The power of product integrity

In the dictionary, integrity means wholeness, completeness, soundness. In products, integrity is the source of sustainable competitive advantage. Products with integrity perform superbly, provide good value, and satisfy customers' expectations in every respect, including such intangibles as their look and feel. Consider this example from the auto industry. In 1987, Mazda put a racy four-wheel steering system in a five-door family hatchback. Honda introduced a comparable system in the Prelude, a sporty, two-door coupe. Most of Honda's customers installed the new technology; Mazda's system sold poorly. Potential customers felt the fit--or misfit--between the car and the new component, and they responded accordingly. Companies that consistently develop products with integrity are coherent, integrated organizations. This internal integrity is visible at the level of strategy and structure, in management and organization, and in the skills, attitudes, and behavior of individual designers, engineers, and operators. Moreover, these companies are integrated externally: customers become part of the development organization. Integrity starts with a product concept that describes the new product from the potential customer's perspective--"pocket rocket" for a sporty, subcompact car, for example. Whether the final product has integrity will depend on two things: how well the concept satisfies potential customers' wants and needs and how completely the concept has been embodied in the product's details. In the most successful development organizations, "heavyweight" product managers are responsible for leading both tasks, as well as for guiding the creation of a strong product concept.     

Managing in an age of modularity

Modularity is a familiar principle in the computer industry. Different companies can independently design and produce components, suck as disk drives or operating software, and those modules will fit together into a complex and smoothly functioning product because the module makers obey a given set of design rules. Modularity in manufacturing is already common in many companies. But now a number of them are beginning to extend the approach into the design of their products and services. Modularity in design should tremendously boost the rate of innovation in many industries as it did in the computer industry. As businesses as diverse as auto manufacturing and financial services move toward modular designs, the authors say, competitive dynamics will change enormously. No longer will assemblers control the final product: suppliers of key modules will gain leverage and even take on responsibility for design rules. Companies will compete either by specifying the dominant design rules (as Microsoft does) or by producing excellent modules (as disk drive maker Quantum does). Leaders in a modular industry will control less, so they will have to watch the competitive environment closely for opportunities to link up with other module makers. They will also need to know more: engineering details that seemed trivial at the corporate level may now play a large part in strategic decisions. Leaders will also become knowledge managers internally because they will need to coordinate the efforts of development groups in order to keep them focused on the modular strategies the company is pursuing.