The ISRI Seminar Series Presents:
 
Carliss Y. Baldwin
William L. White Professor of Business Administration Harvard Business School
 
Design Architecture and Business Strategy
 
Thursday, March 30, 2006
12pm
Newell-Simon Hall 1507
Lunch will be served
 
Abstract:

Behind every innovation lies a new design. Large or complex designs
involving many people require design architectures that create a
sensible subdivision of the tasks.
 
Design architectures (and the systems built from them) may be
"manageable" or "unmanageable." By manageable, I mean that the designs
created within the architecture will stay within the boundaries of a
single enterprise (or a supply chain controlled by a dominant
firm). For example, General Motors' Chevrolet product line has a
manageable architecture while the IBM PC architecture was (and is)
unmanageable. "Manageable" architectures give rise to product lines
and product families, while "unmanageable" architectures give rise to
modular clusters and open source communities.
 
There are important technical properties of a design architecture that
affect its manageability. Two key properties are the architecture's
"modularity" and its "technical potential."
 
Modularity denotes the degree to which the component designs specified
by the architecture are decomposable into quasi-independent groups of
design tasks and decisions. Integral architectures are indecomposable;
modular architectures are decomposable (given appropriate design
rules). Modularity enhances the value of component innovation and
architectural experimentation, because it allows components to be "mix
and matched" to achieve high value and efficiency.
 
Some believe that modularity gives rise to unmanageable design
architectures, but this is not true: Many highly modular architectures
are quite manageable. In contrast, technical potential is directly
correlated with the "option value" inherent in the design spaces
defined by an architecture. Design option value in turn rewards
multiple design searches (or experiments) in a given design space. In
this fashion, high technical potential draws outsiders "into" the
architecture. New players are paid to enter and so enter they
will. Their entry in turn takes the architecture outside the
boundaries of a single firm, making it "unmanageable."
 
Bio: 

Carliss Y. Baldwin is William L. White Professor of Business
Administration at the Harvard Business School. With Kim B. Clark, she
is involved in a multi-year project to study the process of design and
its impact on the structure of the computer industry. She and Clark
have authored Design Rules: The Power of Modularity, the first of a
projected two volumes. Volume 2, in progress, will focus on Design
Architecture and Strategy.
 
A specialist in corporate finance and real options theory, Baldwin
received a bachelor's degree in economics from MIT in 1972, and MBA
and DBA degrees from Harvard Business School. She has taught courses
in finance at the MBA, doctoral and executive levels. She developed
and currently teaches Mergers & Acquisitions, a second-year MBA course
that looks at how value is created (or destroyed) in mergers and
acquisitions.
 
In addition to research and teaching, Baldwin was Senior Associate
Dean for Faculty Planning from 1997-1999, and Director of the Doctoral
Programs at Harvard Business School from 1999-2000. She has served on
numerous corporate and non-profit boards. Within Harvard University,
she is a member of the Visiting Committee of the Harvard Graduate
School of Design and serves on the policy and admissions committee of
the joint Ph.D program in Information, Technology and Management. She
lives in Brookline, Massachusetts, with her husband, Randolph
Hawthorne and two children.