Organizing for Modularity

Paper i proceeding, 2010

The product variety for companies to deal with is constantly increasing; they aim at giving the customer exactly the product variant she or he wants. Hence many companies have adopted a modularization strategy, which is to divide a product into modules with well-defined interfaces. This is done with the purpose of creating modules that can be developed independently of each other. Often the implementation of modularization in a company starts as a separate project. However, the question how firms can maintain a modular product structure over time remains unanswered. It is about making the modularization strategy become a more permanent product development principle. Therefore, the purpose of this paper is to investigate how a company can retain a modularization strategy and a modular product structure over time. The paper is based on case studies at two large Swedish manufacturing companies, one of which was followed for three years and the other for four years. Both companies implemented a modularization strategy, and started to modularize their products, in the mid-1990s. These two cases are compared and contrasted in their ability to keep the same strategy and product structure. This has been done in terms of how different ways of modularizing the product, different organizational structures and different routines for decision-making affect a company in retaining a long-term modularization strategy and modular product structure. Based on the analysis of the two cases, some proposals are given for how a company can do so. First, the different product modules should be defined in line with physical components. Secondly, since interface-related knowledge appears to show characteristics of tacit knowledge, a cross-functional, team-based way of working is proposed. Finally, interface responsibility should be established on the module level to enable decentralized decision-making and to unburden the decision-making hierarchy. In that way, efficient routines for decentralized decision-making can be realized.