INTERVIEW

How to Manage Innovation?

NIKLAS GUSTAFSSON, KTH EXECUTIVE SCHOOL
INTERVIEW

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.

QUOTE

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
INSIGHT

Circular Economy

BY MODULAR MANAGEMENT

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

info@modularmanagement.com

RELATED

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.

LINKEDIN

Follow the ECO² Vehicle Design Centre

INSIGHT

How to Reduce Complexity and Accelerate Value Creation?

EXTERNAL LINK

World Economic Forum on the Circular Economy

HOT TOPIC

Configurability

BY MODULAR MANAGEMENT

Mass customization is a hot topic because customers, you and I, want to configure their own, individual solutions. We don’t want a standardized package, but a solution that meets our specific needs. Question is how companies can make it happen?

INSIGHTS

Configurability and Mass Customization

A modular product architecture enables you to reduce complexity and accelerate value creation. Here's more on what it is and how you can use it to achieve more with less in your business.

Configurability, Configuration and Mass Customization

Configurability is about how well a product can be configured and customized, and is primarily linked to: 

  1. How the product is designed and structured
  2. How the product is represented in IT systems
  3. How the supply chain is set up to support a configurable product. 

Configuration is the activity of arranging parts or elements in a particular form, figure or combination, and primarily linked to processes and tools, so unique customer requests can be translated into a delivered product. 

When understood together, configurability and configuration enable the mass customization of products so companies can meet specific, individual customer needs in an efficient and effective way.

Configurability

Configurable Product Design

To create configurable designs, products should be flexible enough to allow for the adding, removing or replacing of elements without impact across the product. Changes must be isolated to the directly customized element, without causing indirect changes to surrounding elements.

A modular design has exactly this ability. Why? Because functions, features and performances are encapsulated in individual modules and the modules themselves are protected from each other by interfaces. This allows one module, or variants of one module, to be changed while still fitting through the interface, without changing any other module. 

Configurability and IT Systems

A customizable product needs to be represented in IT systems so that elements can be easily added, removed or replaced. 

One important aspect of configurability is the level at which parts are documented in the customer’s bill of materials (BOM). Many companies sub-optimize the BOM in order to simplify or reduce part number count. Parts are then documented on a too high level, and above the level at which customers want to add, remove or change elements. This means that only predefined combinations of elements exist and no unplanned combinations can be made. And over time, the goal of part number count reduction becomes harder since the number of combinations needed grows exponentially with a multiplication effect. At this stage, companies are still only making predefined combinations and configurability suffers. 

Another important aspect is how to manage the total configurable product range in terms of the bill of materials. Do you have multiple super-BOMs for different products? If so, this means you can make changes inside one super-BOM, e.g. add, remove or change elements, but for other changes you have to change to another super-BOM and throw away what you just did, open up a new super-BOM and start from scratch. A truly modular BOM, on the other hand, can handle the full range of products.

Configurable Supply Chain

The supply chain can disable configurability even if the product design and IT systems are set up well.

The most common reason for this is that the manufacture or purchase of sub-assemblies is on too high a level to stock. This problem is similar to that of documenting parts on too high a level. If you buy or sub-assemble predefined combinations on too high a level, suppliers and internal sub-assemblies are unable to run new, unplanned combinations with an acceptable lead time. 

To solve this we need to delay the so-called ‘variance point’. This is the point in the production process where parts and assemblies become a unique order combination, instead of generic parts that fit into multiple combinations. By delaying the variance point, all assembly operations that make the combination order unique are not made until the order is received. At this point, the requested combination is known and assembled to order. Only generic parts up to module level are purchased or produced to stock, before the order, and are then ready to be assembled in the correct combination.

Configuration

Configuration is the activity of arranging parts or elements in a particular form, figure, or combination. This concept primarily relates to the process and tools needed to translate a unique customer requests into a producible product. 

Configure Price Quote (CPQ) systems often see the quote, or customer order, as the end of the configuration process. But what would happen if you extended the configuration process to the point where you actually launch the internal production order? 

You can then accommodate for the fact that the configuration process should not only provide a correct, customer unique quote, but also a unique, producible bill of materials, including all technical and manufacturing documentation: drawings, diagrams, material specifications and instructions. 

One-Touch Configuration

One-touch configuration means that each customer order is touched only once. That personal touch is typically from a sales representative or the customer directly through an online configurator. 

The configurator needs to secure that the input is correct, complete and consistent. If so, interconnected systems can then generate all the quotes, internal and external specifications, bill of materials, documentation, production and material plans and orders.

One-touch configuration, or straight through processing, is fairly easy to achieve for standard, cataloge products. These are often not actually configured, but filtered by a search function that matches the request to a pre-defined product that is already documented and producible. 

Complex products come in too many combinations for a pre-defined cataloge assortment. Non-cataloge complex products tend to involve a unique combination that has never been sold, engineered or produced before. And this is mass customization.

How to Overcome IT Challenges

There are several technical, IT, organizational and process challenges to overcome if you want to achieve one-touch configuration for complex products. The biggest challenge is often how to connect sales to R&D, engineering and production. 

The sales organization works with customers on a high level, and tends to use a configuration model that covers the whole product assortment. One configuration model is necessary to avoid the scenario where changes in the customer request, which are not uncommon, force personnel to start from scratch in a new model. 

The output from sales configuration is usually a high-level, flat list of specifications and priced objects. At the other end of the organization, R&D, engineering and production work on a detailed level and need a hierarchical structure. 

Super BOM

One product model, often called a Super BOM, typically covers one certain size and type of product. A wide assortment, with different product sizes and types, necessitates multiple Super BOMs.

A Super BOM often lacks overview and cannot repeat parts and assemblies freely without repeating rules again and again in all positions. When it grows too big, any overview of how assemblies can be reused in multiple positions is lost and the BOM itself becomes unpractical. When this happens, complexity gets too high and control is lost. 

The main challenge is to connect two organizational areas that are using different product structures, definitions and levels of detail: sales with its typically flat, high-level structure and R&D, engineering and production with their hierarchical structure and full detail. The Super BOM approach works fine for products with rather low variance and complexity, i.e. where one Super BOM is enough. But when variance and product complexity increase, the maintenance cost for multiple Super BOM explodes and connecting sales, R&D, engineering and production systems becomes difficult, expensive and unstable. If it’s doable at all.

Modular BOM

A modular product architecture provides you with an information model that has a Modular BOM at its base.

In contrast to a Super BOM, a Modular BOM allows you to have a product model in R&D and engineering that can be connected to sales. The Modular BOM separates the actual hierarchy of the product (structure) from the parts and assemblies (content), which means you can freely reuse parts and assemblies and the complete assortment can be built into one model.

The commercial structure allows sales to work on a high level to create their flat list of specification and priced objects. The product properties with goal values serve multiple purposes, including control over how the commercial structure is populated, user input to the configurator, and control over how the Modular BOM is populated. 

A Modular BOM ensures consistency and synchronization of customer requests with sales, R&D, engineering and production. It’s flexible, customer centric and can connect your organization.

How to Approach Mass Customization?

A modular and configurable architecture is optimal for mass customization, whether you’re aiming for a CPQ sales configuration, a producible BOM configuration, or straight-through-processing in a one-touch flow. A modular product architecture is not always necessary for configuration, but enables you to more easily meet unique customer demands, and it’s cheaper and faster too.

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.
HOT TOPIC

How to Speed up Time to Market?

BY MDULAR MANAGEMENT

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
TECHNOLOGY

PALMA®

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.

INSIGHT

Lean and Modularity

BY MODULAR MANAGEMENT
TOPIC

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.

Lean

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.

Modularity

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

info@modularmanagement.com

SUMMARY

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
LINKS

Power of Modular Design

Mobile

HOT TOPIC

Executive Dilemma

BY MART TIISMANN

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.

Desktop

HOT TOPIC

The Executive Dilemma

BY MART TIISMANN

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.

Disaggregate

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.

Reaggregate

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 limit your product development to 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.

Do

  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.

Don't

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

BOARD MEMBER
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.
EXECUTIVE SUMMARY

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® STRATEGIC SOFTWARE

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

PALMA
INSIGHT

Design for Agile Line Production

BY MODULAR MANAGEMENT

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

Topic

Agile, Customized and Lean

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? Access a new white paper for a few ideas.

Alex Ginsburg

Co-AUTHOR

Magnus Gyllenskepp

CO-AUTHOR
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.
LINKS

The Executive Dilemma

The Journey

PALMA® Strategic Software

fast service
HOT TOPIC

Design for Fast Service

BY MODULAR MANAGEMENT

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

Hot Topic

How to Design for Fast Service?

fast service

Service builds customer loyalty, saves costs and drives innovation. Or it doesn’t.

“Service is growing in importance for almost all equipment producers. For many of them, it’s the number one contributor to brand loyalty and bottom-line profit. Modularity is a great tool to fundamentally improve quality, lead-time and efficiency in service operations - and boost service sales.”

Alex Ginsburg

Alex is lead author on an insight paper titled 'How to Design Products for Fast Service?' Based on unique industry experience, it’s been developed by Susanne Flyckt Sandström, Markus Lotz and Jakob Åsell – together with Alex – to provide inspiration for product and service design.

Modularity can turn fast, simple and cost-effective service from strategy into reality. Modularity meets the demands of an increasingly competitive market, because a modular product architecture provides a stable product structure that’s configurable down to fixed positional references for technicians to find, record and deliver service activities.

Imagine empowering service personnel, shortening lead times, optimizing resource utilization and building long-term relations with happier customers. Access the pdf below to find out more.

Alex Ginsburg

LEAD AUTHOR
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.
LINKS

The Executive Dilemma

PALMA® Strategic Software