From Chaos to Clarity: Embracing Modularity
by Olli Uuttu • 8 min read
Dear reader, have you ever wondered what goes into building a truly modular product? It’s not as easy as it may seem. While there are several proven methods available to plan and implement optimal modular architectures, it still takes effort, dedication, and discipline to succeed.
I’m sure you know the feeling of getting home after a busy day at the office. It can be hard to find the time and energy for household tasks and hobbies. It’s easy to let go and think that the dishes can wait, or that you’ll leave your tennis equipment here for now, and exercise after you’ve rested a little. Before you know it, you get in the habit of categorizing many small but relevant tasks as “not vital,” and things start getting out of hand. Without even realizing it, postponing the small things begins to affect your personal productivity.
Just like in everyday life, achieving success in product design requires commitment and perseverance. But the rewards can be significant – a modular design can lead to cost savings, faster time-to-market, and greater flexibility in responding to changing customer needs. So, if you’re ready to take on the challenge, let’s explore the world of modular product design together!
how to scope the right modularity?
With modularity we strive to find, design, and run a modular system that provides an optimal way of working and meets the desired variability.
My first encounter with modular product architectures was around 23 years ago, just before the millennium. When I was completing my M.Sc. studies, I was looking for interesting thesis opportunities. Thanks to Prof. Reijo Tuokko, I was given the opportunity to lead a Business Finland (formerly Tekes) funded applied research program focusing on modularization for the next two years. Later on, one of my colleagues published a book based on the research [cite].
Since the turn of the millennium, much progress has been made in the field of modular product architectures. One such method is the brownfield process, which focuses specifically on existing product families. Another example is Modular Management, a startup based on research from KTH Royal Institute of Technology. They have been providing consulting services in this area for many years.
Often, companies developing mechatronic products have a large market (both current and potential) with a variety of customer segments. These segments typically do not share the same parameters when it comes to business needs, technology, and economic maturity. For some customers, what they want tomorrow differs significantly from their understanding of their needs today. Sometimes technical evolution is so rapid that a product design today can become outdated tomorrow. In some customer segments, the price of investment is the only driver, while for others, investment cost does not play a major role if the offered product meets their specific needs and ROI. This leads to the conclusion that the right strategic drivers for modularity can significantly differ depending on the offering (e.g. product line or product family in question).
Strategic drivers for modularity
The figure below presents the main strategic drivers for modularity. By adopting these drivers into your modular architecture, you can guide the development of your modular architecture. The team developing a modular architecture must share the same target view of these strategic drivers.
With Operational Excellence, your target is to focus on profitability. Therefore, your drivers for modularity should aim for an architecture that has as many commonalities as possible between product variants, as well as over time. With Customer Intimacy, you emphasize more on flexibility and agility to adapt to different customer needs, even if it comes with increased operational expense. This approach makes sense when the value for the customer comes mainly from being able to service specific needs, and thus you need to focus more on variability. Sometimes, you may be developing a modular architecture that uses continuously evolving technology that plays a major role. In this case, your strategic drivers should focus on Product Leadership.
Remember, that together with your team, the right target is typically somewhere in between. For example, you may focus on Operational Excellence but still have a desired drift towards Customer Intimacy. In an archery game, your goal is to find your arrow in the middle of the circle. In this modular product architecture game, if you find your arrow in the middle, you should think twice before going forward. Being in the middle means that there is a risk of being more expensive, having less customer intimacy, and/or falling behind when compared to your competitors in terms of product leadership.
How to position customer experience when designing modularity?
Sometimes, a modular architecture is designed to target product leadership and/or customer intimacy, either as part of a certain architecture (such as modules driving variation) or as separate modular platforms. In these areas, it can be particularly valuable to invest in studies that provide an understanding of customer behaviour, such as the work related to customer journeys and customer experience.
How to find out the right level of variability?
As explained earlier, attempting to develop a modular product architecture that has both as much commonality as possible while also offering unlimited variability does not make sense. So, how can you determine the right level of variability? How can you, for example, exclude certain customer needs to focus on operational excellence? In this case, having a good understanding of different market segments, their needs, and their potential is critical.
How do we understand the market segments?
Wikipedia refers market segmentation as “the process of dividing a broad consumer or business market, normally consisting of existing and potential customers, into sub-groups of consumers (known as segments) based on shared characteristics.” The part “shared characteristics” is crucial also when talking about the use of segments to make decisions about variability.
Let’s use a household oven as an example. Suppose we want to sell ovens in geographical areas such as Europe, Asia, and America both now and in the future. In each of these geographical areas, we may have segments such as homes, caravans, and boats. Let’s assume that the ovens we would like to sell to boats share mainly the same characteristics (look and feel, design elements, size elements) in all the mentioned geographical areas. Now, we need to decide whether the product architecture we are working with should provide variability to meet the specific characteristics of the boat segment. As one factor for the decision-making process, we need to understand the sales potential of the boat segment. One method to do so is to understand the boat segment’s relative market volume, relative price, and market growth. Let’s assume that in this case they are:
- Europe boats segment: relative market volume 60%, relative price 100%, market growth 0%
- America boats segment: relative market volume 30%, relative price 140%, market growth 5%
- Asian boats segment: relative market volume 10%, relative price 90%, market growth 10%
Understanding the market segments from modularity perspective
In this case, our working hypothesis can be that the boat segment is an important one, so we want to include it in our oven modular product architecture. Therefore, we aim for a modular design that covers all the identified boat segments. However, during the design process, we might discover that the Asian boat segment has some specific characteristics that are very expensive to include in the platform we are using. In that case, we might decide to exclude the variability that covers the Asian boat segment, since we would get a relatively low margin from it, and therefore simplify the platform design.
It might be worth mentioning that this does not necessarily mean that we do not want to offer products to the Asian Boats segment. Since it has an important part of our turnover and also significant market growth potential, we might want to offer a low-cost product specifically designed for that segment. Therefore, understanding our market segments and their shared characteristics is a key element when driving modularity, and it is used in many steps during modular architecture development.
Who should pay attention to the modularity of our products? Maybe design department should take the responsibility, since they can make the change. Or maybe sales department, and we can market how modular our products are.
A systematic design of modular architecture requires a holistic and cross-functional approach. It is about combining different viewpoints – sales, offering, portfolio structure, strategic drivers, design, production, in use and end-if-life – to find out an optimal process to fulfil your customer needs. It is a game for everyone. For some of us it could mean more work to secure e.g. module interfaces, but for us together it promises a way to increase profitability. Stay tuned! In my coming blogs I will deep dive in what it means to design and run your modular platform!
how can modularity improve your product lifecycle management?
At IDEAL GRP we work with companies developing modular architectures across the Nordics and Baltics. Want to know more!
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