Earnings versus innovation; measuring architectural competencies

Managers in high tech industries often face decisions with the trade-off between increasing operating profits now, and investing in innovation in order to allow for profits in the future. The authors report the case of a telephony business unit, which currently sees the convergence of traditional telephony with the Internet. Literature suggests that in such situations of innovation on the level of the product architectures success and survival of the incumbent firm depend on their embedded architectural competencies. The authors propose that architectural competencies can be measured using business process level accounting figures. They illustrate their proposal to operationalize the concept of ´architectural competence´ with observation of the effects changing accounting standards in a telecom business unit