Design Rules, Vol. 1: The Power of Modularity

The authors clearly and persuasively explain how modular design adds a tremendous amount of value through the creation of real options. Furthermore, modularity allows for the evolution of both design and industry.

In the 1960's, IBM created the System/360, the first modular family of computers. As a result, IBM launched an industry -- and lost control over the tremendous value it stimulated.

"Design Rules" was recommended me by one of the authors' colleagues, who thought that I'd "eat it up." I did, and I'm hungry for Volume 2.

The authors model builds upon the work of John Holland, Stuart Kauffman and Brian Arthur (from the Santa Fe institute) on Complex Adaptive systems (CAS). CAS have four properties:

1. Each of these systems is a network of many agents acting in parallel. The control of these agents is highly dispersed.

2. The CAS has many levels of organization, with agents at any one level serving as the building blocks for agents at the higher level. Furthermore, CAS are constantly revising and rearranging their building blocks as they gain experience. Baldwin and Clark carefully document four layers operating in the computer industry, The global financial system, the markets for goods and labor, organizations, and the design and production of computers. In Addition, the authors describe the six "modular operators", the complete set of options that can be used by agents to modify the system that can be used at any level.

3. All CAS anticipate the future. The various models, whether implicit or explicit assumptions, are constantly tested, refined and rearranged as the system gains experience. Baldwin and Clark assume that designers "see and seek" value, with value being measure in the global financial system.

4. CAS typically have many niches, each one exploited by an agent adapted to fill that niche. Moreover, the very act of filling a niche opens up new more niches. Thus, there is no equilibrium in these models, it is not about a "punctuated equilibrium". The process is a constant search for an improved fit with the environment. Moreover, the clock speed of the process should match the environment.

This book has deep implications for practitioners and scholars interested in understanding the "new" economy. I highly recommend the text.

The authors model builds upon the work of John Holland, Stuart Kauffman and Brian Arthur (from the Santa Fe institute) on Complex Adaptive systems (CAS). CAS have four properties:

1. Each of these systems is a network of many agents acting in parallel. The control of these agents is highly dispersed.

2. The CAS has many levels of organization, with agents at any one level serving as the building blocks for agents at the higher level. Furthermore, CAS are constantly revising and rearranging their building blocks as they gain experience. Baldwin and Clark carefully document four layers operating in the computer industry, The global financial system, the markets for goods and labor, organizations, and the design and production of computers. In Addition, the authors describe the six "modular operators", the complete set of options that can be used by agents to modify the system that can be used at any level.

3. All CAS anticipate the future. The various models, whether implicit or explicit assumptions, are constantly tested, refined and rearranged as the system gains experience. Baldwin and Clark assume that designers "see and seek" value, with value being measure in the global financial system.

4. CAS typically have many niches, each one exploited by an agent adapted to fill that niche. Moreover, the very act of filling a niche opens up new more niches. Thus, there is no equilibrium in these models, it is not about a "punctuated equilibrium". The process is a constant search for an improved fit with the environment. Moreover, the clock speed of the process should match the environment.

This book has deep implications for practitioners and scholars interested in understanding the "new" economy. I highly recommend the text.