Articles

The concepts of product families, product platforms, and derivative products are as applicable to intangible software products as they are to tangible physical products. In both cases, firms can develop a family of products based on a common platform instead of starting from zero every time. Well-designed platform architectures for software products provide productivity benefits and enable rapid growth in market share and revenue. In addition, if the developer builds and communicates methods by which others can build modules that operate in or on the underlying platform, it can become the standard or basis of large-scale innovation, which provides significant strategic benefits. A product platform is a set of subsystems and interfaces that form a common structure from which a stream of derivative products can be efficiently developed and produced. The authors present a model of the architecture of software products and offer case examples showing platform design and management in action. Software developers adopting the product platform approach should form a dedicated team, supported by top management, to assess the organization's current situation and future potential. A market segmentation grid allows the team to document both market information and systems or product status information. In planning a new product platform, the team should understand target users' requirements; propose a new platform architecture and strategy; propose an implementation plan, budget, and time line; and propose an approach that allows for the joint design and sharing of platform components and development processes. Unless companies achieve an effective platform strategy, they are likely to face competitive disadvantages. The effort will require new ways of planning, budgeting, and organizing for systems development.

Current models of organizational strategy and structure fail to meet the challenges of the information age. Based on field study, the authors conceptualize an architecture, or guide, for virtual organizing that focuses on the importance of knowledge and intellect in creating value. Information technology lies at the heart of this business model for the twenty-first century. The authors' approach incorporates three interdependent vectors: customer interaction deals with new challenges and opportunities for company-to-customer interactions; asset configuration focuses on creating and deploying intellectual assets while sourcing physical assets from a complex business network; and knowledge leverage is concerned with opportunities for leveraging diverse sources of expertise within and across organizational boundaries. Each of the vectors in turn has three stages. Stage one focuses on task units such as customer service, purchasing, or new product development. Stage two focuses on coordinating activities to create superior value. Stage three focuses on the interorganizational network to design and leverage interdependent communities for innovation and growth. Each vector raises a distinct series of questions for managers. The overall challenge for companies is to harmonize the three vectors and to undertake external benchmarking when experimenting with different approaches to design.

Is your company doing its best to address customer complaints and learn from mistakes?

Together, suppliers organized to save Toyota from a devastating crisis that threatened to halt operations for weeks.

Growing recognition of the importance of supply chain management has prompted firms in the automotive industry to adopt new practices, including tiered supplier partnerships and supplier associations. While these approaches have been successful in the automotive industry, they may not be applicable to all firms. As an alternative, the authors propose the leveraged learning network. They use the experience of the High-Performance Manufacturing (HPM) Supplier Consortium developed by Allen Bradley Canada, a manufacturer of electric control panels, to explain how these networks operate and the results they achieve. The leveraged learning network is appropriate in cases where the buyer needs to improve supplier performance but lacks the power to compel the necessary improvements. Allen Bradley's initiatives to enhance supplier performance led to the development of a supply consortium; a reorganization culminated in the creation of HPM, a consortium of independent suppliers whose goal is "to work together to enable each member to optimize its competitiveness . . . using shared resources and experience." The consortium conducts a variety of education programs. A facilitator ensures that ideas and information flow continuously among the membership. Allen Bradley has greatly benefited from the suppliers' efforts to strive for world-class standards through reductions in defects, prices, and lead times; greater conformance to schedules; and better service. At the same time, the leveraged learning network poses difficulties, such as the buyer's forfeiture of control over membership and the need to dismiss members who fail to contribute sufficiently to the learning process. The challenge for managers and researchers is to determine the best conditions under which to choose either the tiered supplier partnership approach or the learning leveraged network. While the latter offers many potential opportunities, much work needs to be done to explore further its costs, benefits, and limitations.

Companies must understand their customers’ needs and appoint a manager to oversee the production of high-quality information.

A four-stage model helps companies balance supply and demand in managing IT.

By sharing components and production processes across a platform of products, companies can develop differentiated products efficiently, make their manufacturing processes more flexible, and take market share away from competitors that develop only one product at a time. The platform approach also enables companies to manufacture products in high volumes that are tailored to meet the needs of individual customers. A platform is a collection of assets -- components, processes, knowledge, people, and relationships -- that are shared by a set of products. The platform planning effort involves two key tasks. First, product planning and marketing managers determine which market segments to enter, what the customers in each segment want, and what product attributes will appeal to those customers. Second, system-level designers decide what product architecture to use to deliver the different products while sharing parts and production steps across the products. Using an example from the automobile industry -- the design of an instrument panel, or dashboard -- the authors illustrate how the platform-planning process works. They point out three key ideas that underlie the process: 1. Customers care about distinctiveness, how closely the product meets their needs. At the same time, the cost of a firm's internal operations is driven by the level of parts held in common among a group of products. 2. Given a particular product architecture, a trade-off exists between distinctiveness and commonality. 3. Product architecture dictates the nature of the trade-off between distinctiveness and commonality. By developing and aligning three tools -- a product plan, a differentiation plan, and a commonality plan -- managers can balance the need for distinctiveness with the need for commonality. Together these tools provide a common language that a company's marketing, design, and manufacturing functions can all understand. To successfully meet the challenges inherent in the platform approach, the process must be cooperative, involving all key functions, and must be guided by top management.

Companies today are outsourcing the activities of their IS departments at unprecedented rates. Interviews with senior executives in fifty companies worldwide show that three kinds of strategic intent drive the decision to outsource. -- Companies pursuing IS improvement seek cost reduction, better performance from core IS resources, and the acquisition of new technical skills and competencies. -- Outsourcing for business impact focuses on deploying IT to improve critical aspects of business performance -- Outsourcing for commercial exploitation aims to leverage technology-related assets through the development and marketing of new technology-based products and services Each type of strategic intent requires different approaches and tactics in the areas of the contract type, the performance measurement and evaluation scheme, the compensation system, and the assignment of decision-making rights to the vendor. Since the nature of the risks and rewards for each of the three types is different, the control mechanisms must be different as well. In all cases, the customer's relationship with the vendor must be aligned with the strategic intent underlying the outsourcing initiative. When strategic intent is well understood and the critical issues are carefully addressed, the chances for success are greatly increased. In evaluating IT outsourcing opportunities and structuring relationships, managers should design the outsourcing contract to reflect and reinforce each strategic intent pursued; make sure that their organization and the vendor have the right mix of competencies and know-how; make sure that their organizational culture and work practices are compatible with those of the vendor; and enable continuity by designing contracts and relationships to anticipate change.

A unifying framework for thinking about processes & #x2014;or sequences of tasks and activities & #x2014; that provides an integrated, dynamic picture of organizations and managerial behavior.