Configurability, Configuration and Mass Customization


A modular product architecture enables you to reduce complexity and accelerate value creation. In this insight you will learn more on what it is and how you can harness it for mass customization.

Customers want innovative products, fast. Companies want to make customers happy and be 21st century lean. So how does all that work? Modular Management delivers clarity, performance and customer centricity so clients can reduce complexity and accelerate value creation.


Why module design?

Why Modular Design?


Does your product design methodology support your company strategy​?

Most companies today are operating in multiple market segments and regions where customers demand unique products customized to their preferences with a steady stream of new features and performance.

Companies are also looking across their established internal silos to find ways to improve the performance for their organization. 

The challenge is to simultaneously meet the market demand of mass customized products while cutting internal costs, complexity, lead times and time to market.

In this insight paper Luther describes the difference between Traditional Design and Modular Design methods, with suggestion on how you can implement modular design in your product development process.

Luther Johnson

Customers want innovative products, fast. Companies want to make customers happy and be 21st century lean. So how does all that work? Modular Management delivers clarity, performance and customer centricity so clients can reduce complexity and accelerate value creation.


More readings

Guide To Agile Line Production

Guide How to Design for Fast Service


Configurable Construction Systems


How to Improve Productivity in the Construction Industry?

By Måns Ridzén & Tobias Martin

Construction has a hard time to match the productivity of other industries. 

Although there have been multiple phases of industrialization, these changes have had varying degrees of success. And despite efficiency gains, the construction industry remains relatively traditional. 

For example, despite the promise of prefabrication to deliver higher quality at lower cost, there’s an evident risk that product quality is sacrificed for process efficiency. And even these process benefits can be questioned compared to improved on-site production methods.

What’s clear is that construction companies are looking for ways to improve productivity. 

What’s also clear is that there’s not a one-size-fits-all solution. 

Configurable Construction to Meet Stakeholder Needs

Industry stakeholders want different things and these differences are driven by location and climate, regulations, respect for local traditions and the balance between the needs of construction companies, real estate owners and consumers.

This variety of needs is well suited to a modular approach, where different modules can be interchanged and rearranged thanks to standardized interfaces. The result is a construction system that can be configured to meet the needs of the market and provide solutions to satisfy all stakeholders.

Configurable construction systems can add value for construction companies and end customers through increased productivity, reduced lead-times and improved quality and product performance. This article looks at how companies can move from more traditional, custom-crafted construction to a configurable, truly industrialized system that meets all stakeholder needs.

From Custom-Crafted to Configurable

Start With What Delivers Value

Before starting out on a journey to create a configurable system, it’s important to set clear targets and plan how to reach them. These targets must be set specifically for your organization and will depend on company strategy, legacy and starting point.

Some companies see competence limitations in construction design as one of the biggest risks, and therefore set design re-use and CAD-automation as one of the main targets for their construction system. Others focus on direct material savings, quality improvements, value add for customers or digitalization. Successful companies understand what to focus on, how to set targets and how to connect them to actionable KPIs.

If the scope is wide, there will be reason to question whether it’s possible to select one technical or process solution for the whole range. For example, in a high-value segment a standardized kitchen setup might be used to enable a high degree of prefab. But in a high-price segment, the end customer wants more freedom to design the kitchen, including cabinet interiors, pushing the variance point later in time, pushing down the possible prefab degree.

One of the biggest long-term effects of utilizing a construction system is to be able to improve it continuously over time. Project-based businesses traditionally have a hard time to close feedback loops and continuously improve the product over time. Instead, there’s a risk that the wheel is reinvented in each new project. Construction is project based by nature, but this does not stop the central definition and governance of a construction system.

From Project Based to Configuration Based

Avoid Pitfalls

While the potential value is great, if you approach a new construction system from the wrong angle it can lead to big problems. Even when interfaces are in the right position and module variants are specified according to market demands, value will not materialize unless your processes, IT-systems, suppliers and company culture are adapted and aligned.

If strategies are not aligned properly, and not incorporated into the construction system itself, there will be a gap between company vision and implementation. 

Experience suggests that many companies fail to properly assure that the construction system is flexible enough to be used in construction projects with different needs, thereby forcing projects to depart from set interfaces. Other companies risk focusing more on internal needs than the needs of end users, resulting in poor product performance. If you don’t attack these issues head on, your investment in productivity improvements is likely to fail.

Configurable Construction Systems and Prefab

A common misconception is that moving to prefabricated construction elements is the same thing as implementing a construction system. 

The choice whether production should be located onsite or offsite is part of the construction system’s supply chain strategy, and it’s not clear that a bigger prefabricated share will help realize productivity improvements. For example, market requirements, such as flexibility and late customization, may drive production activities to onsite. 

It’s important to carefully match product flexibility with process capability and customer value. For example, customization that generates significant customer value can be be made onsite, while other elements should be optimized for efficiency and prepared offsite.

A construction system should rather be defined as a system prepared for configuration. 

The first step is technology selection, i.e. standardizing on a specific frame system or multiple systems depending on market requirement. The second step is to have predesigned parts that are configured into a building. The higher the degree of centralized preparation, the less work needed in the design of each building. In reality, different parts of the building system will have different levels of preparation depending on the market challenge. Following this, the level of prefabrication can be optimized for each part to reach efficiency and configurability targets.

How Prefabricated Construction and a Construction System Work Together

How to Start?

Construction has some of the most complex and extensive products of any industry, varying from large buildings to huge infrastructure projects. One of the earliest and most important decisions is how to scope the construction system.

A building is a complex system made up of numerous sub-systems structured in multi-layered hierarchies. Dependencies between sub-systems and variance of execution between projects drive complexity in the design, production and maintenance of a building.

Even if the long-term vision is to have all or at least most of the building’s sub-systems as part of a construction system, it makes sense to slice things up in bite size pieces. Before digging into each sub-system, you can benefit from analysing the current state and identify which sub-system has most potential in relation to investment needs. This enables you to plan the overall journey to a configurable system and materialize that potential in iterative steps, starting with the part of the product that will give most return on investment.

Industry Disruption: Risk or Opportunity?

New actors tend to disrupt markets and leave established actors behind if they fail to adapt. The construction industry is likely to see an increasing level of disruption in the coming years, especially in some markets.

Decentralized production, complex permit processes, exposure to economic cycles, competence shortage and a multifaceted legacy are just some of the challenges facing the industry. What has been considered efficient before is no longer good enough. Industry specific conditions has held the industry back from some of the technological and organizational advances seen elsewhere.

As innovation continues at speed, we’ve reached a threshold where systems, technologies and processes can deal with the needs of the construction industry, and we’re seeing how leading organizations are adopting. Companies that find the balance of when and what to invest in will be greatly awarded, even if it’s a fine line and there are several uncertainties going forward. Whatever the right path is, you will have to be fast, flexible and efficient, which makes an investment in a configurable construction system important. Configurable construction will enable you to meet different stakeholder needs, stay on top of market trends and keep your organization together.

In the near future we’re likely to see new constellations of vertical integration. Larger construction companies will take a life cycle management approach to buildings, where the second and third tenant is a new customer. And this places new requirements on the construction system, with stable interfaces for future upgrades, and on the information management systems needed to handle the lifecycle perspective of the buildings.

The construction industry is changing fast and a construction system that can be configured to meet changing needs could well be a prerequisite for success. Either you adapt as competitors set the framework for the future or you lead the change.


Configurable construction systems can add value for construction companies and end customers through increased productivity, reduced lead-times and improved quality and product performance.

Måns Ridzén,
Modular Management


This is the world-class solution for product management.

Standing for Product Assortment Lifecycle Management, PALMA is cloud-based strategic software to create, document and govern modular product architectures. With this unique structured approach you can design and document product architectures. You can also connect enterprise systems and secure business goals.

Built on an in-memory database platform, PALMA is faster and more capable than anything else on the market, so you can create configuration rules without coding, govern product architecture life cycles and create a business advantage.



By Karl Bråtegren


How to Avoid Roadblocks?

Karl Bråtegren, Senior Manager at Modular Management in Stockholm, shares some thoughts on software modularity and how to avoid roadblocks.


What is Software Modularity?

Software modularity is the decomposition of a program into smaller programs with standardized interfaces.

Microservices is a hot trend right now, and it’s essentially about small modules that are built into a whole software system. Spotify and Netflix talk about how they work with microservice architectures, and before this there was a similar trend called Service-Oriented Architecture (SOA) that targeted bigger modules.

Software modularity pretty much shares the same definitions as hardware modularity, with strategically- and functionally-clean modules that are driven by customer needs and share standardized interfaces. You basically allocate different functions to software modules and then implement them in source code.

A common way of referring to interfaces between software modules is Application Program Interfaces (APIs). For example, Google and PALMA expose APIs to the external world, and when you create software modules it’s like creating APIs within the product.

Why is This a Hot Topic?

The main driver is that software is rapidly becoming a bigger part of many products.

Software is delivering on the most important customer values and companies need to be much faster in development to stay ahead of competition. With modularity you can secure product leadership with separate modules that can be developed quickly without being locked into a complex web of other software functions. Basically, you can avoid roadblocks.

A second driver is ‘hardware portability’, a topic that many clients are looking at right now.

Hardware portability means that you want to be able to move the software solution from one hardware to another, enabling you to easily change hardware supplier. Electronics like PCBs, for example, can reach end-of-life quickly and you need to replace them. You also want to take advantage of better and cheaper hardware when it becomes available. If you have inflexible, over-dimensioned software that doesn’t scale well with the hardware, it makes it very hard to move the solution to a lower performance piece of hardware. With the right modules in place, you can isolate hardware impact to specific modules and enable hardware scalability and portability.

A third driver is that you can’t do everything on your own.

You want to make use of open source and leverage third-party specialist expertise. It’s much easier to plug in third-party software, for example navigation and vision processing, into a modular architecture than a monolithic one. You would in this case aim to create modules with the aim to source them from a strategic partner.

What’s Your Personal Experience of This?

We’ve recent client experience, but an older example is when I worked as Product Manager at Siemens Mobile Networks. This was back in the old days of Wireless Application Protocol (WAP), General Packet Radio Services (GPRS) in mobiles and slow networks.

At Siemens we didn’t have a WAP proxy to sell to operators and wanted to launch our own product. What we did was to partner with an American company that had a proxy server with compression technology, and they then made their APIs available to us. Using these APIs we could develop services aimed at the cell phone service providers and make a viable and attractive solution. We also discovered that we needed a WAP protocol stack, so we found a Finnish company with a commercially available WAP-stack that we could plug into.

This is a practical application of our strategic sourcing driver from the Module Indication Matrix (MIM), but at Siemens we didn’t think much about it back then. We just bumped into challenges that had to be solved and found a way to solve them with strategic partners.

What are the Opportunities for Companies?

There are many reasons to invest in software modularity, but it’s basically about being fast and flexible. By developing new features faster, and more frequently, you can provide new software and hardware products that better meet customer needs.

You can also work with the continuous release of new features, while maintaining quality and not putting product reliability at risk. In an integrated or monolithic architecture, there’s a risk that when you introduce a new feature update the whole product goes down. If it’s a robot, for example, this means the whole line stops. Even if the update feature is quite small, like a nice new Graphical User Interface (GU), customers will be scared – or won’t even dare – to update if it’s in a big monolithic package. This has been a real issue and in some cases it still is.

Without a flexible, modular software you have a slower development pace, more bugs, more testing issues and more time to release. You’re also forced to live with old and expensive hardware and run end-of-life hardware projects, often in panic mode.


What is Modular Management Able to Offer?

We’re able to offer a unique approach in Modular Function Deployment® (MFD) which solves many of the challenges mentioned earlier.

I haven’t seen any other structured approach that explains how you should think if you want to move to microservices or a more modular software architecture. There are rules of thumb in the software world, like separation of concerns, but there is no real method like the one we have.

MFD is unique because it takes customer values into account. This is extra important for software, because for a lot of modules you don’t need parallel variants of the source code, you just need to increase speed in delivering on certain customer values. In other words, you need to rapidly bring out new versions of these modules.

With MFD you can also consider company strategy up front, for example hardware portability, strategic sourcing, carry over and technical specification. One scenario is that when you offer integration capabilities to the external world you may need different protocol stacks. An example of this is to offer many different industrial Fieldbuses (ProfiNet, EtheNnet/IP, DeviceNet…). They will typically come with their own variants of the code. This is an example of when we would apply technical specification as a strategic driver. In the end, this could be enough reason to create a module for the Fieldbuses.

Many of our clients typically have good technical software architects. Architecture is a skill that’s important when you work with software because it’s so abstract. You don’t have brackets and pumps to touch and feel, so software architects are typically comfortable in talking in functions and working with architecture diagrams. But they often overlook customer values and strategies, or at least don’t have a systematic method to approach these critical drivers and how to reflect them in the architecture.


Any Final Thoughts?

I’ve heard software architects say that it’s more difficult to describe exactly what you mean when it comes to software, just because it’s so abstract. You also have a very high degree of freedom in implementation since you’re not bound by physics.

This level of freedom makes it easier to circumvent the architecture during implementation, so it’s always important to go back to why you defined a module and make sure it’s implemented accordingly. That’s where we come in. 

For more information, contact me via the button below.


As software architecture can easily be circumvented by the coders, it is important to repeatedly go back and look at the reasons why certain functions were grouped into modules.

We have done software modularity before, but this time we factored in customer values and strategy. I believe this makes our new architecture much stronger.

Roger Kulläng
Global Software Solution Architect ABB Robotics

There are many reasons to invest in software modularity, but it’s basically about being fast and flexible. By developing new features faster and more frequently, you can provide new software and hardware products that better meet customer needs.

Karl Bråtegren
Senior Manager
Modular Management


This is the world-class solution for product management.

Standing for Product Assortment Lifecycle Management, PALMA is cloud-based strategic software to create, document and govern modular product architectures. With this unique structured approach you can design and document product architectures. You can also connect enterprise systems and secure business goals.

Built on an in-memory database platform, PALMA is faster and more capable than anything else on the market, so you can create configuration rules without coding, govern product architecture life cycles and create a business advantage.


How to Manage Innovation?


KTH Niklas on Innovation

We got the opportunity to speak with Niklas Gustafsson, Program Director at the KTH Executive School in Stockholm. Here’s what he had to say on innovation and business transformation.

You focus on innovation management, why?

I think innovation sums up a lot of the challenges we’re seeing today. In this day and age we’re witnessing the introduction of a lot of new technologies and completely new product and service offerings.

We see this in the consumer business, driven by the new tech coming out of Silicon Valley, but it’s also happening in traditional industries. Big changes are under way, from combustion to electric engines, AI, 5G changing the frontiers of telecom, financial blockchains and new sensors enabling the internet of things. All these innovations are going to transform industries of today into something new.

The question is how companies can manage transformation? And this is where innovation management is a very good tool.

What are the main challenges facing companies today?

I think the biggest challenge is to adapt to the new reality that’s coming, especially for manufacturing companies.

There are so many shifts going on at the same time, in technology, business models and internationalization. A lot is being driven by new technology, but technology itself is not the solution. It’s how you convert technology into a viable business model.

For example, the electrification that’s ongoing in the truck and automotive industry is going to put an end to traditional business models and old ways of thinking.

What are the main opportunities?

If you can adapt, innovative technology presents tremendous business opportunities. I think the future looks very good for companies that are able to transform, adapt and re-educate their personnel.

It’s going to be much tougher for traditional companies that can’t adapt fast enough, which in turn presents opportunities for new companies with interesting and exciting new solutions. Innovative start-ups have the chance to completely transform traditional industries, faster than ever before.

We’ve seen this in Sweden in the music industry, where streaming capabilities have created big new companies. Books is another, where big new companies are buying up older ones.

And it’s not just Silicon Valley type start-ups. The airline industry, for example, is changing to meet new environmental demands, and the shipping industry is also going to have to make big changes. These changes will demand innovative thinking.

Another example is healthcare, where the opportunities are enormous, and we’ll need innovation in legislation too. Legislation that fits the old world won’t always fit the new.

What advice would you give to companies?

Fill up on knowledge. Refill. Understand theory, research, as well as practice. 

I give the same advice to academia. Go out, talk, listen and really understand the companies that are out there, and their problems. There’s a balance at this meeting point of theory and practice, and if you find it you’re in a good position to take on technical innovation and business model transformation.

What's the best thing about your job?

I get to meet a lot of interesting people, ideas and questions. It’s where theory and practice meet.

Any links you'd like to share?

I like trying to understand ideas and think one of the best podcasts right now is called Hidden Brain (external link).

Thanks Niklas.


What I like most about my job is that I get to meet a lot of interesting people, ideas and questions. It’s where theory and practice meet.

Niklas Gustafsson
KTH Executive School
circular economy

Circular Economy


Hot Topic

How to Design Products for the Circular Economy?

Shifting the Economic Model

Transformation maps from the World Economic Forum show where the shift away from a take, make and dispose economic model is gaining ground. So what does this mean for the design of products? How can companies design for the circular economy?​

circular economy

What is the Circular Economy?

The circular economy has over 100 definitions across academia and industry. Common to them all is an economic system that replaces the end-of-life concept with reduction, reuse, recycling and recovery of materials in production, distribution and consumption processes (Kirchherr et al., 2017).

One reason for the circular economy’s rising popularity is its coupling with other megatrends, such as digitalization. The idea is not only to reduce ecological footprint, but also boost economic growth and innovation. 

ISO 14040:2006 defines a product lifecycle as the consecutive and interlinked stages of a product system, from raw material acquisition or generation from natural resources to final disposal. A product system, according to ISO 9001, is the combination of interacting elements organised to achieve one or more stated purposes. A system may therefore be a product or the ecosystem of services it provides.

The circular economy requires us to rethink business models, product design and product lifecycles. And that’s where modular design comes in.

How to Rethink Product Design and Lifecycles?

Usage is typically the longest phase in the product lifecycle. For example, Swedish steel producer SSAB estimates that the majority of all steel ever produced is still in use. At the same time, disposed steel does not satisfy market demand for new steel.

In order to recover materials from products for recycling or remanufacturing, product owners and producers need to agree on product return. They need to rethink the costs of replacing and returning product, and aim to reduce demand for new materials by designing products for greater longevity, or even perpetual reuse. Companies basically need to rethink their business models and the evolution of the customer experience over time. And this naturally involves major risks and uncertainties.

There is significant uncertainty in how to invest, design, purchase, deliver and monitor products so they can be returned efficiently or reusable indefinitely. The degree of freedom for executives and designers to rethink business models or entire products is always limited by time, resources and risk. So how can we act on the opportunities presented by the circular economy? 

Create an Unfair Advantage With Modular Design

For example, take a look at Xerox. 

Xerox is one of the leading manufacturers to design and operate circular product lifecycles for printer and photocopier solutions. The table below illustrates Xerox learnings in moving from selling printer and copier products, to office automation services (pay per use). Savings from remanufacturing a non-modular design were doubled when Xerox moved to a modular design for its copiers.

Modular design enables companies to separate and replace modules that are used intensively from variant introductions and performance upgrades. This improves maintenance services along the product lifecycle, and enables processes for module return, recovery and reuse. 

Modular design also enables companies to explore new markets and new operational models, such as remanufacturing, module by module. This reduces the time, effort and risk involved in innovation, which in turn creates a competitive advantage in time to market for new products. And some of these new products may well be the key to new service business and business paradigms for the circular economy.

Modular Design for Products, Services and Organizations

Sustainable modular designs are customer-centric. This has been true for Modular Management client engagements for more than 20 years, and designs for the circular economy are no different. 

Technology will play a key role in defining product system architecture, whether modular or integral, but technology trends are many and the rate of change is hard to predict. Architectures will not last forever, but a customer-centric modular product architecture is an asset much larger than the sum of technical architectures, and can satisfy strategic and market needs over time.

How to approach customer centricity?

First, think of the customer values provided by your product and then decouple these from current products. Second, rethink your product as the combination of interacting functional elements. With this, how might some elements be designed to perpetuate reuse, decoupled from material use, or designed for effective recovery or recycling? What services would be desirable along the lifecycle? What would this require of your organisation and company strategy? Consider the following, simplified innovation scheme.

circular economy simple innovation model

The positive correlation between modular product architectures and business performance has been researched in a number of industries, including software, computer, consumer electronic and automotive industries. 

At Modular Management we’ve seen how most leading brands, often after product platform and standardization strategies, are investing in modular design and modular architectures to increase strategic flexibility and business performance. 

One learning is crystal clear: cross-functional engagement.

Cross-functional engagement in modular design is fundamental to succeed in realizing and sustaining  business performance. This becomes especially clear when companies want to offer and deliver effective and consistent product lifecycle services for their products. The longer the product is in operation, the more critical lifecycle services become, which is extremely relevant for reuse, recovery and recycling.

Modular design companies are not only faster in time to market, and more cost-effective in design maintenance, they also tend to have more responsive/proactive sales and marketing. Modular design also enables faster assembly and more effective use of suppliers and global manufacturing assets. Modular designs are more suitable to service at near-customer locations, and this reduces tied-up capital linked to logistics. Even spare parts, upgrade and service business become more responsive and efficient.

Provided information model and design principles are aligned, modular architectures for products, services and organisations can meet changing customer needs and accelerate value creation, step by step.

Five Steps of Lifecycle Design Maturity

Rethinking product design for lifecycle services and circularity was a task for a workshop organized by Eurostep, KTH Royal Institute of Technology and Modular Management at the Dome of Visions in Stockholm, Sweden. The task was to define and exemplify levels in maturity in designing for product life cycle services. Participants represented a sample of industrial core competencies, ranging from industrial robots, to heating and power systems, steel and trucks.

Each participant had a different perspective and unique industry experience, but succeeded in defining a common set of challenges, capabilities and values in a five-step maturity model.

Each of the five steps represents a maturity level in designing for product lifecycle serices, from ‘Initial’ to ‘Optimising design’ for product lifecycle services.

This staircase model provides a foundation for Modular Management research into the circular economy. More co-developments with industry are underway, and universities, industries, students and practitioners are welcome to join.

The circular economy embraces both customer centricity and business performance and there is a manageable, step-by-step path to reduce ecological footprint while realizing significant opportunities for your business. Get in touch to find out more.

Colin de Kwant

Colin de Kwant


Mobility Scenarios

A round table event, on how circular economy and industry 4.0 trends impact product lifecycle services, was organized by Eurostep and Modular Management with support from the KTH Royal Institute of Technology (School of Architecture and Built Environment and School of Industrial Engineering and Management). Held in Stockholm, industry participants came from ABB Robotics, Bosch Thermotechnology IVT, Modular Management, Siemens Industrial Turbomachinery, SSAB and Volvo Truck & Bus. And the output was a five-step maturity model in how to design for product lifecycle services.


Follow the ECO² Vehicle Design Centre


How to Reduce Complexity and Accelerate Value Creation?


World Economic Forum on the Circular Economy


How to Speed up Time to Market?


When Speed is of the Essence

How can executives for large companies speed up time to market for new products?

Large companies, with many brands, tend to face challenges in terms of speed. Smaller companies, by their very nature, have a tendency to be faster and more innovative. 

At the same time as small companies are hungry to challenge incumbents with innovative products on high-margin markets, other global competitors challenge on volume. 

The market leadership of multibrand companies is therefore often under pressure, even for the most successful of organizations. But leading multibrand companies often find ways to move faster. On the product side, for example, there are opportunities to reuse parts across products, reduce cannibalization across brands, compete on innovation and speed up time to market for new products. 

Speed is a key element of The Executive Dilemma, i.e. how to optimize operational excellence, customer intimacy and product leadership. Click below to find out more.

executive dashboard


This is the world-class solution for product management.

Standing for Product Architecture Lifecycle Management, PALMA is cloud-based strategic software to create, document and govern modular product architectures. With this unique structured approach you can design, document and configure products. You can also connect enterprise systems and secure business goals.

Built on an in-memory database platform, PALMA is faster and more capable than anything else on the market, so you can create configuration rules without coding, govern product architecture life cycles and create a business advantage.


Lean and Modularity


How to Find the Winning Synergy?

Go Lean and Modular to Minimize Waste

Minimizing waste is the focus of both lean and modularity. In many ways, they’re the perfect match to accelerate value creation.


The core idea of lean is to maximize customer value while minimizing waste. This is accomplished through the application of a structured way-of-working that eliminates or minimizes waste. A lean organization understands customer value and focuses key processes to continuously increase it. The ultimate goal is to provide perfect value to the customer through a perfect, zero-waste value creation process.

Lean thinking changes the focus of management from optimizing separate technologies, assets and vertical departments, to optimizing the flow of products and services through entire value streams. These value streams flow horizontally across technologies, assets and departments to customers.


A modular product architecture also addresses waste in a company. This approach to waste comes from an understanding that each part number adds cost along the entire value chain. A modular product architecture define modules that carry market-driven variance with standardized interfaces, and enables the configuration of many different products from a limited number of module variants.

Winning Synergy

Both lean and modularity are often dependent on a cultural change in the company to be successful, and both require a clear strategy. 

Does the product require cost reduction? Is the objective to expand the product range or do we need to reduce time to market for new products? Lean and a modular product architecture can address these strategic questions if they are clear and communicated to key stakeholders.

How to Avoid the Complexity Waste Trap?

Lean and Standardization

Companies often face a situation where their product structure has become complex, after acquisitions and new product offers expansions. There can also be a significant old product legacy, if old products are not phased out to. Market expectations also drive complexity, with companies responding by expanding their offering without understanding the full consequences. 

When profit starts to drop, cost reduction projects kick in and the product structure tends to get a quick fix by standardization. Lean manufacturing is also pointed out as part of the remedy, but this approach may improve efficiency – but not effectiveness.

What can be done according to true lean thinking, for example the Toyota Production System (TPS)? TPS is about being effective, doing the right things first, and then doing them efficiently. And here’s a way to make it happen.

Lean and Modularity

Business often starts with development of products, where market needs provide the cornerstone, and the product structure must be flexible and effective. 

A modular product structure is effective since it starts with customer needs and configurability. It is easy to expand within the platform limitations, reduces internal complexity, requires less resources and is relatively future proof. Other benefits are faster time to market for new products, a wider product offering, reduced lead times, reduced manufacturing costs and higher quality.

How do we recommend implementing lean and modularity?

Step 1, Analyze Waste and Complexity

There are many lean tools a company can use to find and eliminate waste with a product, e.g. 5S and continuous improvement. But it is important to first understand how complex is the product structure and whether it has been expanding over the years without update or rationalization. An overly complex product structure will typically have many part numbers that are difficult to maintain. The reuse of existing parts numbers will be difficult, and it may include the situation where a designer is making a new part rather than trying to reuse an existing part. Quality problems will also be prevalent with purchased or manufactured parts. If the product structure has indications of being very complex, it is a good idea to investigate how big this unnecessary complexity is and then define an action plan how to reduce the complexity.

This internal complexity translates to extra work in most departments of a company. The driver for this extra work is each part number that is created in the design department. Each number represents a part that has to be developed, tested as a prototype, detailed in a drawing, manufactured, procured, transported, stocked in a warehouse, quality checked, picked from the warehouse, transported to assembly, and assembled into the final product, just to mention a few. All these steps mean more time for a product that has many part numbers and a low volume of each compared to a product where there are few part numbers and high volume of each.

Step 2, Build an Effective Product Structure

The entire cost structure is affected when decreasing the internal complexity of the product. Typical results from mechanical industries, both business to business and consumer products are a part number count reduction of 50% and a cost reduction of 10% in the total value chain.

Modular product architectures address internal complexity by enabling a company to configure a range of products by combining different module variants with standardized interfaces. It is important to create an efficient product structure before applying lean directly on the existing product structure. If lean is applied on a bad product structure limited results will be achieved because the negative effects of too many part numbers in the product architecture will still exist. It will not be possible to gain the leverage of increased purchase volumes if too many different part numbers are being used. 

In terms of money this increased purchase volume will generate a substantial reduction of direct material cost (dM), often in the range of a few % up to 10% reduction. What cost reduction project can achieve these savings at the same time as quality is improved?

It is important to understand that neither lean nor modular product architecture is in any conflict with one another. They are both striving in the same direction – minimizing the waste defined as non-value added activities for the customer that will buy the product. modular product architecture and lean are not primarily aiming at the level of individual processes, but target the entire value chain of a company.

Many lean-thinking organizations are doing the wrong things more right. Making things efficient that shouldn’t be done in the first place. Doing a lot of efficient things but not effective things.

Step 3, Implement Lean

Modularity is how to be effective. Lean is how to be efficient. 

This is what Toyota built on with TPS, following the work of Taguchi: ‘Let’s do the right thing first, then make them efficient.’ This encourages you to start with an effective modular product structure and then implement it efficiently throughout your organization.

Modularity and lean create powerful synergies in a company. After more than 20 years of experience of developing modular product architectures with lean implementation, we’ve seen a reduction in client product costs, decreased lead times and reduced tied-up capital. All at the same time as the product offering has expanded. 

On top of cost reductions, there are also important increases of revenue due to offering more customizable products to the market. One common question is which to start with, modularity or lean? Or can both initiatives be run in parallel? Our experience is that it’s best to start with an effective product structure and then apply lean efficiency. This will give you a competitive advantage, with lean putting the turbo on modularity.

Anders Leine
Anders Leine


Lean and Modularity

Modularity and lean create powerful synergies in a company. Both strategies focus on minimizing waste and in many ways they’re the perfect match. 

After more than 20 years of developing modular product architectures with lean implementation, Modular Management has seen a reduction in client product costs, decreased lead times and reduced tied-up capital. And all at the same time as the product offering has expanded.

How to Implement Lean and Modularity?

One natural question is which comes first? One size doesn’t fit all, but experience leads us to recommend a three-step implementation program: 

1) Analyze Waste and Complexity

2) Build an Effective Product Structure

3) Implement Lean and Continuously Improve.

"Modularity is how to be effective. Lean is how to be efficient."

Anders Leine, Modular Management

Power of Modular Design



Executive Dilemma


The executive dilemma is how to optimize operational excellence, customer intimacy and product leadership – all at the same time 

As CEO of an international company, I learnt it’s possible to connect products, customers and organizations. Modular product architectures, together with a well-structured information model, make it possible increase efficiency, meet individual customer demands and innovate. The executive dilemma is therefore possible to solve.



The Executive Dilemma


The executive dilemma is how to simultaneously optimize operational excellence, customer intimacy and product leadership. And it can be solved.

As CEO of an international company, I learnt that it’s possible to connect products, customers and organizations. Modular product architectures and information management tools make it possible.

How to Solve It?

Profitability is secured through the management of business fundamentals.
So what are they?

Treacy and Wiersema present a model in their book ‘The Discipline of Market Leaders.’ The authors identify three value disciplines – or axes – that serve as measurable and manageable fundamentals: Operational Excellence, Customer Intimacy and Product Leadership. Based on these axes, the executive challenge becomes how to reduce costs (operational excellence), increase market share (customer intimacy) and increase price premiums (product leadership) at the same time?

This model is rational, practical and I like it. Systems associated with each axis can connect your teams and the KPI output can populate your management dashboard. But how?

Why am I Sharing This?

I’ve always been interested in the bigger picture. How do things work? How does everything stick together? How can we improve?

After reading illustrated how-to books as a child, I completed engineering and business degrees in Sweden and the US. My professional career began in engineering at Scania. After that I moved into regional management at Eaton Corporation and the product divisions of ESAB, and then joined Sidel Group as President and CEO in 2008.

Now I’m a Board Member at Modular Management, world leader in modular product architecture, and at Starcounter, the in-memory database specialist. You’re welcome to link in, but I’m not here to reminisce about my career. Instead, here are a few ideas about how executives can bridge strategy and results. And connect organizations without drowning in complexity and Microsoft Office documents.

Connect Systems to Value Axes

Operational excellence means optimizing processes to deliver the highest value at the lowest cost. Fast, lean and agile supply chains are part of this. Total operational cost is a key measurement and the supply chain head (COO) has the task of optimization.

System: ERP

Customer intimacy means products and services that suit individual customer’s needs. Every customer is unique and wants an individual solution. Fast. Do this well and you can build long-term customer satisfaction and loyalty. Market share is the driving KPI, and sales (CSO) and marketing (CMO) often share responsibility.
System: CRM and CPQ

Product leadership means first-to-market with new and innovative products. Do it well and you get a price premium. Sales of new products are key performance indicators and your innovation teams drive this, with R&D and product management (CTO) at the forefront.
System: PLM and CAD.

And as CEO, you get the lot.

The authors of ‘The Discipline of Market Leaders’ suggested that companies should focus on one axis to increase competitiveness and become market leader. But how can a CEO succeed with responsibility for all three axes by focusing on just one? Instead, let’s look at a solution for the Executive Dilemma.


One size doesn’t fit all, which is exactly why disaggregation into a modular architecture is important.

Modularity is defined as ‘the degree to which a system is made up of relatively independent but interlocking components or parts.’ A modular product architecture is the foundation for tailoring your hardware, software and services to the needs of your customers.

Products can be built up of modules. Each module has a technical function, as well as specific parameters in terms of company strategy and customer needs.

For example, product X is built up of 20 separate modules and each module is available in five different variants. If the modules have standardized interfaces, each variant can be combined differently to create completely different products, which can then be configured by individual customers. The result? 95 trillion product configurations quickly produced with fewer parts and lower overall costs.

Since one size doesn’t fit all, make sure that you can disaggregate your products into modules that each combine these three key variables: strategy, function and customer needs.

Each module should have a clear, documented purpose, not just functional/technical, so the full interdependencies between modules is clear. Modular design means each module is available in different variants to be easily combined and connected though standardized interfaces. Customers can configure customized solutions and you can deliver fast without drowning in complexity.


Once you’ve disaggregated products into modules, you have a modular product architecture and its accompanying, documented information model. Modularity, configuration and digitalization then combine to solve the three-axis executive challenge.

With a modular product architecture, each customer knows what is and isn’t possible to configure. And you know too. The bill of materials (BOM) is such that customers get what they want, fast. Your organization knows what you’re selling, making, delivering, servicing and reselling. You sell what you have, not what you don’t, and you focus your product development on those modules that really make a difference. Your support systems are connected, thanks to the universal information model connected by nodes, and your organization is able to share the same information in real time.


  1. Make sure everything you do is anchored in solid strategy. Building a modular architecture does not start with standardization, it starts with understanding your customers’ needs.

  2. Adopting a modular architecture is by its nature transformative and requires persistence. Build faith and momentum by going after low-hanging fruit and make sure you deliver short-term gains throughout the program, even if some of those steps might not be directly critical for the end result.


1.       Don’t underinvest in your R&D. That can be a tempting way to optimize short-term results, but rebuilding a depleted technology pipeline is very tough. Avoid ending up there.

2.       Don’t underinvest in your people. And when you drive a transformation, make leading the change a visible path career booster for your high-potential talents. 

Mart Tiismann

Mart Tiismann

Customers want innovative products, fast. Companies want to make customers happy and be 21st century lean. So how does all that work? Modular Management delivers clarity, performance and customer centricity so clients can reduce complexity and accelerate value creation.

The Executive Dilemma is how to optimize operational excellence, customer intimacy and product leadership

You can solve this dilemma if you disaggregate products and services into modules and then reaggregate. A modular product architecture, with accompanying information management tools, enables you to connect your products, customers and organization.

Customers want innovative products fast. Customers want to customize. Producers want to make customers happy and a modular product architecture, based on my experience, makes this possible. Modular design enables you to manage all three value axes at the same time. And your  products and services can be customized on line, en masse.

Thanks for reading and don’t hesitate to get in touch.

"One size doesn’t fit all, which is exactly why disaggregation into a product architecture is important."

Mart Tiismaan

PALMA stands for Product Architecture Lifecycle Management. It’s the world-class solution for product management and I strongly recommend you take a look.


How to Design for Agile Line Production?


Agile production and mass customization are powerful concepts that line producers often find hard to realize. But it is possible.


How to Guide - Agile Line Production

Agile production and mass customization are powerful concepts that line producers often find hard to realize.

Many struggle to simultaneously: 

  • Ensure lean, operational excellence.
  • Innovate and renew products fast enough to stay at the forefront of global competition.
  • Offer the product variance and uniqueness needed to appeal to many customers.

So, how can you make mass customized products and secure business fundamentals? How can you design for agile line production? Download our comprehensive guide and learn from real cases.

Alex Ginsburg


Magnus Gyllenskepp

Customers want innovative products, fast. Companies want to make customers happy and be 21st century lean. So how does all that work? Modular Management delivers clarity, performance and customer centricity so clients can reduce complexity and accelerate value creation.


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The Executive Dilemma

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