Modularize later

A principle from The Innovator's Dilemma. An innovation always starts out integrated, and is modularized later.

The boundaries of modularization matter. An object can be sliced in an infinite number of ways. What is important is that you slice it in a useful way.

Module boundaries should be drawn when a distinct sub-problem has been clearly identified in the value chain. At this point it can be farmed out.

By definition, an innovation is not well-understood before it has been created. This is why innovative products and technologies start off integrated, and why modularizing too early will fail. For a new product category, the value chain is just forming, the problem space is not well understood, and sub-problems are too ill-defined to be farmed out.

It is difficult to change module boundaries once drawn. After roads are laid down for a city, buildings may change, businesses may change, but roads rarely change.

Modularized products have a hard time adapting when the basis of competition changes, and the value chain is reorganized.

Modularizing along the wrong boundaries is the cause of second system syndrome.

Because innovations start off integrated, then become modularized, markets often have 2 phases:

• New market creation (integrated product)
• Modularization and commidification (modularized product)

Also: Design patterns, The Innovator's Dilemma, Disruption Theory.