Contrasting platform thinking and product modularization: A survey of Swedish development practices

Product modularization and platform thinking are both practices that seek to alleviate the negative impact of product customization and variety on internal operations by relying on economies of substitution. Through the use of a standardized pool of components and interfaces, these practices aim to create a broad spectrum of product choices. At first sight, product modularization and platform thinking are very similar. The difference between these practices can, however, be found in the manner in which they employ standardization. Where product modularization focuses on creating standardized building blocks that can be mixed and matched to create product variants, product platforms have an even stronger emphasis on standardization, using the same pool of core platform components and interfaces over the life of the platform and relying on distinctive variable components to create product variants.
There is a general lack of research addressing the contingency factors that dictate the appropriateness of the use of product modularization and platform thinking in different contexts. To our knowledge, no large-scale empirical research has been reported in which the two concepts, contextual influences and organizational effects are considered together. Based on data from 138 Swedish firms, the purpose of this paper is twofold. First, to examine in which environmental and organizational contexts the use of the two design approaches is appropriate and secondly, to investigate which practices are complementary to product modularization and/or platform thinking.

This paper uses data collected through an online questionnaire aimed at studying the product development practices in the Swedish manufacturing industry. We developed 7-point bipolar measurement scales for most of the variables of interest in this research. As it was a key priority to keep the survey short, the dependent variables are single-item constructs grouped into three categories: marketplace conditions, product development organization and product development practices. The independent research variables, product modularization and platform thinking, are measured using multi-item scales coherent with existing scales or well-known definitions of the respective variables. The data was analyzed using independent sample t-tests, where the total sample was divided into independent subsamples dependent on their average score in the independent research variables. Three different groups of t-tests were done, comparing firms with: 1) low versus high use of modularization, 2) low versus high use of platform thinking, and 3) low versus high use of both modularization and platform thinking.

As modularization and the use of product platforms often are linked to the (mass) customization of products, one environmental contingency included in this paper is the degree to which customers require customization. The results indicate that firms employing product modularization solely or combined with platform thinking have customers that specifically value customization. This implies that a modularization strategy is beneficial in these settings, possibly due to the fact that this strategy enables firms to quickly respond to customer demands by changing or personalizing modules. Another important environmental contingency is the rate to which technology changes. Since product modularization and the design of platforms are costly and resource intensive exercises, these strategies may not be applicable in environments with high technological change, where firms are not capable of reaping the benefits of module and component reuse. However, the findings indicate that only firms that employ high degrees of platform thinking experience lower rates of technological change. This might imply that product modularization as a strategy better can handle technological change, as firms employing this strategy are less bound to a technological trajectory than compared to firms using platform thinking.

An important organizational contingency to the use of platforms is the degree to which the product development process is formalized. Literature suggests that platform thinking is best supported through formalization, as a formalized product development process helps keeping the platform and its interfaces stable and also enables technical solutions to be repeated. The empirical results in this paper support this suggestion, as firms employing high degrees of platform thinking also have a higher degree of formalization. The sole use of platform thinking or combined with product modularization is found to be related to a lower degree of outsourcing of product development work. This might indicate that it is difficult to incorporate external suppliers in the work with immature product platforms, as platform thinking is a highly complex task and may constitute an implicit competence for the firm.

Results indicate that firms employing product modularization also use a wide range of complementary practices, including QFD, DFA, FMEA and TRL classification. DFA can prove to be a very useful complementary practice to product modularization, as it can help the firm design modules according to assembly needs and also can help decrease the cost of assembly, a process that is all-important for modular systems. In a similar vein, QFD can also help during module design, as it enables the firm to interpret and translate customer requirements. Last but not least, using TRL classification and FMEA can help firms with high modularization prevent very costly misfortunes, as adding a defective module or immature technology to a base of interchangeable modules would not only affect one or a couple of products, but have a negative impact on a wide range of product variants. Platform thinking has a fewer amount of complementary practices, however, the findings do indicate that TRL classification and the use of defined gates and goals in product development supplement the use of platforms. Firms using product platforms have to respond to or lead technological change by integrating new technology into an already existing product structure. Without using TRL classification and defined goals and gates, these firms can risk that immature technology is incorporated in their core platform and that their long-term platform-based plan for future product variants and successive generations is disrupted.