1. Slide 1 © Carliss Y. Baldwin 2008 The Design of Infrastructure (Design Theory meets Infrastructure) Carliss Y. Baldwin Harvard Business School Infrastructure Meets Business: Building New Bridges, Mending Old Ones Academy of Management PDW Chicago, IL August 7, 2009

2. Outline of remarks  What constitutes success for designs?  Specific challenges for infrastructure –Other people’s options –Stable expectations vs. evolution/efficiency/adaptability  Implied design principles –Simple infrastructure »End-to-end »Scalability –Total immersion infrastructure »Separation of functions Slide 2 © Carliss Y. Baldwin 2008

3. Slide 3 © Carliss Y. Baldwin 2008 Three levels of design success  Obey the laws of Nature (physics)—become real  Fulfill expectations  Evolve gracefully Success increases at each level, but there is tension between levels

4. Slide 4 © Carliss Y. Baldwin 2008 Three levels of design success  Not real, never real  Very real

5. Slide 5 © Carliss Y. Baldwin 2008 Three levels of design success  Does not fulfill expectations  Fulfills expectations

6. Slide 6 © Carliss Y. Baldwin 2008 Other designs that did not fulfill expectations The wings of IcarusRMS Titanic Global Financial System

7. Slide 7 © Carliss Y. Baldwin 2008 Three levels of design success  Not evolvable  Evolvable

8. Slide 8 © Carliss Y. Baldwin 2008 The evolvable design much more modular Changes in one part most likely do not affect other parts

9. Infrastructure supports other people’s options What is special about infrastructure? Slide 9 © Carliss Y. Baldwin 2008

10. Infrastructure supports other people’s options  Airports, Highways  Travel at MY volition  Electricity  MY labor saving devices  Telecomm Networks  MY messages  Education  MY thoughts and dreams  Prisons  ??? Slide 10 © Carliss Y. Baldwin 2008

11. Design Principle 1: End-to-end  Design principle of the Internet  Provide a simple (as simple as possible) basic enabling service  Move “extra” services to the edges/outside the core Slide 11 © Carliss Y. Baldwin 2008

12. Design Principle 2: Scalabilty  If infrastructure is successful at creating option value for other, it will be in high demand  Thus—build for changes in scale in the basic end-to-end service  Congestion is the curse of successful infrastructure Slide 12 © Carliss Y. Baldwin 2008

13. End-to-end + Scalability work when infrastructure functions are simple  What if infrastructure functions are complex? –Airports –Oil rigs –Prisons –Hospitals  Total environment infrastructure –Design principles are different Slide 13 © Carliss Y. Baldwin 2008

14. Design Principle 3: Separation of function  A special kind of modularity  Divide activities according to function and make different functions independent  Create stable interfaces across functions –“Differentiation and integration” –“Weak linkage”  Avoid having one activity incorporate two functions –Although one activity can support multiple clients (infrastructure within infrastructure) Slide 14 © Carliss Y. Baldwin 2008

15. Modular Task Structure— Open Office v1.0 Database Write word processor Calc spreadsheet Graphics system Presentations, charts, drawing

16. Open Office v1.0—Core-Periphery View Core-Periphery Analysis iterated on the Modules Calc and Write

17. Separation of function supports evolution/adaptation  Changes in requirements/needs/desires are often function-specific  Change one dimension without changing all the rest  Separation of function is a benefit of scale –Hotel vs. bed-and-breakfast –Hotel can decouple functions Slide 17 © Carliss Y. Baldwin 2008

18. Summary: Design principles for infrastructure  Other people’s options  For single-function infrastructure (water, electricity, Internet) –End-to-end design –Scalability  For multi-function infrastructure (airports, hospitals, oil rigs, prisons) –Separation of functions/functional modularity Slide 18 © Carliss Y. Baldwin 2008

19. Thank you! Slide 19 © Carliss Y. Baldwin 2008