The Role of Modularization in the Innovation and Strategy Process to Deal with Future Uncertainties
Today, one of the greatest concerns for many companies is how well their business will fit their future markets. In the onset of the perfect storm caused by the myriad of megatrends, such as sustainability, servitization, digitalization, electrification, automation, and urbanization, predicting how future markets will unfold will be impossible for most businesses. Navigating and handling the product strategy to the realization and innovation process will make all the difference. If history, as well as the COVID-19 pandemic, can provide any insight, it is that the stakes are high.
Companies that fail to timely prepare their products and delivery mechanism for future markets may face substantial losses. Both research and industry voices increasingly suggest companies need and can gain from a more systematic approach and scenario perspective for their future
Moreover, many companies have unsurprisingly drawn their interest to both flexible and product development strategies systems that cope with unpredictable market dynamics, and research has recently highlighted Modularization as one such strategy. Yet, how can one modularize against an uncertain future?
Through Modular Management’s research network at the Swedish Royal Institute of Technology (KTH), and being part of Eco2 Centre for Vehicle Design we were able to initiate research into this very question. First for subway trains and infrastructure and more recently focused on the road freight industry. The attention and interest received for our research from non-vehicle manufacturers support our strong belief the challenge and findings are most likely relevant and should be explored also for other industries.
In this blog post, we will share some key findings from our recent research focused on future goods transportation missions using trucks as an example. The purpose of this research project has been to close an identified gap between future studies and modularization.
And to do so, we started to explore how scenario modeling can support modular product architectures to meet future needs by evaluating;
- platform design strategies
- product (re)configuration
- modular product up-gradation pathways
But first, let’s take a look at the transportation industry and why it serves as an excellent case study when modularizing against the future.
High Pressure for Future Resilience and Flexibility in the Transportation Industry
Product and infrastructure platforms in transportation solutions like trains, trucks, and busses are designed to sustain long lifecycles as do the modular product and infrastructure platforms from and for which they are designed. While serving economic goals and keeping material resources in use, long-life products, platforms, and infrastructure may lock manufacturers and societies into paths limiting the transformation to more sustainable solutions. Furthermore, transport system transformation is ongoing and driven by the many mentioned trends such as automation, digitalization, electrification, servitization. The road freight industry is also a significant contributor to CO2-emissions and thereby subject to strong political pressure, globally driven by Paris Agreement and UN’s Sustainable Development Goals, aiming to unlock the transportation sector from its fossil-fuel dependency and legacy.
Most truck manufacturers have already committed to abandoning their dependency on fossil fuels and the recent news of a record order in electrified trucks supports that this transformation is ongoing. The transformation to battery electric vehicles both supports the decarbonization but also raises new questions and challenges concerning batteries material and technology maturity, charging infrastructure availability, and the energy system behind it as well as the overall net sustainability impact from raw material to end-of-life.
Based on this, we argue that flexible and upgradable product architectures are of paramount importance when designing products for future market needs in an ever-changing business landscape.
Advancing the Modularization Process to Deal with the Uncertain Future
Our research has studied and proposes to integrate futures studies into the modularization process and developed a model to evaluate the effectiveness of modular products against future scenarios. There are, as far as we know, no current methods that integrate futures studies into the modularization process. Nor were any methods found to evaluate the effectiveness of modular product architectures and the product configurations it can support against future scenarios.
Technology will play a key role in defining product system architecture, whether more modular or integral, but technology trends are many and the rate of change is hard to predict. Technology-based architectures will not last forever, but a customer value delivery-centric modular product architecture is an asset much larger than the sum of technical architectures. Customer values delivery-centric architectures can evolve to satisfy changing strategic, and market needs over time.
A New Model for Future Scenarios Simulation of Modular Products
To explore how future scenarios could be integrated with modularization, we replaced our needs-based market segmentation, the first step in the MFD-method for developing modular systems, with a market context based on futures studies. An overview of the method can be seen below, illustrating how future customer values have been extracted from a set of future scenarios and weighted according to the perceived level of importance in that future.
The study builds upon profound scenario frameworks from earlier research by the Integrated Transport Research Lab in Stockholm and developed with the participation of more than 50 experts from 30 different organizations within the transportation industry. Nonetheless, the originators state that the scenarios do not intend to frame the most likely future. Instead, the scenarios provide a set of possible but distinctive different futures, and hence, the scenarios serve as an excellent foundation when exploring how firms can modularize against the future.
In our current study, we are focusing on electrified heavy-duty trucks with battery and fuel-cell technologies as the sub-systems of interest. To simulate the future performance of modular truck configurations, a simulation model has been built. The modular truck configurations that have been evaluated consist of the most significant but yet largely independent high-level modules. Modules and module variants used do not intend to reflect optimal solutions, but realistic concepts based on literature, forecasts, and foresight from industry and input from a heavy-vehicle expert in our research community.
The modules and corresponding module variants used in the model enable 42 unique product configurations. Vehicle product configurations were evaluated on their performance and scenario-specific weighted importance of three key customer values: Total Cost of Ownership (TCO), Overall Equipment Effectiveness (OEE) and Sustainability (for this study limited to CO2 footprint) derived from the scenario narratives.
By following the method described above, and by creating a simulation model, this research serves as a proof of concept on how the overall performance of modular product configurations can be evaluated across multiple futures. Furthermore, the simulations enable a more in-depth analysis of the underlying performance of module variants. Therefrom, this approach can direct the scope for platform development by providing insights regarding the least and most robust modular designs and configurations, as well as critical and non-critical modules and modular up-gradation options.
Prepare for an Uncertain Future through Modularization
The contribution from this study so far (a report can be downloaded below) can be considered two-fold and in alignment with mentioned objectives:
The pathways and application scenarios for the continuation of this study are multiple. One is to evaluate both near term (more certain but also constrained) versus long term (more uncertain, but un-locked) futures to support assessment of evolving, transient or new product platform design strategy, and configurations enabled or disabled in each. Another would be to include decision-making pro's and con's such as the possible financial impact of design strategy alternatives to guide product platform planning and R&D investments.
We welcome you to join the conversation with industry-, research and the public sector, as we are all stakeholders to a sustainable future. We believe scenario frameworks and models such as these can provide an effective common language and shared configurable future contexts to connect people and organizations, evaluate ideas and accelerate projects, as modules in societies’ present and futures.
Read more about the application of future studies in the innovation process we also recommend reading this research paper.
A full report of our study and model to evaluate future good transportation scenarios can be found here.
Interested to get engaged?
Please contact me directly if you'd like to know more about the research project and or how those could be applied in your company, I’d love to hear your thoughts about how to prepare for the future and design for sustainability.
Colin De Kwant
Vice President & Senior Consultant at Modular Management
+46-736-20 11 31