Product Architecture and Product Development Process for Global Performance

In this chapter, we characterize the impact of product global performance on the choice of product architecture during the product development process. We classify product architectures into three categories: modular, hybrid, and integral. Existing research shows that the choice of product architecture during the new product development is a crucially strategic decision for a manufacturing firm. However, no single architecture is optimal in all cases; thus, analytic models are required to identify and discuss specific trade-offs associated with the choice of the optimal architecture under different circumstance. This chapter develops analytic models whose objectives are obtaining global performance of product through a modular/hybrid/integral architecture. Trade-offs between costs and expected benefits from different product architectures are analyzed and compared. Multifunction products and small size are used as examples to formalize the models and show the impact of the global performance characteristics. We also investigate how optimal architecture changes in response to the exogenous costs of system integrators. Some empirical implications obtained from this study show that if one considers global performance, modular architecture is an absolutely suboptimal decision and integral architecture is an all-the-time candidate for optimal architecture.