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Managing In The Modular Age: Architectures, Networks, and Organizations

Book Description

This book brings together seminal articles by leading scholars of technological and organizational systems, exploring the impact of 'modularity'. Modularity refers to an ability to take apart and put together differenct products and networks, or to 'mix and match' components in order to meet different user specifications. This is of key importance today where new systems such as the World Wide Web and many areas of the computer industry depend on it. The volume pulls together and defines an exciting new area of inquiry: into how our 'modular age' is reshaping the business eco-system.

  • Includes contributions from leading scholars of technology and organization

  • Modularity refers to an ability to take apart and put together different products and systems, or to 'mix and match' components in order to meet different user specifications.

  • Consolidates and defines an area of inquiry that is becoming increasingly important with the development of web-based and 'network' industries.

  • Sensitizes readers to the complexity of issues surrounding new modular products and systems created by e-business

  • Encourages readers to make connections among different levels and disciplines.

  • Initiates a debate around issues of modularity.

  • Includes a commentary co-authored by the late Nobel Laureate Herbert A. Simon to whom the book is dedicated.

Table of Contents

  1. Copyright
  2. ACKNOWLEDGEMENTS
  3. INTRODUCTION: MANAGING IN THE MODULAR AGE: ARCHITECTURES, NETWORKS, AND ORGANIZATIONS
    1. Decomposability Principle
    2. Modular Systems and Standards
    3. Path Dependence and Creation
    4. Economics of Standards
    5. Organizational Issues
    6. Research Directions
    7. Conclusions
    8. Notes
    9. References
  4. I. OVERVIEW
    1. 1. THE ARCHITECTURE OF COMPLEXITY
      1. 1.1. Hierarchic Systems
        1. 1.1.1. Social systems
        2. 1.1.2. Biological and physical systems
        3. 1.1.3. Symbolic systems
      2. 1.2. The Evolution of Complex Systems
        1. 1.2.1. Biological evolution
        2. 1.2.2. Problem solving as natural selection
        3. 1.2.3. The sources of selectivity
        4. 1.2.4. On empires and empire building
        5. 1.2.5. Conclusion: the evolutionary explanation of hierarchy
      3. 1.3. Nearly Decomposable Systems
        1. 1.3.1. Near decomposability of social systems
        2. 1.3.2. Physicochemical systems
        3. 1.3.3. Some observations on hierarchic span
        4. 1.3.4. Summary: near decomposability
      4. 1.4. The Description of Complexity
        1. 1.4.1. Near decomposability and comprehensibility
        2. 1.4.2. Simple descriptions of complex systems
        3. 1.4.3. State descriptions and process descriptions
        4. 1.4.4. The description of complexity in self-reproducing systems
        5. 1.4.5. Ontogeny recapitulates phylogeny
        6. 1.4.6. Summary: the description of complexity
      5. 1.5. Conclusion
      6. 1.6. Notes
      7. 1.7. Commentary
        1. 1.7.1. The architecture of complexity: background and central idea
        2. 1.7.2. Organizations and markets
        3. 1.7.3. Coordination and organizations as complex systems
        4. 1.7.4. Connecting to issues of organizational identification
        5. 1.7.5. Conclusions
      8. 1.8. Note
      9. 1.9. References
    2. 2. TECHNOLOGICAL AND ORGANIZATIONAL DESIGNS FOR REALIZING ECONOMIES OF SUBSTITUTION
      1. 2.1. Technological Systems for Economies of Substitution
        1. 2.1.1. Economies of substitution
      2. 2.2. Organizational Systems for Economies of Substitution
        1. 2.2.1. Intrafirm issues
        2. 2.2.2. Interfirm issues
        3. 2.2.3. Institutional issues
      3. 2.3. Cooperative and Competitive Dynamics in a Modularly Upgradable World
      4. 2.4. Conclusion
      5. 2.5. Acknowledgments
      6. 2.6. Notes
      7. 2.7. References
      8. 2.8. Commentary
        1. 2.8.1. Three attributes of technological systems
        2. 2.8.2. Tradeoffs among system attributes
        3. 2.8.3. Modularity versus integrity
        4. 2.8.4. Modularity versus upgradability
        5. 2.8.5. Integrity versus upgradability
        6. 2.8.6. Economies of substitution
        7. 2.8.7. Implications
        8. 2.8.8. Conclusions
      9. 2.9. Notes
      10. 2.10. References
    3. 3. NETWORKS AND INNOVATION IN A MODULAR SYSTEM: LESSONS FROM THE MICROCOMPUTER AND STEREO COMPONENT INDUSTRIES
      1. 3.1. Introduction
        1. 3.1.1. Attributes and product differentiation
        2. 3.1.2. Networks
        3. 3.1.3. Autonomous versus systemic innovation
      2. 3.2. The Development of High-Fidelity and Stereo Systems
        1. 3.2.1. Early developments
        2. 3.2.2. The move toward systems in the post-war period
        3. 3.2.3. The importance of compatibility
        4. 3.2.4. The origins of 33-rpm records
        5. 3.2.5. Networks in hardware and software
        6. 3.2.6. RCA's response
        7. 3.2.7. The importance of networks to the adoption of the LP and FM
        8. 3.2.8. From modular systems to appliances?
      3. 3.3. The Microcomputer Industry
        1. 3.3.1. Early developments
        2. 3.3.2. The Apple II
        3. 3.3.3. Modularity again: the IBM PC
        4. 3.3.4. The emergence of a network of competitors
        5. 3.3.5. The importance of the network
        6. 3.3.6. The importance of modularity
        7. 3.3.7. Demand-side benefits
        8. 3.3.8. Supply-side benefits
        9. 3.3.9. Other types of networks and systems
      4. 3.4. Conclusions
      5. 3.5. Notes
      6. 3.6. References
      7. 3.7. Commentary
        1. 3.7.1. Genesis of the article
        2. 3.7.2. What the article said and what it anticipated
        3. 3.7.3. The limits to modularity
        4. 3.7.4. Conclusions
      8. 3.8. Notes
      9. 3.9. References
  5. II. MODULARITY AND ARCHITECTURES
    1. 4. THE ROLE OF PRODUCT ARCHITECTURE IN THE MANUFACTURING FIRM
      1. 4.1. Introduction
      2. 4.2. What is Product Architecture?
        1. 4.2.1. The arrangement of functional elements
        2. 4.2.2. The mapping from functional elements to physical components
        3. 4.2.3. The specification of the interfaces between interacting physical components
      3. 4.3. A Typology of Product Architectures
        1. 4.3.1. Types of mappings from functional elements to physical components
        2. 4.3.2. Interface coupling
        3. 4.3.3. Types of modular architectures
        4. 4.3.4. Slot
        5. 4.3.5. Bus
        6. 4.3.6. Sectional
      4. 4.4. Product Change
        1. 4.4.1. Product architecture determines how the product can be changed
        2. 4.4.2. Change within the life of a particular artifact
        3. 4.4.3. Change across generations of the product
      5. 4.5. Product Variety
        1. 4.5.1. Variety and flexibility
        2. 4.5.2. Infinite variety
      6. 4.6. Component Standardization
        1. 4.6.1. A modular architecture makes standardization possible
        2. 4.6.2. What are the implications of standardization?
      7. 4.7. Product Performance
        1. 4.7.1. Local performance characteristics and modular architectures
        2. 4.7.2. Global performance characteristics and integral architectures
      8. 4.8. Product Development Management
        1. 4.8.1. System-level design
        2. 4.8.2. Detailed design
        3. 4.8.3. Product test and refinement
        4. 4.8.4. Organizational implications
      9. 4.9. Closing Remarks
        1. 4.9.1. How to establish a product architecture
        2. 4.9.2. Product change
          1. 4.9.2.1. Product variety
          2. 4.9.2.2. Component standardization
          3. 4.9.2.3. Product performance
          4. 4.9.2.4. Product development management
        3. 4.9.3. Research directions
        4. 4.9.4. Conclusions
      10. 4.10. Acknowledgments
      11. 4.11. Notes
      12. 4.12. References
      13. 4.13. Commentary
      14. 4.14. References
    2. 5. MANAGING IN AN AGE OF MODULARITY
      1. 5.1. A Solution to Growing Complexity
      2. 5.2. Modularity Outside the Computer Industry
      3. 5.3. Competing in a Modular Environment
      4. 5.4. Needed: Knowledgeable Leaders
      5. 5.5. Notes
      6. 5.6. Further Reading
      7. 5.7. Commentary
        1. 5.7.1. Modularity creates options
        2. 5.7.2. Modular designs evolve as the options are pursued and exercised
        3. 5.7.3. The dot.com bubble and crash
        4. 5.7.4. What our theory does and does not predict
        5. 5.7.5. Managing in a modular age
      8. 5.8. Acknowledgments
      9. 5.9. Notes
      10. 5.10. References
    3. 6. TOWARD A GENERAL MODULAR SYSTEMS THEORY AND ITS APPLICATION TO INTERFIRM PRODUCT MODULARITY
      1. 6.1. Modular Systems
        1. 6.1.1. Fitness and adaptation
        2. 6.1.2. Coupling and recombination
        3. 6.1.3. Separability
        4. 6.1.4. Heterogeneity of inputs and demands
        5. 6.1.5. Migration and equilibria
        6. 6.1.6. Overcoming inertia
      2. 6.2. Interfirm Product Modularity
        1. 6.2.1. Separability and synergistic specificity
          1. 6.2.1.1. Functionality achieved through specialized components
          2. 6.2.1.2. Customer ability and willingness to choose and assemble components
          3. 6.2.1.3. Heterogeneous inputs
          4. 6.2.1.4. Diversity of technological options available
          5. 6.2.1.5. Differentiation in firm capabilities
        2. 6.2.2. Heterogeneous demands
        3. 6.2.3. Urgency
          1. 6.2.3.1. Speed of technological change
          2. 6.2.3.2. Competitive intensity
          3. 6.2.3.3. Market power and architectural control
      3. 6.3. Implications, Limitations, and Suggestions for Future Research
        1. 6.3.1. Implications for management and public policy
        2. 6.3.2. Implications for future research
      4. 6.4. Notes
      5. 6.5. References
      6. 6.6. Commentary
        1. 6.6.1. Modularity in multiple disciplines
          1. 6.6.1.1. Modularity in psychology
          2. 6.6.1.2. Modularity in biology
          3. 6.6.1.3. Modularity in American studies
          4. 6.6.1.4. Modularity in math
        2. 6.6.2. Pervasive themes
      7. 6.7. Notes
      8. 6.8. References
  6. III. NETWORKS AND STANDARDS
    1. 7. THE ECONOMICS OF NETWORKS
      1. 7.1. Introduction
      2. 7.2. Classification of Networks
      3. 7.3. Network Externalities
        1. 7.3.1. Sources of network externalities
        2. 7.3.2. The "macro" approach
          1. 7.3.2.1. Perfect competition
          2. 7.3.2.2. Monopoly
          3. 7.3.2.3. Oligopoly and monopolistic competition under compatibility
          4. 7.3.2.4. Oligopoly under incompatibility
          5. 7.3.2.5. Coordination to technical standards with asymmetric technologies
        3. 7.3.3. The "micro" approach
          1. 7.3.3.1. Mix-and-match: compatibility versus incompatibility
          2. 7.3.3.2. Changes in the number of varieties as a result of compatibility decisions
          3. 7.3.3.3. Quality coordination in mix-and-match
      4. 7.4. Network Externalities and Industry Structure
        1. 7.4.1. Invitations to enter
        2. 7.4.2. Interconnection or foreclosure by a local monopolist?
      5. 7.5. Sequential Games
      6. 7.6. Markets for Adapters and Add-Ons
      7. 7.7. Concluding Remarks
      8. 7.8. Notes
      9. 7.9. References
      10. 7.10. Commentary
        1. 7.10.1. Introduction
        2. 7.10.2. Features of network markets with key antitrust implications
        3. 7.10.3. Implications for the Microsoft antitrust case
      11. 7.11. Notes
      12. 7.12. References
    2. 8. THE ART OF STANDARDS WARS
      1. 8.1. Historical Examples
        1. 8.1.1. North versus South in railroad gauges1
        2. 8.1.2. Edison versus Westinghouse in electric power: the battle of the systems2
        3. 8.1.3. RCA versus CBS in color television4
      2. 8.2. War or Peace?
      3. 8.3. Classification of Standards Wars
      4. 8.4. Key Assets in Network Markets
        1. 8.4.1. Control over an installed base of customers
        2. 8.4.2. Intellectual property rights
        3. 8.4.3. Ability to innovate
        4. 8.4.4. First-mover advantages
        5. 8.4.5. Manufacturing capabilities
        6. 8.4.6. Strength in complements
        7. 8.4.7. Reputation and brand name
      5. 8.5. Preemption
      6. 8.6. Expectations Management
      7. 8.7. Once You've Won
        1. 8.7.1. Staying on your guard
        2. 8.7.2. Offer customers a migration path
        3. 8.7.3. Commoditize complementary products
        4. 8.7.4. Competing against your own installed base
        5. 8.7.5. Protecting your position
        6. 8.7.6. Leveraging your installed base
        7. 8.7.7. Staying a leader
      8. 8.8. Rear-Guard Actions
        1. 8.8.1. Adapters and interconnection
        2. 8.8.2. Survival pricing
        3. 8.8.3. Legal approaches
      9. 8.9. Conclusions and Lessons
      10. 8.10. Acknowledgements
      11. 8.11. Notes
      12. 8.12. Commentary
      13. 8.13. Notes
  7. IV. FIELD-LEVEL AND ORGANIZATIONAL DYNAMICS
    1. 9. DYNAMICS OF ORGANIZATIONAL COMMUNITIES AND TECHNOLOGICAL BANDWAGONS: AN EMPIRICAL INVESTIGATION OF COMMUNITY EVOLUTION IN THE MICROPROCESSOR MARKET
      1. 9.1. Past Research
      2. 9.2. Technological Communities
        1. 9.2.1. Communities based on designs
        2. 9.2.2. Communities based on sponsors
        3. 9.2.3. Summary
      3. 9.3. Context of the Study
      4. 9.4. Theory and Hypotheses
      5. 9.5. Method
        1. 9.5.1. Data
          1. 9.5.1.1. Population density measures
        2. 9.5.2. Procedure
      6. 9.6. Results
      7. 9.7. Discussion and Conclusions
        1. 9.7.1. Organizational support as a resource
        2. 9.7.2. Technological bandwagons and strategy
      8. 9.8. Conclusions
      9. 9.9. Acknowledgements
      10. 9.10. Notes
      11. 9.11. References
      12. 9.12. Commentary
        1. 9.12.1. Introduction
        2. 9.12.2. Technological variation and standard setting
        3. 9.12.3. Collective action and standard setting
        4. 9.12.4. Organizational support and modularity
        5. 9.12.5. Conclusions
      13. 9.13. Notes
      14. 9.14. References
    2. 10. DOMINANT DESIGNS, TECHNOLOGY CYCLES, AND ORGANIZATIONAL OUTCOMES
      1. 10.1. An Illustration of the Phenomenon: Dominant Designs, Technology Cycles, and Organizational Outcomes
        1. 10.1.1. Propulsion
        2. 10.1.2. Landing function
        3. 10.1.3. Early systems architecture
        4. 10.1.4. Dominant designs, technology cycles, and industry dynamics
      2. 10.2. A Context for Dominant Designs and Technology Cycles: History of Technology and Evolutionary Economics
        1. 10.2.1. History of technology
        2. 10.2.2. Evolutionary economics and the economics of standards
      3. 10.3. Literature on Dominant Designs and Technology Cycles
        1. 10.3.1. Contrasting approaches to dominant designs
        2. 10.3.2. Toward a refined model of dominant designs: nested hierarchies of technology cycles
      4. 10.4. Dominant Designs, Technology Cycles, and Organizational Outcomes
      5. 10.5. Conclusions
      6. 10.6. Acknowledgments
      7. 10.7. Notes
      8. 10.8. References
      9. 10.9. Commentary
        1. 10.9.1. Modularity, markets and service innovation
        2. 10.9.2. Innovation streams, modularity, and technology cycles
          1. 10.9.2.1. Product structure and competence
          2. 10.9.2.2. Technology cycles, innovation streams, and senior teams
          3. 10.9.2.3. Moderators of product and industry transitions
        3. 10.9.3. Technology cycles, innovation streams and services
          1. 10.9.3.1. Major distinctions between products and services
          2. 10.9.3.2. "Product" structure and competence in services
          3. 10.9.3.3. Technology cycles in services
          4. 10.9.3.4. Moderators of industry transitions in services
          5. 10.9.3.5. Negative implications of service–product distinctions
          6. 10.9.3.6. Conclusions
      10. 10.10. References
    3. 11. MODULARITY, FLEXIBILITY, AND KNOWLEDGE MANAGEMENT IN PRODUCT AND ORGANIZATION DESIGN
      1. 11.1. Introduction
      2. 11.2. Nearly Decomposable Systems
      3. 11.3. Modularity in Product and Organization Designs
        1. 11.3.1. Modular product designs
        2. 11.3.2. Modular organization designs
      4. 11.4. Models for Managing Knowledge and Learning in Product Creation
        1. 11.4.1. "Traditional" sequential development processes
        2. 11.4.2. Overlapping problem solving
        3. 11.4.3. Modular product design
          1. 11.4.3.1. Improved component-level learning
          2. 11.4.3.2. Improved architectural-level learning
          3. 11.4.3.3. Using modular product architectures as mechanisms for coordinating organizational learning
          4. 11.4.3.4. The shifting focus of knowledge management in modular product development
      5. 11.5. Conclusions
      6. 11.6. Acknowledgements
      7. 11.7. Notes
      8. 11.8. References
      9. 11.9. Commentary
        1. 11.9.1. Introduction
        2. 11.9.2. The main ideas about modularity
        3. 11.9.3. Herbert Simon's influence
        4. 11.9.4. Important extensions of modularity concepts
          1. 11.9.4.1. Modularity in the marketing processes
          2. 11.9.4.2. Modularity in knowledge management
          3. 11.9.4.3. Modularity in competence-based strategic management
        5. 11.9.5. Modularity in eBusiness
      10. 11.10. Notes
      11. 11.11. References