From Parts 1 and 2
Part 1 discussed the four ages of mankind. The first was the Age of Speech; for the
first time humans could “learn by listening” rather than “learn by doing”; that
is, data could be accumulated, communicated, and stored by verbal
communications. It also transformed the
hunting and gathering into an economic architecture of small somewhat settled
communities over the course of 300,000 years.
Settlement produced first
significant increase in economic activity, wealth per capita, and in the
academics in the form of the shaman for tribal organization.
The second, the Age of Writing, produced a quantum leap in
data and information that could be accumulated, communicated, and stored. This was over a period of at least 6,500
years. During this time, academic
activity evolved from everyone working to survive to a diversity of jobs and
trades and the economic stratification of political organizations. Again, the total wealth of humanity took a
leap of orders of magnitude as the economic architectures of city states, then
countries, and then empires evolved. The
academics evolved from the shaman, to priests, clerics, researchers,
mathematicians, and universities (e.g. the Museum at Alexandria ~ 370 BC and
the University of Bologna, 1088) and libraries.
The third, the Age of Print, started with Gutenberg’s press
in 1455, but blossomed with Luther’s radical admonition that everyone should
“read” the bible about 1517. Suddenly,
the quantity of information and knowledge to a leap of several orders of
magnitude as all types of ideas were accumulated, communicated, and stored.
Part 2 dealt with history of Services Oriented Architecture
(SOA) as it developed hand in glove with computing architecture—a natural fit.
This part, Part 3 A, deals with how SOA works with mass
customization of products, systems, and services. Part 3 B, will show where the three economic
architectures, infrastructure, mass production, and mass customization will be
employed in the Digital Age.
Mass Customization Using Services Oriented Architecture
As I will attempt to demonstrate, Services Oriented
Architecture (SOA), while beginning its life as an architecture for computer
applications, is really a new economic system that will supplant Capitalism as
the economic engine. That is to say, the
prescriptive economic architectures of socialism and communism do not have the
ability to create value; just redistribute it so that everyone is in the same
economic class…destitute.
Mass Production Architecture
I’m positing that in the Digital Age mass customization will
replace mass production for products, systems, and services. This does not mean that mass production will
go the way of the dodo. In fact there
will be three architectures, infrastructure, mass production, and mass
customization.
Many times, many people may want and are willing to pay for
the same or nearly identical items. As
Adam Smith discussed, the reason the mass production produced so much wealth is
that mass production is cost efficient, or as many economists point out, there
are economies of scale. Economies of
scale result from turning the process of manufacturing a produce into discrete steps
or activities.
Adam Smith discussed this concept in the first chapter of An
Inquiry into the Nature and Causes of the Wealth of Nations. He showed how the same number of individuals
could make an order of magnitude more pins per day when each one performed only
one step in the process and repeated that step of each pin.
According to Adam Smith, once the process for creating a
product is divided into discrete steps, many individuals will “figure out” how
to create tooling to improve their step of the process. While Adam Smith did not document this step,
he implied that the business owner, the one selling the product and employing
the personnel, would then purchase the tooling.
Again, the productivity of each worker using the tooling increases.
Since Adam Smith’s time, economists have been fascinated
with these two concepts. The first Adam
Smith called the “Division of Labor”.
The second has no name so I call this effect “process
multiplication”. The reason is that
tooling increases the effectiveness of labor the way a gun increases the
effectiveness of a soldier—the military calls this effect “force
multiplication”.
The more tooling that is used in the process, the more the
tooling costs. The more it costs, the
more product is produce (hopefully) and more cost efficiently. This cost efficiency means the product costs
less to produce.
Because the production process has been tooling intensive,
it has also become capital intensive—tooling costs money and a lot of expensive
tooling costs a lot of money (capital—hence Capitalism). Actually, there is no such thing as
Capitalism; it’s really mass production architecture. Since it is capital intensive, anyone who
does not have the money to purchase the tools can’t produce the product as cost
efficiently. This leads to both the
concepts of Economies of Scale, (i.e., the greater the quantity of product you
make, the better the division of labor and process multiplication of more
tooling), and the Barrier to Entry caused by the need to have the money to buy
the tooling to produce the product cost competitively.
The reason for this brief recitation of a significant
portion of the mass production architecture is that for the near and mid-terms
there will be certain sectors of the economy where mass production will
continue to make sense—it will continue to be the most cost efficient
architecture for producing a certain class of products.
The Day before Mass Customization
In the early 1990s, I worked with the Strategic Supply Chain
Management (SSCM) Project. The goal of
this team was to find ways to improve the cost efficiency of mass production
systems. This included the development
and implementation of products. The
reason for the formation of this project was to counter the gains in market
share by the Japanese and other foreigners.
The team came to several conclusions. First, Just In Time (JIT) manufacturing was
an imperative. JIT means that the
subcomponents of a product are manufactured as they are needed for the assembly
of a product in response to a customer order—all of this in near real time. JIT means that warehousing costs are
completely eliminated.
I had already worked on two projects of this type. The first in 1984 and 85 created a paperless
product line for a major office furniture company (The design of this line won
the Society of Manufacturing Engineers Lead Award in 1987). In 1986 and 1987, I worked on a program for
the US Navy, called Rapid Access to Manufactured Parts, (RAMP). It too, was using JIT concepts.
The SSCM team came to two other conclusions. First, that standardized contractual clauses
should be agreed to by contractor and subcontractor before any contracts are
bid on. In other words, there should be
a team, built by and around the contractor to “go after” proposed projects.
Second, that a better customer requirements identification
and management process is needed to effectively and cost efficiently manage a
supply chain. These are two items that
are required for the digital age and mass customization. While the first has gained a very small
amount of traction, businesses in the US, at least, have paid no attention to
the second. Sometime in the near future
it will become self-evident that this is a problem.
While the static and dynamic architecture of mass
production, as described by Adam Smith, and incorporated into the US
Constitution, has served the United States and the rest of the world well, it
will be supplanted by the mass customization using Services Oriented
Architecture in the Digital Age.
Mass customization is creating products, systems and
services tailor-made to the customer’s requirements. Actually, this was tried by the US automotive
industry after WWII with limited success. In the 1950s and 60s the “option
list” for automobiles was quite long.
For example, you could order a car only with power steering but not
power brakes, with an AM or with an AM/FM radio. Every option was individually priced. So each customer could get a vehicle that met
their exact requirements.
However, the Japanese took advantage of the inherent costs in
terms of time to fulfill orders, defects caused by not meeting the customer
requirements, etc., by reducing the costs of their vehicles and decreasing the
delivery time through offering bundled packages of options, among other things.
Now, customers could only order a sun roof if they accepted
a power seat on the driver’s side, even if they didn’t want because the seat
was part of the bundle or package that include the sun roof. In the future, this will not be the case.
Mass Customization
In the 1990s, I became a member of several international
standards committees. The first was the
Agile Manufacturing Enterprise Forum, at Lehigh University. Their definition of agile manufacturing was “an
organization that has created the processes, tools, and training to enable it
to respond quickly to customer needs and market changes while still controlling
costs and quality.” The team determined
that this is accomplished by assembling a consortium of small organizations
(businesses, consultants, and possibly academics). This consortium would as a team on create
products, systems, and services.
The next team that I joined, The Next Generation
Manufacturing Project (NGM), elaborated on the consortium concept. This project focused on how to create an agile
manufacturing enterprise. It concluded
that there are two ways to create
design/development/implementation/manufacturing consortiums. These happen to be identical with the ways
that programming languages were implemented in the 1960s and with the ways
services are assembled in SOA.
The first method for assembling services into a program is
called “Orchestration”. Orchestration is gathering all of the needed
software functional components together, then ordering and structuring them
into the program that performs the task require by the customer. In the older programming technology this
would be called compiling a program; that is, converting all of the
instructions into machine code before executing the program.
For mass customization, orchestration is assembling a team
or consortium of small and entrepreneurial organizations, then creating the
product, system, or service. Because
it’s mass customization and not mass production the team creates only one item.
Currently, one of the better examples of organizations that
use the orchestration form of business architecture, are custom car shops. In fact, there is one television channel
where half its shows are of shops that create custom cars. In these shows, a customer starts with
something that was well used, badly abused, to complete junk. The customer tells the custom car shop owner
his or her requirements and the owner tells the customer the approximate cost.
When the vehicle, in whatever condition comes into the shop,
the shop’s team disassembles it entirely.
They send all of the metal body components to a member of the consortium
that functions as a “sand” blaster and epoxy coater, send the engine and other
mechanical components to a shop that functions as the engine and mechanical
parts rebuild center, send seats and other interior components to a shop that
functions as the interior restoration and customization center, and tosses the
parts that can’t be salvaged.
When the metal body comes back to the shop, generally, there
is rust and damage, which didn’t show prior to the blasting that will need to
be repaired. Additionally, if the job is
to “customize” as opposed to “restore” the vehicle a body shop function will
need to change the bodies shape to enable the customization. Frequently, this is the function of the
shop.
If, for example, a fender is in too poor condition to be
repaired, then the shop may go to a junkyard to find the part or may go to an
organization that just manufactures metal components that are no longer
available. This is yet another function
of the consortium.
When the body work is completed, the shop will send the
vehicle’s body, sometimes it engine and mechanical components out to a paint
shop; and if there are chrome parts, they may be sent to a shop specializing in
chroming parts—two more functions of the consortium. Frequently, for customized vehicles a new
exhaust system needs to be constructed—yet one more function; and finally the
vehicle is assembled in its restored or custom form.
Since these custom car shops (especially those with good to great
reputations) have a fairly constant stream of customers, they can set up
agreements (read contracts, with standard contractual clauses) as to who does
what part of the work, the timeframes required, and the costs, prior to
starting a job. In effect, the
consortium functions as a single unit, the way services assembled for execution
function as a program. So we could call
this organizational architecture, the Orchestration Mass Customization Architecture.
The second method for assembling software services is called
“Choreography”. Choreography differs from orchestration in
that the core organization—the one accountable to the customer for the product,
system, or service—organizes the team on an as required basis. At the start of the effort it does not have a
consortium in place. Instead, the core
organization adds functional services as it deems necessary.
Most times, core organizations engaged in research and
development or creative content activities use choreographic organizational
architecture. This would include
research institutes, creation of exotic materials, the initial development of
an entire new field of engineering, like ocean engineering or space
engineering, and, most familiar to most people, the creation of entertainment
content.
The motion picture and now the video content industry have
long used choreographic organizational architecture. To start, a “screenwriter” authors or adapts
a story from a book to the “must meet” requirements for a video or movie; that
is, that it fits within a time-frame, that much of the background of the story
is told dialog and so on.
Once the screenwriter has a script, he or she will send it
out to producers. If a producer likes
the script, that is, in general “make money”, he or she will assemble a team to
produce the film or video. This team is
assembled as needed, not like the old studio system where a team has been
preassembled.
Actually, these days and going forward, more videos will be
produced by “amateurs” using current and near future technology. This is very likely going to undermine the
entire “entertainment industry”. This is
the next step from the studio system, to customer centric entertainment.
The Three Economic Architectures of the Digital Age
In Part 3 B, I will describe how the three architectures
that I have defined will work together in the Digital Age to provide unprecedented
value to the largest number of people possible.