Title: Modularity in the design of complex engineering systems
Description: This paper summarizes and extends the arguments set forth in our book, Design Rules, Volume 1, The Power of Modularity. We first present evidence to show that modularity is a financial force, which can change the structure of an industry. The economic power of modularity lies in two fundamental properties: first, modularity creates options; and second, modular designs can evolve at low cost and without central control. We explore the value and costs that are associated with constructing and exploiting a modular design, and then examine the risks that modularity poses for individual firms.