Competing—and Learning—in Modular Markets

This paper explains how the adoption of a modular approach to product and process architectures can greatly improve product development performance and provide a powerful framework for knowledge management and organisational learning. We first consider specific ways in which modular architectures enable both new processes for product development and new product strategies. We then explain how disciplined adherence to the modular way of creating new products helps an organisation to identify its current technological capabilities more clearly, and to define objectives and processes for strategically focused organisational learning. We discuss three seemingly counterintuitive principles in the new strategic logic of managing in the modular way, as well as new management practices involved in the modular way of working.