility is not just a definitional distinc-
in the face of burgeoning demand and a limited tion. It may be observed in the very specific detail
supply of skilled labor. It was easier to duplicate of engineering data on the product and process
machines than skilled labor and management in a technology. The evidence shows that Ford's engine
tight labor market. Furthermore, the demand for line was functionally broadened through innova-
new equipment embodying labor and management tion so that it could more robustly accommodate a
was not satisfied through internal development variety of market segments with less and less ac-
alone. Outside suppliers played a significant role tual mechanical variety [14].
in producing the volume of machinery that Ford The technology of early automotive engines was
required. not well developed. In order to power a large,
Recent experience in the semiconductor in- expensive car a large elaborate engine was needed.
dustry underscores the close link between capital Since Ford in the early years served many market
16 W.J. Abernathy and K.B. Clark / Innovation

segments (Model K was the largest and most in manufacturing and therefore a wider dynamic
expensive line; Models A, B and C were the less range of performance in aspects like speed (r.p.m.),
expensive and smaller products) a line of engines compression and horsepower per unit size. The
was needed that could meet a wide range of rubber engine mount, widely adopted in the 1930s,
customer demands. Engine variety as a function of broadened the appeal of small cylinder count en-
market segmentation is illustrated in fig. 2 which gines. Before its use, smoothness of ride was
compares the range of cubic inches of displace- achieved largely by high cylinder count engines
ment and delivered horsepower in Ford's engine like the V-12, or even the V-16. Such engines were
line from 1903 to 1908. The data show that large associated with speed, power and prestige, but
variation in engine size (353 CID), yielded the they also served to guarantee smooth operation.
small, but critical difference of 32 horsepower in The advent of the simple rubber engine mount in a
the market. V-8 design eliminated the need for great mechani-
Over time, incremental advances in both prod- cal variety since it isolated the transfer of vibration
uct and process technology not only improved the to the chassis, without adding more cylinders.
engine's performance, but also increased its versa- Increased technical versatility is an important
tility in meeting market needs. Incremental in- dimension of regular phase innovation, but it may
novations like dynamic balancing reduced vibra- also be the basis for a strategic thrust into niche
tion and prolonged operating life; constant tem- creation. The essence of increased versatility is
perature inspection rooms led to greater precision greater understanding of the possibilities in the

100 - -
n-
W

0 90--
n
UJ
O)
n- 80--
O
"r

0 70
UJ
rr
W
> 60

W
r~ 50

T --40

30--

Model T / •
20-- • ~ Model B

10 Model A Model F

I
I I i I J I , I I
1O0 200 300 400 I 500
r I
I-I~ 353 ~1
CUBIC INCH DISPLACEMENT (CID)

Fig. 2. Relationship between mechanical variety (CID) and performance (HP) in Ford engines 1903-1908.
 w.J. Abernathy and K.B. Clark / lnnooation 17

technology and the implications of alternative versatility is evident in the counter clockwise rota-
refinements. Enhanced technical insight and un- tion of the lines indicating the relationship be-
derstanding may provide the design change tween mechanical variety and horsepower. By the
required to offer a new product configuration, or a 1950s a difference of 245 horsepower was provided
different mix of performance characteristics that by a range in mechanical variation of a little over a
.meets an identified new set of customer needs. 200 cubic inches of displacement. This c o m p a r e d
This seems to have been the case with the Model A to a variation of 32 horsepower for a large 353
in 1927, with the creation of " m u s c l e " cars in the cubic inch displacement in the early 1900s.
1950s, and affordable sports cars (e.g. Mustang) in The significance of a trend toward greater
the 1960s. market-niche versatility for our purposes lies in its
Niche versatility was characteristic of automo- implication for innovation. As the versatility
tive development through periods of regular increases there is less need for novelty and techni-
innovation and later in the creation of market cal variety in meeting a variety of market needs. In
segments and niches. The cumulative effect of a sense, incremental innovation is self-limiting,
numerous innovations on Ford's engine line from just as Gilfillan, an early scholar on the subject
1900 to 1958 is depicted in fig. 3. In this figure the observed many decades ago [15]. As long as market
earlier trend in market variety versus mechanical demands are anticipated, as long as they are con-
variety is extended for groups of major F o r d sistent with embedded experience, a technology
engines by decades. The increasing market-niche that has been refined and improved will be rela-

b
400--
\
v-8 9 2-,958
- ( 5 8 )/ - ,r " \

245
HP / I \1937 1951
V-8(55) J'~1927

1 1O0F
I
v-8(37)~
v.,(,,,./
I ~
2(33)

I /

I 100
a
A(03)
T
~

I
200 I
. ~
~
I
I
i.
~

I
300

207
• B(05)

400
I
~06)

I
500
4
/
/,903-1908

I CUBICINCH DISPLACEMENT
(CID)
Fig. 3. Trends in market-niche versatility for the Ford engine line 1903-1958.
a The number in parenthesis is the year in which the engine model was introduced.
b Rotation (the dotted line) shows a decrease in the ratio of mechanical variety needed to deliver a given range of performance in
horsepower from the 1903-1908 era to the 1952-1958 era.
Source: W.J. Abernathy, Managerial Dimension of Technological Trends (unpublished, 1975).
18 W.J. Abernathy and K.B. Clark / Innovation

tively robust in meeting them. opment. In contrast to the typical "birth-growth-

These observations on evolutionary adaptation maturity-decline" pattern of development, the
in an industrial unit are related to ecological con- transilience map thus suggests the possibility of
cepts about development and dominance of bio- "de-maturity" [17].
logical species within their "niche" in the environ- There are three kinds of changes in the in-
ment. As the product and process technologies dustrial environment that may create the condi-
evolve and develop, they become more robust in tions for de-maturity. The first is new technical
the way they accommodate the full range of variety options that open up possibilities in performance
in the existing environment. Like the tree that or new applications that the existing design con-
develops an extensive root system to weather the cepts could meet only with great difficulty or not
dry seasons it must occasionally face, management at all. These options may come through research
refines and perfects a product over time to better and development from within the industry, or they
accommodate the range of variation in the market. may be the basis for an invasion by competitors
Yet a product and process technology that be- from a related field. The second impetus for de-
comes more highly organized and efficient in the maturity may come from changes in customer
way it meets established requirements, it also be- demands. Whether through changes in tastes, or
comes more vulnerable to sudden and unantic- through changes in prices of substitutes or comple-
ipated variations in the environment. The highly ments, new customer demands may impose re-
productive, efficient and developed product unit is quirements that can best be met with new design
also more vulnerable to economic death. approaches. The third source is government policy.
Regulations imposed on an established industry,
3. 3. Innovation and reversals in development for example, may set technical requirements or
demand performance standards that favor revolu-
Sustained periods of regular innovation are pre- tionary or architectural strategic development.
dicated on a stable relationship between the needs De-regulation may have the same effect.
and preferences of customers and the design con- The impact of the closed steel body on the auto
cepts in the technology. Regular innovation thus industry of the 1920s illustrates the possibilities of
follows the emergence of a dominant design. But it de-maturity and the critical elements of a success-
also reinforces the dominance of that design ful strategy in that environment. In section 3 we
through improved performance, reliability and noted the emphasis in technical development on
lower cost. As the technology develops in the comfort, convenience and ease of operation that
regular phase, the preference-technology nexus in- followed the new body technology. One of the first
herent in the dominant design strengthens as it that exploited the opportunities that a new direc-
grows more complex. If, however, the relationship tion in technology presented was the Chrysler
between customer demands and technical char- Corporation. The company was founded in the
acteristics begins to break down, if new technical 1920s and in its rise one can see the consequences
options emerge, or if the range of demands begins of a well executed strategic thrust into revolution-
to strain the ability of the existing designs to meet ary and architectural innovation.
them, firms may find a move away from regular Figure 4 shows the position of Chrysler innova-
innovation advantageous. tions from 1924 to 1949 on two transilience maps;
We have in mind something more than a move the first covers the period 1924 1939, while the
to exploit new market niches. What we want to second covers 1940-1949. The position of each
consider is the possibility that changes in the en- point on the map is derived from a qualitative
vironment may create the opportunity (or the assessment of the impact of the innovation. The
necessity) for a strategic vector out of the regular assessment was based on historical evidence of the
mode of innovation, into the revolutionary or ar- changes required to implement the innovation.
chitectural phase. A strategic thrust of this sort The first map (top half of figure) shows Chrysler's
implies the re-emergence of a kind of innovation - departure from the pattern of innovation that had
new concepts, departures from existing designs - characterized the industry in the Model T era.
and a degree of technical variety and ferment that From 1930 to 1939 Chrysler introduced several
is more like the early stages of an industry's devel- innovations in carburetion, body design, transmis-
 144J. Abernathy and K.B. Clark / Innol,ation 1~

I.
Niche Architectural
Chrysler
1924-1939

"i •1924
•1924
t~

Technology

1;34 19~4 19~4 1939

• 1934
1938 •
1 '32 ,& 1~31 " 1;34

1934 19°32

19e26 19o37 19o27 1~39

Regular Revolutionary

Niche Architectural II.

Chrysler
1940-1949

1946

Technology

194o
19e47 1&9
1~41 o1949

Regular Revolutionary

Fig. 4. Transilience maps of Chrysler innovations a

a For a definition of the dimensions of the map see fig. 1.
Source: W.J. Abernathy et al., Industrial Renaissance (Basic Books, New York, 1933), Appendix I), pp. 155 77.

sions and chassis construction that departed from Chrysler also introduced refinenacnts in noise and
established practice. These changes in technology harshness characteristics, seats, and dashboards
were embodied in models designed for existing that appear in the regular innovation category.
customer groups and existing channels, and thus Chrysler's regular innovation and those that x~ere
have been placed in the revolutionary quadrant. more revolutionary reinforced one another. The
20 W.J. Abernathy and K.B. Clark / Innovation

emphasis in both cases was on comfort and con- the transilience map. Each quadrant in the map
venience, power and smoothness of ride. Both represents a different kind of innovation, and tends
kinds of innovation helped to build and then to to be associated with a different competitive en-
strengthen Chrysler's appeal in the marketplace, vironment. Moreover, because the nature of change
but it was the significant revolutionary changes imposed on the firm is so different, the framework
that gave Chrysler its distinctive character, and its implies that the successful persuit of different kinds
competitive advantage. of innovation will require different kinds of
The contrasts between Ford and Chrysler, and organizational and managerial skills. The transili-
between the Chrysler of the 1930s and the Chrysler ence map may thus illuminate the managerial en-
of later years are instructive. Faced with similar vironments required to nurture innovation and
market developments and technical possibilities, technical progress in each mode. Much further
Ford's strategic thrust (as evidenced in the Model research remains to be done, but our work to this
A) was to define the family car on the basis of point suggests a number of working hypotheses.
imitative product technology, and to push forward In the architectural phase management must
with innovations in production processes. Almost encourage the creative synthesis of information
all of Ford's innovations in the 1930s involved and new insight into user needs with information
processes, and few of those resulted in product about technological possibilities. Architectural in-
characteristics valued in the market. Thus while novation thus demands attention to the manage-
G M and Chrysler (and others) were at work on ment of creativity with a keen insight into business
new concepts in suspensions, brakes, transmis- risk. Unique insights about user needs, usually
sions, and bodies, Ford's development efforts were accrued through personal experience must be com-
largely focused on the cost of manufacture. bined with an ability to see the application of
Chrysler's strategy of new design concepts and technologies in a new way. The task is one of
thus of flexibility in product characteristics was constantly scanning for technological develop-
highly successful in the decade of the 1930s; by the ments and unmet market needs, and orchestrating
end of the decade Chrysler had passed Ford in the creative, first-time combination of resources.
market share. In the 1940s, however, the second In contrast, timing is the essence of manage-
transilience map (bottom of Fig. 4) shows clearly ment in the niche creation phase. The technology
that Chrysler shifted its focus to incremental tech- is generally available; the key skill is sizing up new
nical change in both the regular and market niche market opportunities, and developing a product
modes. This shift was consistent with the emer- package that exploits them. Management must
gence of a new dominant design - the "all-pur- nurture quick-footed capability for getting into the
pose road cruiser" - in the early 1940s, and subse- market before competitors enter the same niche
quent efforts to segment the market. Although and destroy profitability. Under these conditions.
Chrysler was a significant participant in subse- manufacturing must be quick and responsive, in-
quent years, its market share declined as the rate suring timely delivery, responsive service and ade-
of technological change in the product diminished. quate capacity for a quick buildup.
Product engineering remained a central element in In the regular mode, methodical planning and
the Chrysler approach, but the kinds of changes consistency are key management factors. Stability
introduced offered little that was unique or dis- of product design and sources of materials are
tinctive. In contrast to its heritage as a pioneer in needed to support directed technological progress,
new design concepts, the Chrysler of the 1950s and engineering improvements, market refinement and
1960s was caught between two strategies: too small continuing process development. Management may
and inefficient to compete on cost; not innovative need to buffer the organization against supply
enough to create a technology-based differentia- disruptions or other environmental changes. The
tion. idea is to achieve volume production and use scale
economies to lower costs and improve products.
Every opportunity must be taken to advance qual-
4. Managerial implications and conclusions
ity, improve product features, break bottlenecks in
This paper has presented a new way of assess- production, and foster process innovations that
ing the competitive significance of an innovation reduce scrap and increase yields. This is the world
 w.J. Abernatl~v and K.B. Clark / Innovation 21

of the a d m i n i s t r a t o r , and the functionally oriented development, the firm m a y try to introduce a
engineer. revolutionary d e v e l o p m e n t in another, a n d m a y
The r e v o l u t i o n a r y m o d e of i n n o v a t i o n is try to develop new niches in a third. W h e t h e r
d o m i n a t e d by " t e c h n o l o g y push". M a n a g e m e n t firms ought to m a n a g e in that way, and if so, how
must be c a p a b l e of sustaining a consensus a b o u t to do it seems an i m p o r t a n t area for further work.
long-term goals through investments in new tech- Pursuit of these issues will r e q u i r e a n e x a m i n a t i o n
nology and innovation. Here the task is to focus of the i m p a c t of m a r k e t structure and competitive
possible unruly technical talent t o w a r d specific rivalry on the different kinds of innovation.
m a r k e t s and to m a r s h a l the financial resources for
this purpose. G o o d technical insight is n e e d e d to
b r e a k established conventions a n d foster close col-
Notes and references
l a b o r a t i o n between p r o d u c t designers, process de-
signers, and m a r k e t planners. T h e climate must be
[1] See for instance: M. Abramovitz, Resource and Output
one that encourages a sense of c o m p e t i t i v e assault.
Trends in the United States since 1870, ,.tmerwan Eco-
The hypotheses a b o u t managerial e n v i r o n m e n t s nomic Review 46 (1956) 4-23: Robert Solow, 1-ethnical
a n d the historical analysis of the auto i n d u s t r y Change and the Aggregate production Function. Ret,iew ot
suggest a n u m b e r of questions a n d directions for Economics and Statistics 39 (1957) 312-30. S. Kuznet~,
further research. T h e transilience m a p itself, of Secular Mot,ements in Production and Prices (Houghton
Mifflin, Boston, MA, 1930).
course, requires further study through a p p l i c a t i o n
[2] For example, F.M. Scherer, Industrial Market Structure
in other industries. Detailed e x a m i n a t i o n of the and Economic Performance, (2nd edition, Rand McNally,
technological a n d competitive d e v e l o p m e n t of Chicago, IL, 1980); Joe S. Bain, Barriers to New Competi-
o t h e r industries should focus b o t h on testing the tion, (Harvard University Press, Cambridge, MA, 1956).
ideas discussed here, and refining and e x t e n d i n g [3] See, for example, T. Burns and G. Stalker, The Manage-
ment of Innovation (Tavistock Publications, London, 1961);
them. W o r k along these lines is u n d e r w a y in
U.S. Department of Commerce, Technologiea[ Innovation;
aircraft and semiconductors. Its Enuironment and Management. A report by the panel
A particularly fruitful area for further analysis on innovation, Robert Charpie. Chairman (U.S. Govern-
is the notion of strategic vectors, and associated ment Printing Office, Washington, DC. January 1967):
i n d u s t r y transitions. The differences in organiza- Also John Jewkes et al., The Sources ((lnt,ention (Macmil-
lan, London, 1960).
tional environments in each m o d e of i n n o v a t i o n
[4] Michael E. Porter, The Technological Dimension of Con>
implies that a transition from one phase to another petitive strategy, in: R. Rosenbloom ted.) Research otz
m a y pose a significant challenge to established Technological lnnot,ation, Management and Policy Vol. 1.
firms. This suggests the need to examine the im- (JAI Press, Inc., Greenwich CT. 1983) pp. 1 34. Richard
p a c t of i n n o v a t i o n on m a r k e t structure during S. Rosenbloom, Technological hmovation in Firms and
Industries: An Assessment of the State of the Art, m: P.
periods of transition, as well as i m p l i c a t i o n s for
Kelly and M. Kranzberg et al. (eds.) Te~hnoh;gical h m m a -
management. Historical evidence suggests that the tion: A Critical Ret,iew of Current Knowh'dge (San Fran-
creation and d e v e l o p m e n t of t e c h n o l o g y - b a s e d in- cisco Press, San Francisco, 1981), pp. 215 30. Nathan
dustries leads the industry from q u a d r a n t to Rosenberg, Inside the Black Box (Cambridge Universit,,
q u a d r a n t . It is at these points of transition that Press, Cambridge, 1982). Richard R. Nob,on and Sidney
G. Winter, An Et'olutionarv Theo*T qf E~ r)m,mic ("hanw'
originating firms exit and are replaced b y new
(The Belknap Press of the Harvard Liniversit\ Press, ('am-
firms better able to manage in the new mode. On bridge, MA, 1982).
the other hand, firms like F o r d and Douglass [5] Rosenbloom, Technological Innovation in Firm', and In-
A i r c r a f t have m a n a g e d to m a k e the transition. The dustries. See [4].
n a t u r e of transitions, and the d e t e r m i n a n t s of [61 Although the three types of competence tire closely le-
late& it seems useful to make distinctions among them. In
survival deserve a d d i t i o n a l a t t e n t i o n a n d analysis.
thc first place, they may play .,,omewhat different rnle,~ m
The differences across types of i n n o v a t i o n also determining the firm's position, and inno', ation ma', affect
have implications for the m a n a g e m e n t of technol- them in different ways. Furthermore. the competencies are
ogy at a given p o i n t in time. While a firm m a y acquired and developed in very differe,rt ways. Material
have a d o m i n a n t orientation, it is likely that the resources, and some human skills are often available
through established markets. But some skills and some
firm will face the task of m a n a g i n g different kinds
types of knowledge are specific to the firm and must be
of innovation at the same time. W h i l e one part of developed internally through experience. Whether through
the product line m a y be in the regular phase of market transactions or through internal development, the
22 W.J. Abernathy and K.B. Clark / Innovation

acquisition of resources, skills and knowledge is costly and (Division of Research, Harvard Graduate School of Busi-
especially in the case where internal development is re- ness Administration, Boston, 1972).
quired, may take much time. [12] T.S. Kuhn, The Strueture of Scientific Revolutions Univer-
[7] Joseph A. Schumpeter, The Theory of Economic Develop- sity of Chicago Press, Chicago, 1962).
ment (Harvard University Press, Cambridge, MA, 1934). [13] J.E. Tilton, The International Diffusion of Technology: The
[8] Timex Corporation. Harvard University Graduate School Case of Semiconductors (Brookings Institution, Washing-
of Business. Case No. 9-373-080 (1977). ton, DC, 1971); and D.C. Mueller and .I.E. Tilton, R and
[9] W.J. Abernathy and J.M. Utterback, Patterns of Industrial D Cost as a Barrier to entry, Canadian Journal of Econom-
Innovation, Technology Review 50 (7) (June-July, 1978). ics 2 (4) (November 1969) 570-579.
T. Burns and G. Stalker, The Management of Innovation [14] These trends were developed and reported in an early
(Tavistock Publications, London, 1961). Ibid., p. 19. Also draft of the Productivity Dilemma by W.J. Abernathy,
John Jewkes et al., The Sources of Invention (Macmillan Managerial Dimension of Technological Change: Innova-
Co., London, 1960). tion and Process Change in the U.S. Automobile Industry
[10] Examples cited in this section as they relate to the auto- (1975).
mobile industry are not referenced individually. The back- [15] C.S. Gilfillan, The Sociology of Invention, (MIT Press,
ground of this section draws on underlying research pub- Cambridge, MA, 1935).
lished in William J. Abernathy, The Productivity Dilemma." [16] The analogy with ecological models is interesting; see for
Roadblock to Innovation in the Automobile Industry Johns instance S.J. McNaugton and L.L. Wolf, Dominance and
Hopkins University Press, Baltimore, 1978); and W.J. the Niche in Ecological Systems, Science 167 (3915)
Abernathy, K.B. Clark and A.M. Kantrow, Industrial (January 9, 1970) 131-139.
Renaissance: Producing a Competitive Future for America [17] The nation of "de-maturity" is discussed in W.J. Aber-
(Basic Books, New York, 1983). nathy, K.B., Clark and A.M. Kantrow, Industrial Renais-
[11] We refer to the "technology life cycle" concept as a sance (Basic Books, New York, 1983). See also K.B. Clark,
representation of the changes in infrastructure within the Competition, Technical Diversity and Radical Innovation
firm thatsupport a given state of technology, in particular, in the U.S. Auto Industry in: Richard S. Rosenbloom
see W.J. Abernathy, The Productivity Dilemma [10]. Closely (Ed.) Research on Technological Innovation, Management
related is the International Product Life Cycle, see L.T. and Polio' (JAI Press, Greenwich, Conn., 1983).
Wells (ed.) The Product Life Cycle in International Trade