📈 Chartpack: Understanding modularity (1/2)

Modularity is the key to adaptable, cost-effective & sustainable innovation

Hi, Azeem here.

Over the past few weeks, we’ve been experimenting with a new way of sharing our team’s research. Meet Chartpacks. In the first edition of Chartpacks, my colleague

Nathan Warren

explored AI measurement — you can read Parts 1, 2, and 3 here.  

In the next two weeks, we’re turning our attention to modularity. My colleague

Chantal Smith

will be leading the way in exploring the crucial role of modularity in innovation and exponential technologies across various industries in Chartpack #2. 

The first part of this Chartpack is made available to all readers, with the subsequent part exclusively available to our paying members.

Over to

Chantal Smith

.

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Part 1 | 

The building blocks of modularity

Modularity is a critical driver of innovation, efficiency and cost decline. It is a core factor in making exponential technologies, well, exponential.

The first modern modular systems emerged to make muskets easier to maintain and gain an advantage on the battlefield. Its power as a design strategy went on to revolutionise manufacturing. Modularity was also a crucial element in the development of intermodal transportation and global trade with the invention of the standardised container. Modularity remains very relevant to current exponential technologies.

It enabled software to develop as fast as it did by fostering collaboration and creativity and is key to understanding how the current AI revolution is unfolding. Modularity is also at the heart of some of the fastest solutions to climate change, as it underpins the massive price decline of renewables. One day, it could even help make nuclear fission cheaper. 

Over the course of two editions of this Chartpack, I aim to demonstrate the critical importance of modularity across industries and its relevance to our exponential future. In this first part, I’ll introduce the concept and showcase its role in major historical transitions. The second part will focus on how modularity has made the AI revolution possible, and how it continues to shape its development. I will also demonstrate how modularity has been crucial in driving the exponential price decline of renewables, particularly solar PV. Ultimately, my aim is to persuade you that modularity is a fundamental framework for understanding exponential technologies and tackling climate change.

So, let’s get right into it!

What is modularity?
Modularity is the degree to which a system or entity is broken down into smaller, individual components that can be (1) replaced or modified without affecting the rest of the system and (2) combined in different ways using a connector.¹²

A system has a low degree of modularity if its components can only be modified or replaced, but not necessarily reassembled into a different configuration. For instance, consider a house. If a window breaks or the wallpaper is mouldy, either can be replaced without the house collapsing. However, the house is not modular enough to be reassembled into a spaceship, or a boat. A closely related concept to modularity is standardisation, which enables components to be easily interchanged and created, thus supporting modularity.

A system has a high degree of modularity if its components can not only be altered and replaced easily, but can be assembled in different ways using a standard connector. LEGO products are a great example of this: we have different types of bricks, but they all share the same studs and tubes which allow for a seamless connection. We can assemble LEGO bricks in different ways to create new things, as long as they share this standard connector. The graph below charts the growth in the number of bricks in LEGO sets over time, a wonderful testament to how small plastic bits can be used to create ever bigger and more complex objects.

Modularity, whether to a higher or lower degree, has repeatedly revolutionised economic processes and is one of the key drivers of learning curves and exponential growth. 

Oh baby, baby, it’s a modular world³
Modularity in the design process has long existed, but it first had a significant impact at the beginning of the Industrial Revolution. Honoré Blanc, a French gunsmith, introduced the concept of interchangeable parts in 1785 to make the process of building and repairing muskets easier. American inventor Eli Whitney brought Blanc’s idea to the United States.

The process of manufacturing muskets was slow and labour-intensive, as each component was handmade and required custom fitting. By breaking down the musket into standardised parts that could be easily exchanged, the manufacturing was streamlined and production increased.

There isn’t any reliable data on the transition towards modern muskets, however, it likely kickstarted the industrial production of weapons that made possible the growth of armies. In the early 18th century, battles involving 30,000-40,000 men were considered large, but this changed in the latter half of the century. The introduction of machinery, standardisation, and continuous production likely led to larger armies, with Napoleon Bonaparte drafting over 1.4 million men into his Grande Armée between 1800 and 1812. Even this low degree of modularity transformed weapons manufacturing and was a valuable proof of concept for a new way of manufacturing goods.

The Model T advantage
In the early 20th century, Henry Ford revolutionised the manufacturing industry by applying modularity to the design of the Model T. Prior to the Model T, cars were custom-built by craftsmen, resulting in high costs and limited production. Ford’s approach was to use a low level of modularity by standardising car parts and breaking down the manufacturing process into smaller, specialised tasks. This allowed workers on the assembly line to specialise in one particular process, such as attaching a single part to the car, rather than building the entire car from scratch. As a result, Ford produced cars faster and at lower costs. This made it possible to sell cars at a price affordable to the average American. In addition to the cost savings, the standardisation of parts and ease of repair made the Model T a hit with consumers. Ford produced over 15 million Model T cars in the early 1920s, becoming one of the most popular cars in history.⁴

You’re going to carry that weight⁵
A century later, modularity made global trade possible through the advent of the shipping container. Before the introduction of standard containers, goods were transported in various sizes and shapes. This required significant time and labour to load and unload cargo onto ships, trains, and trucks. This method, known as break-bulk shipping, was inefficient and costly.

In 1956, American entrepreneur Malcolm McLean was frustrated by the difficulties of intermodal goods transportation. His solution was the standardised shipping container, a simple yet revolutionary concept that changed global trade. Shipping containers are large, modular steel boxes that can be easily loaded, unloaded, and transferred between ships, trains, and trucks. They were designed to be stackable, making optimal use of space on cargo vessels and in port facilities. This brought efficiency, security, flexibility, and adaptability to the industry, and enabled global trade to grow enormously (you can read more about this in Chapter 2 of Azeem’s book).

This is a higher degree of modularity than the 18th-century muskets and Ford’s assembly lines. Indeed, not only are containers nearly identical and easily replaceable, they can be combined and attached to a variety of other containers or modes of transportation (cranes, trucks, boats, etc.). The first generation of containerships could hold from 500 to 800 containers, while current containerships can carry more than 24,000. 

Standardisation is important across modularity, but here another very important component becomes crucial once again: the connector.⁶

He was Wright
We’ve now seen how different degrees of modularity and a seemingly minor change such as standardising parts and making them replaceable can have a significant economic impact. 

There is, however, one ingredient fostered by modularity that is crucial to exponential growth: learning. Enter Wright’s law. Next week, we’ll examine how modularity fosters learning, and how learning curves underpin exponential technologies. To understand this, I’ll discuss two defining technologies of the 21st century: advanced computing and renewable energy. 

1. Author’s definition, inspired by various definitions collected by Thomas Frandsen.

2. In product design, what enables different modules to be connected in a standard way is referred to as the interface. Here, for ease of understanding, I use the term connector. Read more here.

3. A reference to a Cat Stevens classic.

4. Note that the chart uses cumulative units produced as the X-axis, rather than time. The reason will become clear in the second part of the chartpack (a clue: it’s about learning curves.)

5. Reference to the Beatles song “Carry That Weight”.

6. Why we should care about connectors will become clear in the second part of the Chartpack, especially as we examine the AI revolution.