Accomplishing the layered modular architecture in digital innovation: The case of the car’s driver information module
Introduction
Much has been made of the disruptive nature of digital innovation (e.g., Lucas and Goh, 2009, Soerensen and Landau, 2015). Entire sectors of the economy, including the newspaper (Ihlström and Henfridsson 2005), photography (Sandström, 2011, Tripsas, 2009), construction (Boland et al. 2007) and car industries (Hylving et al., 2012, Lee and Berente, 2012), have been fundamentally transformed as bits replace atoms. In the car industry1, sensor-studded vehicles are rendered increasingly smart, alerting the driver to anomalies related to the vehicle (e.g., low tire pressure) and to traffic (e.g., automated braking). These not only affect safety (Sayyad et al. 2017), but also the driving experience (Reilhac et al. 2017) as the vehicle parks itself and alerts the driver when the car veers out of the lane.
Advancing an architectural theory of digital innovation, Yoo et al. (2010) argue that a layered modular architecture is a key indicator of an organization’s digital innovation2 maturity and likelihood of success. A layered modular architecture is described as a “hybrid of the modular architecture of a physical product and the layered architecture of digital technology” (Yoo et al. 2010: 729). While prior research has shown that developing this architectural prerequisite of digital innovation is fraught with tensions and conflicts (Hylving et al., 2012, Svahn et al., 2017), it has failed to theorize their source.
We propose that a pervasive cause of these tensions and conflicts is inherent in the hybrid architecture. The modular architecture of physical products, which reflects a hierarchical configuration of modules (i.e., hierarchical modularity), and the layered architecture of virtual goods, implying a layered configuration of modules (i.e., layered modularity), represent contradictory logics (Henfridsson et al., 2014, Svahn and Henfridsson, 2012). Specifically, hierarchical modularity relies on a top-down logic of decomposition, whereby components with high interdependence are clustered together and vertically separated from components with which they have fewer interactions. In contrast, a layered modularity applies a bottom-up logic, where universally used and relatively stable components form a platform on which components that enact more ephemeral functions then draw (Colfer and Baldwin 2016).
Motivated by Kallinikos’ (2012: 83) claim that “the progressive dissociation of function, form and matter from one another is the most remarkable attribute of technological evolution whose implications are poorly understood and … seldom investigated to a sufficient degree,” we set out to investigate how digital innovation is achieved. Since digital innovation is a process of digitalization in which social and technological aspects of organizing are mutually implicated (Yoo et al. 2010), and organizational structures are correlated with product architectures (Cabigiosu and Camuffo 2012), the need to integrate two contradictory types of modularity into a coherent architecture capable of generativity, presents us with a the following question: “Given that the layered modular architecture needs to hybridize modular arrangements with opposing logics, how is it accomplished?”
To answer this research question, we rely on a qualitative study of AutoInc’s3 digitalization of its vehicles’ instrument cluster on the driver’s dashboard, i.e., the DIM (Driver Information Module). Focusing on a 10-year period (2005–2015), during this time the digitalization of AutoInc’s DIM consisted of three projects – each increasing the degree of digitization – we trace the transformation of the DIM’s architecture.
Our research makes a number of contributions. Firstly, we develop a theoretically-informed definition of the layered modular architecture. We do this by identifying the two types of modular arrangements – hierarchical and layered modularity – whose hybridization forms the layered modular architecture. Furthermore, we offer a visualization of this hybrid structure (Fig. 2). As such, we significantly extend architectural theories of digital innovation.
Second, by describing and illustrating the interdependence of the social (e.g., organizational roles, allocation of decision rights) and the material (e.g., arrangements of modules) in digital innovation, we gain a more holistic and situated understanding of the complexity of digitalization (Yoo 2010), i.e., change in technology and practices. With few exceptions (Arakji and Lang, 2007, Henfridsson and Bygstad, 2013; Sandberg et al. Forthcoming), most prior digital innovation research prioritizes either its technical/material (e.g., Huang et al., 2016, Ravichandran, 2018, Scott et al., 2017) or its social/organizational aspects (e.g., Rolland et al., 2018, Tumbas et al., 2018, Yeow et al., 2018).
Third, we abductively develop a plausible explanation (Bamberger 2018) of how a layered modular architecture is accomplished, namely by means of three techno-organizational transformations: (A) uncoupling the digital control system from the physical product hierarchy, (B) layering the digital control system, and (C) continuously (re)connecting the two architectures. This conceptualization enriches prior research that adopts an architectural theory of digital innovation (e.g., Huang et al., 2016, Svahn et al., 2017).
Our paper proceeds as follows: we outline the architectural theory of digital innovation and, noting that the layered modular architecture represents the hybridization of hierarchical and layered modularity, we present their conflicting logics. An introduction to the mirroring hypothesis concludes our conceptual scaffold for analyzing our empirical data. After describing the context of our case study, as well as our data collection and analysis strategies, we present our findings. We conclude the paper by answering our research question and identifying three transformations that constitute the process of digitalization (Yoo 2010).
Section snippets
Digital innovation as evolving a layered modular architecture
Definitions of digital innovation range from “a product, process, or business model that is perceived as new, requires some significant changes on the part of adopters, and is embodied in or enabled by IT” (Fichman et al. 2014: 330), to “the carrying out of new combinations of digital and physical components to produce novel products” (Yoo et al. 2010: 276). These definitions accent different aspects of digitalization: while the former focuses on innovation as an outcome, the latter privileges
Case organization: AutoInc
AutoInc is a global car company that produces a range of passenger vehicles, including sedans, SUVs and hatchbacks. To learn about how the layered modular architecture is accomplished, we focus on the digitalization of AutoInc’s Driver Information Module (DIM) between 2005 and 2015. Not only is the car’s DIM the user interface of the car’s digital control system (Lee and Berente 2012), but it is also a source of strategic differentiation and branding. Indeed, the DIM has become the focus of car
Empirical findings: Accomplishing the layered modular architecture
AutoInc’s digitalization journey comprised of three projects (Table 2): the Sensor Platform project, the Personalization project, and the Connectivity Platform project. Table 4 provides a summary of our analysis of each DIM.
Discussion
Digital innovation, that is, enhancing physical artifacts by means of digital capabilities (Lyytinen et al., 2015, Yoo et al., 2010), has become a strategic imperative for many organizations (e.g., Tilson et al., 2010, Tripsas, 2009). Despite garnering considerable attention in IS research (e.g., Bailey et al., 2012, Barrett et al., 2012, Loebbecke and Picot, 2015, Lucas and Goh, 2009), a detailed understanding of digital innovation from an architectural perspective (Lee and Berente, 2012, Yoo
Conclusion
While Yoo et al.’s (2010) architectural theory of digital innovation, which describes digitalization as a movement along a continuum from a modular (i.e., hierarchical) product architecture to a layered modular architecture, might conjure images of a smooth transition from one end of the continuum to the other, empirical research notes that digital innovation is fraught with discontinuities and conflict. In this paper, we theorize that the source of this conflict lies in the incongruity between
Acknowledgment
The Vinnova project 2010-01196 made it possible to write this paper together with funding from the Sweden-America Foundation.
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