The Essential Leadership Role of Senior Management in Adopting Architectural Management and Modular Strategies (AMMS), with Perspectives on Experiences of European Automotive Firms

The potential benefits of architectural approaches to developing new products and of using modular architectures as the basis for new kinds of product strategies have been recognized since the 1990s and elaborated at some length in management research. Relatively little attention has been paid, however, to the fundamental changes in management and organizational processes a firm must undergo in order to implement architectural management and modular strategies ("AMMS") successfully. A common misperception among some senior managers is that implementing AMMS involves primarily some technical changes in product designs and some changes in the product development process at the working level. As this paper will argue, however, effective implementation and use of AMMS requires extensive transformations of an organization's processes, structures, and culture. These transformations in turn call for major changes in senior management concerns and activities- i.e., in the way senior managers manage. This paper identifies the essential understanding of AMMS that senior managers must have and the essential leadership roles that senior managers must be willing to fulfill in order to lead their firms through the critical organizational and managerial changes required to implement and use AMMS effectively. This paper also suggests that there are two fundamentally different management approaches to leading the organizational change process needed to implement AMMS. We characterize these as the "programmatic" approach and the "incentives" approach. We evaluate both approaches by identifying the characteristics of a firm's business environment that are likely to determine the potential effectiveness of each approach. We illustrate the issues identified and the recommendations made here with examples drawn from various efforts by European automotive firms to implement AMMS.