Week 1
Yoo et al. (2010); The New Organizing Logic of Digital Innovation: An Agenda for Information
System
Digital innovation
● = The carrying out of new combinations of digital and physical components to
produce novel products. (vooral gefocust op product innovation)
● Characteristics:
1. The reprogrammability: enables separation of semiotic functional logic of
device from physical embodiment that executes it (analog tech not possible).
2. The homogenization of data (binary numbers)
3. The self-referential nature of digital technologies
○ DI requires a firm to revisit its organizing logic and its use of corporate IT
infrastructures. (E-book vs normal book).
● Layered architecture
The layers manifest two critical separations: (1) that between device and
service because of reprogrammability and (2) that between network and
contents because of the homogenization of data.
1. devices
● physically machinery layer; e.g. computer
● logical capability layer; e.g. operating system (OS)
2. Networks;
● Physical transport layer; cables, radio
● logical transmission layer; network standard, e.g.
TCP IP
3. services ; Application functionality (e.g. google)
4. contents; Text, fotos, sounds, metadata, ownership,
copyright, encoding method, content tags.
○ Components in layered modular architecture are product
agnostic.
Physical product design
● Integral architecture
○ Integral: Complex and overlapping mapping between functional elements and
physical components, interfaces between components are not standardised
and tightly coupled. (interdependent)
■ → changes in one part affect the rest of the product.
■ → high performance and quality.
■ Dominant approaches to competitive strategy are product positioning
(market scope), and strategic strength as key parameters for
determining appropriate strategy.
● modular architecture
, ○ Standardized interface between components. Reduced complexibility and
increase flexibility
○ The modular architecture provides a scheme where physical products are
decomposed into coupled components, is attributed functionality, and is then
interconnected through interfaces.
■ Complex system, refers to degree in which a product can be
decomposed into components that can be recombined. Leads to
vertical disintegration (separate companies).
■ Key source of value creation: agility of rapid combining components of
modular product without sacrificing cost or quality. Flexible because
substitutions of components is accomplished within single design
hierarchy. (differences in degree). (camera more flexible because
standarizes mounting interface enables more lenses to be added.
● The layered modular architecture.
○ Bestaat uit normale fysieke product architectuur met daar bovenop
gekoppelde lagen van devices, networks, services and content.
○ The layered modular architecture is a hybrid between a modular architecture
and a layered architecture, where the degree by which the layered
architecture adds the generativity to the modular architecture forms a
continuum
○ Layered modular architecture offers generativity. (google maps). Due to loose
coupling across layers. Whereas components in a modular product fall under
a single design hierarchy.
● Layer modular architecture vs modular architecture
○
● layered modular architecture can be used to be simultaneously a product and
platform if digitized. -> ipad is a new product out of the box, and firms can invent
novel components such as accessoires. -> basic functionality expanded.
● Subsystems of automobile digitized -> other firms can develop and integrate new
devices.
● Innovation within layered modular architecture is distributed between the same firms
and different firms. (doubly distributed) -> because of the primary source of value
, creation. Both control over product components is distributed and product knowledge
is distributed across heterogeneous disciplines.
1. Digitizing products blurs product and industry boundaries. Revisit traditional
theoretical devices such as generic strategies, product life cycle and dominant design
product. Need of articulation of new competitive strategies and evision new roles of
IT in shaping those strategies.
2. Because layered modular architecture represents a range of possibilities for
embedding digital components into physical product, it also represents a strategic
choice for firms seeking DI.
3. With layered modular architecture, firms create digital product platforms to control
key components or particular combinations of components within certain layers.
Strategic control of key components can render competetive advantage.
● With layered modular architecture, however, innovation activities cut across multiple
design hierarchies. -> traditional centralized tools to support knowledge management
and virtual teams need to be augmented with new tools that can handle
heterogeneity and discontinuity in knowledge.
Boek H1: The foundations of the digital economy
Short summary
● Then came the digital economy. The digital economy builds upon the internet
economy due to increasing resources of data flowing from billions of hyperconnected
digital devices and the development of artificial intelligence
● The digital economy is characterised by two interrelated mechanisms of datafication
and expansion of networks.
● Datafication boils down to deriving value (economic, social, and political) from
abundant data generated en masse via digital devices and analysed in an
increasingly efficient, faster, and cheaper way by intelligent algorithms. The value
may consist in the processes (e.g., planning, production, and management) being
made autonomous (onafhankelijk) or in products (goods and services) being
personalised, i.e., tailored to the needs and expectations of the customers
● The enhanced access to the internet through the digital devices contributes to the
growth and thickening of online (and in consequence also offline) networks
connecting people, companies, public institutions, machines, and systems. Such
networks become the source of data in their own right – i.e., they become datafied.
The emergence of the new platform business model results in strengthening some of
the existing networks as well as creating new ones through the operation of matching
and recommendation algorithms. This way online networks become increasingly
datafied.
● The intensification and extension of datafication processes into new areas of
economic, social and political life is leading to a digital transformation. This is
9paving the way for the emergence of a new model for the functioning of markets,
enterprises, households, and the public sector. Production and consumption
processes are changing, as are: the nature of work, forms of employment,
companies’ business models, and the way public institutions function (and, as a
result, the way the global economy does too).
