Is modular design the key to fast innovation?

Photo Nicolas Bry / Senior Vice-President, Orange Innovation Group / May 23rd, 2012

In recent years, many firms have sped up their innovation processes. But can we protect the meaning and relevance of innovation while accelerating and increasing its impact? This is exactly the issue challenged by component innovation.

During the last twenty years, the linear process of innovation has been abandoned in favor of innovation by interactions, leading to new forms of organization. Innovation management positions have been created, in order to define attractive and groundbreaking innovation lines, as well as encourage innovation culture within firms.

Does innovation follow models?

New organizations encounter change management issues. Innovation can be considered as the creation of a new tradition: before being accepted and recognized, disruptive innovations change the values promoted by management, the payment models, the value chain. They even alter the firm’s identity. Besides, these transformations take time and do not respond to the urgent need to speed innovation.

In such conditions one might be greatly tempted to rely on models. A review of the most innovating firms offers many examples. Of course, as noted ironically by Gary Hamel, the innovation leaders unfortunately tend to disappear from the top 10 from one year to another. And another question can be raised: can these models be replicated?

Let us take the example of Apple, one of the firms most regularly referred to in recent years. Not without reasons: the implementation of an ecosystem which unites a terminal with services and contents, the search for meaning, at the crossroads of technologies, customs and culture, relying on a strong design and on intensive marketing (conceived as an investment and not as a cost), a strategic management of its supply chain to keep a step ahead in assembling technologies – all of these reasons are examples that can serve as guidelines. And yet, the company’s CEO also plays a great role. Steve Jobs’ idea was to keep a limited portfolio of innovations, a bold and remarkably courageous strategy; difficult to imitate, as the common sense tends to aim at more diversified portfolios to share risks.

The problem raised by Apple is the basically: how to imitate talent? Many frogs have aspired to become an ox: they soon burst… If innovation is a search for identity, singularity is an inspiration but not a model of innovation: “become the innovator that you are”, as Nietzsche would put it!

Fast innovation and its limits
Keeping all these difficulties in mind, a new innovation model can be designed, with features taken from different firms and different contexts. This model aims fast innovation by relying on the autonomy and agility of entities dedicated to “creative tension”.
The concept of agile and autonomous entities is easily understandable. That of “creative tension” is less obvious and still, just as essential. It gives to the innovation team a focus, an ambitious goal: in a word, it leads the team to build a belief.

To help organize the design work, it offers a creative framework including open innovation and design thinking features, combined with an user-centered approach, with a search for meaning, fast and iterative prototyping of lead-user design. The rugby approach used in the software industry and the model of circulating knowledge (metaphor, analogy and model) conceived by professor Ikujiro Nonaka (Hitotsubashi University), are full parts of this framework and the pillars of creativity.

One of the main issues of this approach is to develop a collective approach leading the team to build a meaningful identity. Innovate means “to change while staying who you truly are” as explained by Marc Giget : renew your identity while staying coherent with your culture is the equation to solve by the innovation team.

But an innovation team still needs to convince its partners within the firm: the acceptation of innovation needs appropriation and commitment of teams and business units downstream. That cannot be done without aligning the innovation strategy with that of the parent company. The tools to build this alignment include a permanent dialogue with innovation deciders, granting resources, financial commitment of the parent firm in the project and an innovation portfolio that brings into balance ground-breaking projects with probing projects and quick wins.

However, experience shows that this model also has drawbacks. To keep up to its promise of a fast innovation, accepted and promoted by the heart of the firm, the three principles of autonomy, creative tension and alignment are recommendations, though not a guarantee!

The fact that these principles can be contradictory should not be overlooked – nothing really surprising, since the model itself is an intent to resolve contradictions between the culture of innovation and the slower rhythm of big companies. Frictions are inevitable and arbitration is a delicate matter: for instance, working on an efficient alignment can lead an autonomous entity to share the creation process with the parent company, thus slowing down innovation speed.

Last, the setting up of innovation teams, focused on a challenge, united, and quite multidisciplinary, does not help the acquired knowledge to flow towards other projects and main business activities within the firm. That requires transversal management abilities, a strong desire to animate and share, in a word: altruism, which is a rare quality.

Changing views with the modular design
Should we give up on fast innovation? A well-documented approach offers a possible evolution: modular innovation, described by K.B. Baldwin and C.Y. Clark at the beginning of the 2000s under the name modular design. This approach consists in breaking complex projects into separate modules that have as little dependence as possible and with precise interfaces: this independence helps improve a module by changing it for another or dividing it, with no impact on the rest of modules. The substitution and division of innovating modules are vectors of value, as shown by Baldwin and Clark.

A successful application of modular design is open source. The management techniques for open source rely on the principles of modularity and distribution: a complex program is divided into multiple software components which realization depends on the community.

The world of open source software has developed remarkable tools for management: developing a collective identity, flowing knowledge through online networks, non-hierarchical governance, control & command management, based on initiative but with a strict social control on the code’s quality: warning to those whose work is not up to the standards, their failure will be publicly exposed on the forum! Again, transversal management is crucial to gather collective intelligence and achieve innovation speeds that can be impressive.

Similar approaches include applications opening an operation window through an API to third-parties who will build an ecosystem, as well as intelligent objects sharing their data with developers who will create value by building services around these data. It is now a strong trend to conceive an application and simultaneously an API, or to develop an asset such as a telecommunication network through an API store.

Component innovation
The experience I would like to report here does not start from a deliberate implementation of these steps: it’s from an empirical experiment that we developed our innovation from a component accessible through an API, thus meeting modular design and open source logics.

The theme on which we were working was social interactions around television, with a project of social TV. Our starting point was to improve the fast innovation model and achieve acceptation of innovation by all our partners within the firm. As matter in fact, the solution came from outside: “Keep on going with the innovation field you are offering to us, but make it a component rather than an application”, suggested our internal partners for innovation, in charge themselves of applications that call to consumers.

Instead of a complete application, materialized by an interface on smartphone or on a television, we conceived a component, centered on one function that brings social and content together and connectable to multiple applications through an API: something like a hub, providing Social TV data.

The first results are pretty good: half a dozen applications are connected to the Social TV component and enhance the experience of Orange clients, helping them discover new contents and increasing their loyalty to the brand.

In terms of conception, the benefits are significant.

Time to Market and Flexibility. The disconnection between applications and components allows the innovation team to focus on the component, enjoying an autonomy that gives more meaning to its activity and allows the team to speed up, when needed.

Parallel Implementations. The component function can become a hub easily and receive simultaneous connections from different applications.

Crossfunctional Evolution.
The needs of the different applications are mutualized in order to enrich the functions of the component that are available to all: it’s a virtuous circle of innovation, the progress of any member benefitting to all. The social component that started from the TV has extended to movie contents (Ciné Day), video on demand, sports competitions such as Roland-Garros or UEFA and it has completed some quantitative measures (buzz, tendencies) by an analysis of feelings and a cloud of key-words. The component approach of Social TV has been duplicated to a Social Culture component and a Personal Video component.

Cooperation. Concentrating on the conception of components avoids mixing genres. It guarantees to the partner product manager some control on the user interface of his application. In such conditions, the possibility of dialogue is stronger and enables spontaneous exchanges: “I thought of this UI (user interface), does the component know how to feed me with the right data?” ; “Yes, but this data filtered that way makes more sense to the user, don’t you think? We can visualize it this way…”

These benefits look very much like those of an API ecosystem: whereas APIs often address to external third-parties, we simply launched an ecosystem of internal APIs to accelerate innovation.

A metamodel: the API design
At a time when experience creation for the client through design and interfaces is essential, when innovation changes in an act of cultural creation, isn’t it contradictory to promote a faceless innovation through components innovation?

Components innovation presents elements of a specific conception approach, the API design. We haven’t opened an API from an existing application, as is generally the case. Our aim was, from a start, the API itself.

This belief would then have consequences on technology, customs in the specific field, possibilities opened by observation. We had to question the long-term permanence of an emerging trend, but also our positioning, the meaning of our innovation, the service provided to the consumer.
Focusing on the component would force us to raise other questions: its functional identity, first of all, by working on the metaphor through which we could name it (in the case of Social TV, that of a ‘filter’; but also the whole perimeter of functions and the focus of the component on some contents.

Last, we had to think about more technical problems, but just as important: the data, their relevance and their representation; the query methods of the component; the prototyping, the staging of the component, through visualization tools and a demonstrator; the iteration through multiple stages, that enlarge step after step the functional field and the contents processed; and last, the opening and the actions needed to make the ecosystem prosper.

Going on and enriching this approach leads us to a portfolio strategy of innovation: which new components are relevant? Which opportunities are presented by blending technologies, customs and our specific operating edges?

Answering all these questions isn’t obvious. A first answer can be found in the ability to find new components and help the acceleration of innovation through research on the application ecosystem. That makes us wonder how to cover the functional components, according to which principles expand them, but also which global system of component build. Modular conception must necessarily reflect on innovation architecture and the way components will combine. With questions that don’t yet have answers: is there a limit to modularity? A “golden number” of components?

These questions imply technical and scientific views, but also a market approach. Raising them implies renouncing to a straightforward answer. We need to build complex solutions, dealing with the firm identity. Much more than just an organization issue, innovation management is a continuous process of improvement, building on the cyclic circulation of knowledge.

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