Recently, I read the MIT Sloan Management Review article 'Beyond Best Practice' by Lynda Gratton and the late Sumantra Ghoshal, both from London Business School. Writing a book on strategy implementation and business architectures myself (see earlier posts), I was very pleasantly surprised when I came across the following passage:
[begin quote]
The origin of Nokia's modular structure can be traced back to the software technology heritage the firm began to develop in the 1980s. At that time, Nokia's software technology was built from two core elements: the software mantra of reusability, and standardization through the creation of a shared common platform. Reusability is considered crucial to software development. When programmers at Nokia built new software programs, up to 75% of the program typically was built by reconfiguring modules of previously developed software. The sped up the development process, reduced the cost of making new programs and ensured that knowledge could be rapidly shared. The technological leverage Nokia achieved by reusability and reconfiguration depended on the programmers' skills in slicing and sequencing the modules of previous programming.
This competence and philosophy of reusing modules, which began in the 1980s as an element of its technology, became the design foundation of the modular architecture of the company structure. In the software programs, the modular units that were reconfigured were pieces of written software. In the company architecture, the modular units that were reconfigured were modular teams of people with similar competencies and skills. In the same way that modular reconfigurations ensured that valuable software was not lost, the modular architecture ensured that valuable skills, competencies and team relationships that were held within teams of people were not lost or dissipated. In effect, the signature process of structural modularity has its roots in the software production process of reusability through modularity and reconfiguration.
Nokia's signature process of structural modularity also has its roots in a technology philosophy of shared common platforms and standardization. Reconfiguring different modules of software requires that each module be developed in a similar way with a similar underlying architecture. That is, it requires a high degree of standardization. For more than 20 years, a mindset, discipline and philosophy of reusability and standardization had pervaded Nokia. It was well understood that only through common tools, platforms, technologies and languages could speed be achieved. This became the backdrop to Nokia's signature process: the capacity to build modular corporate structure.
The quality of this signature process was tested in January 2004, when Nokia announced and then implemented what would represent a fundamental organizational shake-up for most companies. In order to focus more closely on changing customer aspirations, Nokia's nine business units were restructured into four. At the same time, in order to ensure speed of innovation and production across the globe , all the customer and market operations, product development operations, and manufacturing, logistics and support activities were reorganized on a companywide basis into three horizontal business units. This organizational change was made fully effective within one week and involved over 100 people assuming new jobs. The rest of the employees had no such change because the modular teams to which they belonged were simply reconfigured. The discipline, philosophy and mindset of reconfiguration through standardization and shared platforms, which was initially developped from the company's technology history, ensured that Nokia could skillfully and rapidly reconfigure its human resources to meet changing customer needs.
[end quote]
Having based our own approach to business architecture on modularity as well, this provides me with the best possible example I could think of. It shows our thinking is not just theory, nor is it unproven. One of the world's largest and at times most admired companies has adopted exactly the kind of approach to organizational design that we suggest!
[begin quote]
The origin of Nokia's modular structure can be traced back to the software technology heritage the firm began to develop in the 1980s. At that time, Nokia's software technology was built from two core elements: the software mantra of reusability, and standardization through the creation of a shared common platform. Reusability is considered crucial to software development. When programmers at Nokia built new software programs, up to 75% of the program typically was built by reconfiguring modules of previously developed software. The sped up the development process, reduced the cost of making new programs and ensured that knowledge could be rapidly shared. The technological leverage Nokia achieved by reusability and reconfiguration depended on the programmers' skills in slicing and sequencing the modules of previous programming.
This competence and philosophy of reusing modules, which began in the 1980s as an element of its technology, became the design foundation of the modular architecture of the company structure. In the software programs, the modular units that were reconfigured were pieces of written software. In the company architecture, the modular units that were reconfigured were modular teams of people with similar competencies and skills. In the same way that modular reconfigurations ensured that valuable software was not lost, the modular architecture ensured that valuable skills, competencies and team relationships that were held within teams of people were not lost or dissipated. In effect, the signature process of structural modularity has its roots in the software production process of reusability through modularity and reconfiguration.
Nokia's signature process of structural modularity also has its roots in a technology philosophy of shared common platforms and standardization. Reconfiguring different modules of software requires that each module be developed in a similar way with a similar underlying architecture. That is, it requires a high degree of standardization. For more than 20 years, a mindset, discipline and philosophy of reusability and standardization had pervaded Nokia. It was well understood that only through common tools, platforms, technologies and languages could speed be achieved. This became the backdrop to Nokia's signature process: the capacity to build modular corporate structure.
The quality of this signature process was tested in January 2004, when Nokia announced and then implemented what would represent a fundamental organizational shake-up for most companies. In order to focus more closely on changing customer aspirations, Nokia's nine business units were restructured into four. At the same time, in order to ensure speed of innovation and production across the globe , all the customer and market operations, product development operations, and manufacturing, logistics and support activities were reorganized on a companywide basis into three horizontal business units. This organizational change was made fully effective within one week and involved over 100 people assuming new jobs. The rest of the employees had no such change because the modular teams to which they belonged were simply reconfigured. The discipline, philosophy and mindset of reconfiguration through standardization and shared platforms, which was initially developped from the company's technology history, ensured that Nokia could skillfully and rapidly reconfigure its human resources to meet changing customer needs.
[end quote]
Having based our own approach to business architecture on modularity as well, this provides me with the best possible example I could think of. It shows our thinking is not just theory, nor is it unproven. One of the world's largest and at times most admired companies has adopted exactly the kind of approach to organizational design that we suggest!
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