Design Rules, Volume 2: Chapter 6—The Value Structure of Technologies, Part 1: Mapping Functional Components
Baldwin, C. Y. (2020) “The Value Structure of Technologies, Part 1: Mapping Functional Relationships,” Harvard Business School Working Paper (Rev. September 2020).
23 Pages Posted: 16 Sep 2020
Date Written: September 8, 2020
The purpose of this chapter is to build a robust and versatile language that is capable of representing the value structure of large technical systems. The language is based on elements I have labeled functional components. The language is more abstract than the language of technical recipes and task networks, thus it is capable of hiding details. However, the language also makes it possible to “trace back” from each named functional component to a technical recipe and a corresponding task network. Finally, although the language itself is non-mathematical, the value structure it reveals can be used to specify equations and prove mathematical propositions about the value of technical systems.
The plan of the chapter as follows. I first explain why it is difficult to value technologies using standard economic methods based prices, quanities and probabilities. I then describe a methodology that shows how functional components are combined through technology to create a particular artifact or technical system. The methodology uses symbolic notation to clarify relationships between and among functional components. I illustrate these relationships using an ancient technology—the technology for making a garment from pieces of cloth. I go on to describe commonly observed patterns within technical systems, including optional features; composite functions; and platforms.
Keywords: Technology, Organizations, Modularity
JEL Classification: L1, L2, O3
Suggested Citation: Suggested Citation