Digital Product Innovation: Building Generative Capability through Architectural Frames

Abstract

Over the last decades we have witnessed a profound digitalization of tangible products. While this shift offers great opportunities, it also exposes product developing industries to significant challenges. In these industries organizations, markets, and technologies are tuned for mass production, providing competitive advantage through scale economics. Typically, firms exercise modular strategies to deliver such scale benefits. Rooted in Herbert Simon’s notion of near decomposability, modular product architectures allow for production assets, such as tools, processes, and plants, to be effectively reused across product variants and over generations of designs. However, they come at a price; modularity requires overall design specifications to be frozen well before production. In practice, this tends to inscribe functional purpose in the structures of the system, effectively preventing firms from taking advantage of the speed by which digitized products can be developed and modified. The main objective of this thesis is to investigate and explain how product developing organizations adapt architectural thinking to balance the proven benefits of modularity and the emerging opportunities provided by digital technology. In doing so, it introduces a complementary architectural frame, grounded in Christopher Alexander’s seminal work on patterns. This frame associates the concept of architecture with generativity and reuse of ideas, rather than scale economics and reuse of physical assets. Sensitizing the theoretical framework through a longitudinal case study of digital product innovation this thesis derives several implications for theory and practice. Across four embedded cases in the automotive industry it demonstrates that generative capability follows from a shared organizational view on products as enablers and catalyzers of new, yet unknown functionality. Such an emergence-centric view requires product developing firms to rethink existing governance models. Rather than exercising control through specific functionality, inscribed in modular product structures, it offers the benefit of influencing innovation through general functional patterns, serving as raw material in distributed and largely uncoordinated innovation processes. This shift in focus, from specific functionality to general functional patterns, enables a new strategic asset for product developing firms. It opens up for proactive rather than reactive strategies, where the architecture makes an instrument to cultivate new ideas and business opportunities, rather than a tool for cost savings.

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