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CRITICAL REVIEW 12

CRITICAL REVIEW

Critical Review — Digital Differentiation, Software Product Lines, and the Challenge of Isomorphism in Innovation: A Case Study

Introduction

The article written was by Andreasson and Henfridsson (2009), and analyses software product lines (SPLs) engineering adoption with the goal of implementing digital differentiation of the physical artefacts. According to the authors introducing a software-based variety could be challenging for firms innovating in the realm of the manufacturing model. Essentially, the common dependency between the product design as well as organization design of firms that produce a new product can counter efforts to bring change by means of SPL engineering. The authors maintain that the IT innovation process involves creating as well as diffusing new IT-based products/services. Even though, Andreasson and Henfridsson argue that innovation associated with the complex technology systems is normally an inter-organisational endeavour, they have not proved how heterogeneous actors bring collaborations that oppose motivations, knowledge resources and technology bases. Without a doubt, integrating software into physical products as observed by Andreasson and Henfridsson provides challenges to the innovation processes. For instance, available space of digital options is multiplied so as to augment the existing offers and also to radically launch new ones in the market. Additionally, seizing up-and-coming digital options is challenging because the existing practices of product innovation lacks the needed organizational agility or IT capabilities. By reviewing existing pieces of literature of product families and SPLs, Andreasson and Henfridsson seek to create an insight into isomorphism role in the implementation of digital differentiation while developing a new product.

Overview and Summary of the Reviewed Paper

The physical products digitisation as mentioned by Andreasson and Henfridsson is drastically challenging the processes of innovation in established firms. Although the needed isomorphism between product design as well as organization design is crucial for exploiting the dominant design, it depresses the capability of the firm to counter technological discontinuities. According to the authors, introducing digital technologies into the physical products epitomises a discontinuity for a number of firms, especially those in the manufacturing sector. Even though the processes that exist are rooted in an innovation logic perfected for a tangible business, Andreasson and Henfridsson argue that integrating software into the existing product architectures results in an unknown innovation logic that needs new architectural knowledge. Therefore, handling these parallel logics during the organisation of the innovation processes has become a persistent issue. Andreasson and Henfridsson focus on how software product line engineering can be adopted so as to implement the digital differentiation of physical products. They conducted their case study research at GlobalCarCorp, one of the largest automakers in the world.

The R&D operations at GlobalCarCorp serve scores of brands; therefore, the brands multiplicity generates inducements for identifying and creating product platforms that makes differentiation economically viable. The authors used an iterative process to collect data, and it involved three phases; meeting attendance, recording and transcribing semi-structured interviews; and character confirmatory. Besides that, data was collected from multiple sources such as meeting notes, semi-structured interviews, email correspondence as well as workshop documentation. They noted that manufacturing organization was experiencing challenges in their quest to establish processes of SPL engineering that could break with the fundamental isomorphism between design structure and task structure. Given that the established isomorphism is anchored on the hardware model that remains within the firms that produce physical products, Andreasson and Henfridsson noted that it is challenging to create new task structures as well as design structures for the sub-system software portion. As evidenced at GlobalCarCorp, when a new task structure is adopted it is challenged severely by the dominant task and design structures associated with the hardware. This acumen contributes to the SPL literature that ignores the surrounding processes. In conclusion, Andreasson and Henfridsson maintain that the product families’ innovation literature appears to oversee the growing digitisation of physical products, in so doing, ignoring the important relationships that emerge between differentiations across the physical as well as digital realms.

Review objectives

The objective of this paper is to critically review Andreasson and Henfridsson assertion that innovation opportunities and challenges that face scores of manufacturing organizations when manufacturing products are becoming digitized. The authors have hardly outlined some of the core competencies that should be used when a manufacturing firm seize emergent digital options. This critical review will explore some aspect of organisational informatics using Andreasson and Henfridsson article.

Critical analysis

In their paper, Andreasson and Henfridsson express digital differentiation as a software-enabled process capable of recognising evaluating, implementing as well as maintaining distinguishing features of a physical product as compared to other products from a similar class. The authors argument are echoed by Nylen and Holmstrom (2015, p.58) arguing that digital technology has become more and more important in the realisation of business goals and that their pervasive effects have led to far-reaching restructuring of various industries. According to Andreasson and Henfridsson, digital technologies bring about a massive potential for service and product innovation, which is very challenging to predict and control. As a result, firms require dynamic tools so as to be able to support themselves while handling new forms of emerging digital innovation processes. Nylen and Holmstrom (2015, p.59) maintain that, the nature of such processes compels the manufacturing firms to challenge the earlier assumptions concerning the digital environment and portfolio of their product and service and how to organise the innovation work. Henfridsson et al. (2009, p.22) also agree with Andreasson and Henfridsson that digital innovation brings about new threats and options to automakers. By embedding ICT capabilities, King and Lyytinen (2004, p.297) posit that the digital automobile can, for example, allow new forms of design supply chains, business models as well as product differentiation. Simultaneously, utilising ICT effectively as a tool for generating options relies on the gaining capabilities that can enable the organizations to seize opportunities that are emerging. The ability of the firm to deploy resources in order to get the sought after outcome (dynamic capability) can be achieved through modularity of both organization design as well as product design. The interplay between car manufacturing and software industries in joint innovation has been studied scantly, but Andreasson and Henfridsson study exhibit some evidence on how modularity of the traditional hardware component tensely meets the emergent software service-based modularity. Andreasson and Henfridsson’s literature on IT innovation provides little understanding concerning the creation of innovation as well as collectives of heterogeneous innovation.

Digital differentiation concept has been discussed extensively in the Andreasson and Henfridsson paper with the goal of describing innovations anchored on the SPLs. Andreasson and Henfridsson examined the existing relationship between mechanical engineering and software with regard to the system architecture as well as the automotive company development process. They discerned that hardware manufacturing limits the integration of the product-line approach. Evidently Andreasson and Henfridsson approach do not have details regarding system modelling and also do offer an outline that can be followed. According to Gleirscher et al. (2014, p.1), knowledge exploitation regarding innovations is critical for management of innovation, particularly when estimating innovations impact on the technology platform. The existing approaches as observed by Gleirscher et al. (2014, p.9) suggest processes for developing and creating both forms of innovations: For instance, the Capability Maturity Model Integration (CMMI) provides guidance of how a firm can choose and rollout innovations. Still, innovation management is supported by systems engineering through creativity techniques, evolutionary development methods, technology management, architecture documentation as well as value engineering and system modelling.

Andreasson and Henfridsson observed that in digital service innovation, there emerges a new challenge that ranges from managing relationships with unfamiliar providers so as to create multifaceted strategies for capabilities and differentiation coupled with digitalisation). However, they do not explain how the dual system of digital innovation can be managed effectively through organising architectural and logics design and managing the market dynamics. As mentioned by Svahn and Henfridsson (2012, p.3353), conventional requirements in the innovation of products such as vertical industries and liner process are being challenged by digital requirements. As a consequence, this needs numerous renewals like changing institutional practices and infrastructure, altering how producer and customer interact, and so forth. Although physical products digitization as mentioned by Andreasson and Henfridsson involves inherent tensions between the traditional manufacturing paradigm and the emerging software logic, they do not offer sustainable solutions to these tensions. Such tensions according to Hardless and Jaffar (2011, p.30) are caused by the co-existing regimes of heterogeneous innovation that have different technical materiality and social structures. The manufacturing paradigm, on one hand, is typified by the innovation regime that focuses on the component-based modularity. According to Svahn et al. (2009, p.3), modularity is valuable in designing complex systems, like airplanes or cars since it establishes the independence across and interdependence within the product components. Andreasson and Henfridsson have not discussed how service-based modularity expedites new social structures anchored on coordination between the heterogeneous and distributed actors. In the process of distributed innovation, where stakeholders who are uncoordinated work in networks that do not have hierarchical relations, opportunities for identifying and seizing new market shares need firms to be agile. Even though most organizations stress product innovation predictability, utilisation of agile processes in digital innovation brings about flexibility. This according to Sambamurthy et al. (2002, p.238) connotes that the organizations using digital technology normally struggle with agility related to that technology as well as the various options offered by that digital innovation.

Andreasson and Henfridsson observed that thedigital options created were challenging in consideration of the established isomorphism that existed between established task and design structures. In their research, they focussed on SPL engineering adoption in the instrument cluster design at GlobalCarCorp. The used the SoftClusterTool with the objective of harvesting benefits of commonality on the hardware and achieving the existing differentiation between the software and GlobalCarCorp brands. Therefore, adopting SPL engineering was Andreasson and Henfridsson’s attempt to put digital differentiation vision into practice. Still, they do not provide an institutionalist perspective associated with the innovation phenomenon. A number of articles such as Ashworth et al. (2009) have discussed the isomorphism phenomenon related to other perspectives like organizational cooperation and sustainability. Modern global competitiveness is making businesses get worried about various key issues that can bring about substantial advantages while pursuing the strategic goals. Hylving et al. (2012, p.11) maintain that innovation should be treated as the development of products while isomorphism is the capability of the organizations’ processes becoming the same after some time. Therefore, to apply innovation as a mechanism for escaping isomorphism, non-technological and technological innovations should be the fundamental factor, regardless of whether they are on models of organizational management or products.

Appraisal

Scores of manufacturing firms source their design practices as well as capabilities through long episodes of incrementally refining the product designs and organizational processes. After resolving the design competition concerning the technological alternatives in a certain market, there emerges a dominant design that make firms focus on the process innovation instead of producing superior products that are radically base on the new technology. In view of this, digitising tangible products bring about non-trivial problems to well-established firms such as GlobalCarCorp. Such firms as maintained by Andreasson and Henfridsson find it hard to passively view the evolution through which digital technology brings to the industry in addition to the value propositions. Digital technology according to the authors can result in increased product experience and performance, but given that they have focussed only on the automobile industry it cannot be generalised that products in other industries are changing due to digital technology. The insight provided in the article is not sufficient and barely help companies that are trying to organize for innovation. This is because of the fact that there is a knowledge gap between the divergent forces (the new digital and dominant design technology); therefore, there is a need for knowledge about the digital technology influence on established ties between the actual product design and organizational processes. Andreasson and Henfridsson have not empirically exhibited how such linkages can condition utilisation of the digital differentiation in an established firm. In view of the existing innovation literature, there exist some tensions in such linkages as observed by Andreasson and Henfridsson while digitising the instrument cluster at GlobalCarCorp.

As observed at GlobalCarCorp, new task structures that are introduced are normally challenged severely by the hardware’s dominant task stand design structures. Their study at GlobalCarCorp pointed out the growing digital content of physical products has become more challenging and is cutting across the established firm. The instrument cluster disintegration of the automaker as a hardware component in addition to the applied software for visual expression as well as driver information provides new flexibility. Software engineers who were recruited found it hard to swiftly address the change requests, which were managed traditionally through close interaction with the supplier with high costs as well as long lead times. Evidently, the redefined relationship with the supplier would generate new roles such as the software engineer as well as redefined roles such as HMI engineer at the established firm. Still, Andreasson and Henfridsson have not illustrated how the established dominant design influenced the software platform initiative; and if there is any measures that can reduce the generated tensions. As mentioned by reference, dominant designs enable the established firms to organise their processes of innovation in order for them to benefit on their technical, relational, and intellectual resources. Eventually, this results in a reciprocal relationship between the cross-organizational processes and the product design, which are used for performing product innovation. This relationship has been defined as a fundamental isomorphism between design structure as well as task structure.

Conclusion

In conclusion, the paper has critically reviewed Andreasson and Henfridsson article. The authors have outlined the digital technology unique features that allow new forms of innovation processes, which are rapid as well as hard to predict and control. However, they have failed to empirically explain why established firms such as GlobalCarCorp need dynamic tools so as to be able to manage their efforts in digital innovation. Without a doubt, the digital innovation processes are rapidly advancing, but they are very challenging when the firms are engaging in the design various products, whereby the traditional products are embedded in the digital components. The authors’ use GlobalCarCorp to show how established firms are facing complex challenges when embedding software systems while processes of digital innovation are radically unfolding at different speed. There exist some gaps in Andreasson and Henfridsson that need further research; for instance, their research focuses on one case study; thus, resulting in analytic generalization from the research. Although a number of industries have started digitising their physical products, the outcomes of this digitisation process cannot be assumed to be the same in all other industries. Still, the understanding provided by Andreasson and Henfridsson should be tested in other product-developing settings save for the manufacturing industry. Still, as indicated in the article, product families are inclined to oversee the growing digitisation of tangible artefacts, in that way, discounting the relevant as well as new relationships that emerges between differentiation across the physical and digital realms.

References

Andreasson, L. & Henfridsson, O., 2009. Digital differentiation, software product lines, and the challenge of isomorphism in innovation: A case study. In 17th European Conference on Information Systems. Verona, Italy, 2009.

Ashworth, R., Boyne, G. & Delbridge, R., 2009. Escape from the Iron Cage? Organizational Change and Isomorphic Pressures in the Public Sector. Journal of Public Administration Research and Theory, vol. 19, no. 1, pp.165-87.

Gleirscher, M., Vogelsang, A. & Fuhrmann, S., 2014. A Model-Based Approach to Innovation Management of Automotive Control Systems. In 8th International Workshop on Software Product Management. Karlskrona, Sweden , 2014.

Hardless, C. & Jaffar, A., 2011. Heterogeneous Inter-Organisational IT Innovation Creation: Institutional constraints in a public sector oriented market. Scandinavian Journal of Information Systems, vol. 23, no. 1, pp.29–58.

Henfridsson, O., Mathiassen, L. & Svahn, F., 2009. Reconfiguring Modularity: Closing Capability Gaps in Digital Innovation. Sprouts: Working Papers on Information Systems, vol. 9, no. 22, pp.1-31.

Hylving, L., Henfridsson, O. & Selander, L., 2012. The Role of Dominant Design in a Product Developing Firm´s Digital Innovation. Journal of Information Technology Theory and Application, vol. 13, no. 1, pp.6-21.

King, J.L. & Lyytinen, K., 2004. Automotive Informatics: Information Technology and Enterprise Transformation in the Automobile World. In Dutton, W.H. Transforming Enterprise: The Economic and Social Implications of Information Technology. Cambridge, MA: MIT Press. pp.283-312.

Nylen, D. & Holmstrom, J., 2015. Digital innovation strategy: A framework for diagnosing and improving digital product and service innovation. Business Horizons, vol. 58, p.57—67.

Sambamurthy, V., Bharadwaj, A. & Grover, V., 2002. Shaping Agility through Digital Options: Reconceptualizing the Role of Information Technology in Contemporary Firms. MIS Quarterly, vol. 27, no. 2, pp.237-263.

Svahn, F. & Henfridsson, O., 2012. The Dual Regimes of Digital Innovation Management. In 45th Hawaii International Conference on System Sciences. Hawaii, 2012.

Svahn, F., Henfridsson, O. & and Yoo, Y., 2009. A Threesome Dance of Agency: Mangling the Sociomateriality of Technological Regimes in Digital Innovation. In Thirtieth International Conference on Information Systems. Phoenix, 2009.