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Modularity, Flexibility,andKnowledge Management in Product andOrganizationDesign
By Ron Sanchez and Joseph MahoneySMJ (winter 1996)special issue: Knowledge and the Firm
Overview
Investigates interrelationships among:Product designOrganization designProcesses for learning and managing knowledgeCompetitive strategyUses theprinciples of nearly decomposable systems(Simon 1962)In particular, usingstandardizedcomponentinterfaces
Overview
Organizations design productsBut I can also be argued thatproducts design organizationsSpecific product designs implicitly select coordination tasksCoordination tasks largely determine the feasible organization designs for developing and producing those productsFirst in modularity literature to suggest the linkage between product design and organization design“mirroring hypothesis”
Nearly Decomposable Systems
Complex SystemConsists of parts that interact and are interdependent to some degreeHierarchyis an organizing principleStructural conception of hierarchy, as opposed toauthorityhierarchyRecursive structure:interrelated subsystems that in turn have their own subsystemsNearly Decomposable SystemsInteractions among subsystems are weak (but not trivial); interactions within subsystems are strong
Nearly Decomposable Systems
Impacts of environmental disturbances localized within specific subsystemsIncreases survivability and adaptabilityThus Simon argues through evolutionary process most complex systems are nearly decomposable
Modularity in Product & Org Design
Degree of coupling:Theextent to which a change in the design of one component requirescompensating design changein the design of other componentsModularity:A special form of design whichintentionallycreates a high degree of independence or ‘loose coupling’ between component designsBystandardizingcomponent interface specifications
Linkage between Product and Org Designs
Tightly coupled product systemChange within one component likely requires compensating changes in other componentsDevelopment process consequently requires intensive managerial coordinationThus, requires tightly coupled organization structureCoordinated by managerial authority hierarchyLoosely coupled product systemSimilar logic: requires loosely coupled organization structure
Models for Managing Knowledge and Learning in Product Creation
Innovation During Product Development Involves:1.) creating new information about the functions components can perform – learning about components per se2.) creating new information about the ways components interact and can be configured – learning about product architectureFour odes of learning – radical, architectural, modular, incremental
Models for Managing Knowledge and Learning in Product Creation
3 Models of Development ProcessesSequentialFollows a sequential stagingInformation structure of component interface specification is theoutputof the processAn evolving information structureOverlappingSome overlappingInterface still an evolving information structureModularComplete specification of interface before development
Models for Managing Knowledge and Learning in Product Creation
Sequential / OverlappingEvolving information structureRequires recursive information flowOrganizationally, requires managerial adjudication of many technical and financial issuesRequires authority hierarchyModularStable information structureConcurrent development possible without overt managerial interventionCoordinationembeddedin the interface specification
Conclusion
Modular Development enablesImproved component-level learningBy insulating disruptions by unexpected changes elsewhereImproved architectural-level learningBy preventing compartmentalization of organizationStrategic flexibilityStandardized interface allows a range of variations at component level (so long as they conform to the specifications)Essentially, range of variations createsoption value
Contributions
Linking product design, organization design, and competitive strategyIllustrate the linking mechanisms between product design, design process, and organization designExplicitly investigates knowledge specialization beyond content into process

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Modularity, Flexibility, and Knowledge Management in ...