Carliss Y. Baldwin
William L. White Professor of Business Administration
Carliss Y. Baldwin is the William L. White Professor of Business Administration at the Harvard Business School. She studies the process of design and its impact on firm strategy and the structure of business ecosystems. With Kim Clark, she authored Design Rules, Volume 1: The Power of Modularity, the first of a projected two volumes. Volume 2, Modularity on Trial, will consider how modular technologies are affecting the basic structure of the global economy—for good and for bad.
Baldwin received a bachelor's degree in economics from MIT in 1972, and MBA and DBA degrees from Harvard Business School. She developed and taught Mergers & Acquisitions, a second-year MBA course, and presently teaches Finance 2, a first-year required course.
She has served on numerous corporate and non-profit boards. At Harvard Business School, she has been a Director of Research, Senior Associate Dean for Faculty Planning, and head of the Doctoral Programs. Within Harvard University, she has been on the Visiting Committee of the Harvard Graduate School of Design and the policy and admissions committee of the joint Ph.D program in Science, Technology and Management.
Design Rules, Vol. 1: The Power of Modularity
We live in a dynamic economic and commercial world, surrounded by objects of remarkable complexity and power. In many industries, changes in products and technologies have brought with them new kinds of firms and forms of organization. We are discovering news ways of structuring work, of bringing buyers and sellers together, and of creating and using market information. Although our fast-moving economy often seems to be outside of our influence or control, human beings create the things that create the market forces. Devices, software programs, production processes, contracts, firms, and market are all the fruit of purposeful action: they are designed.
Using the computer industry as an example, Carliss Y. Baldwin and Kim B. Clark develop a powerful theory of design and industrial evolution. They argue that the industry has experienced previously unimaginable levels of innovation and growth because it embraced the concept of modularity, building complex products from smaller subsystems that can be designed independently yet function together as a whole. Modularity freed designers to experiment with different approaches, as long as they obeyed the established design rules. Drawing upon the literatures of industrial organization, real options, and computer architecture, the authors provide insight into the forces of change that drive today's economy.
Hidden Structure: Using Network Methods to Map System Architecture
All complex systems can be described in terms of their architecture, that is, as a nested hierarchy of subsystems. In this paper, we use network methods to detect the core components of an architecture, to establish whether systems possess a core-periphery structure, and to measure important elements of these structures. Our results complement the wealth of theoretical papers published on system design and architecture. Using a sample of 1286 releases from 17 different software applications, we establish some stylized facts about the structure of real-world software systems. We find that the majority of systems in our sample – 67% to 89% – possess a core-periphery structure. However, it is important to note that a significant number of systems lack such a structure. Thus a considerable amount of managerial discretion exists when choosing the “best” architecture for a system. The contribution of this paper is to make hidden features of a system’s architecture visible. Our methods may be helpful in locating and measuring technical debt, that is, the cost of making and verifying future changes in a complex technical system.
Sharing Design Rights: A Commons Approach for Developing Infrastructure
Modularity and Intellectual Property Protection
Modularity is a means of partitioning technical knowledge about a product or process. When state-sanctioned intellectual property (IP) rights are ineffective or costly to enforce, modularity can be used to hide information and thus protect IP. We investigate the impact of modularity on IP protection by formally modeling the threat of expropriation by agents. The principal has three options to address this threat: trust, licensing, and paying agents to stay loyal. We show how the principal can influence the value of these options by modularizing the system and by hiring clans of agents, thus exploiting relationships among them. Extensions address screening and signaling in hiring, the effects of an imperfect legal system, and social norms of fairness. We illustrate our arguments with examples from practice.
Modeling a Paradigm Shift: From Producer Innovation to User and Open Collaborative Innovation
Organization Science, 22(6):1399-1417
We argue that innovation by individual users and open collaborative innovation increasingly compete with and may displace producer innovation in many parts of the economy.