Battle of complexity: the Cato principle

[Deutsche Fassung]

Whoever searches examples of modularization or standardization, will find one in the automotive industry or other mass production businesses. That leads to the impression that modularization is only possible combined with high volumes and would not be possible for a low volume or even a “lot size 1”. Is that really the truth?

Initially, modularization is the attempt to escape the growing spiral of complexity. Where does this come from, and who is pushing this spiral? First of all, there is the logical approach of the sales department to try to differentiate oneself on the market vs. the competitors. This would be possible with a wide and comprehensive product portfolio to cover most of the customer needs preferably. Unfortunately, this would conclude in a low lot size, increasing handling efforts and more internal complexity. Without significant growth in market shares, costs would go up and the competitiveness would decline. In mature and stagnating markets companies try even more to adapt their product portfolio to customer-specific demands, in order to conquer niche markets. This increases the complexity further on. It is necessary to break this vicious cycle.

The vicious cycle of complexity

The vicious cycle of complexity

The myth of customization

The goal of modularization is to benefit from the economies of scale impact on the one hand and to combine standard solutions with the “one-piece-concept” on the other hand. The solution is the Cato principle (© A torso is a body which is not operating at all. Some of the further added functions are predefined options. They have to be added according to the relevant specifications regarding the business application. And finally there are customized options or necessities. So Cato stands for: Customized solutions according to the relevant specifications of the application, in order to add to the torso all necessary options.

But Cato also stands for patience. As a roman senator, Cato usually finished his speeches with the statement: “By the way … I am of the opinion that Carthage has to be destroyed!” (Ceterum censeo Carthaginem esse delendam.) The senators laughed at him, but he repeated his demand. Three years after his death, Carthage was destroyed. So please, keep in mind that modularization is a very detailed work to be done. Patience wins!

By using the Cato principle a modular product portfolio can be achieved. The principle proceeds on the assumption that most of the products in our modern world are not really customized. Very few parts are done as a “first-piece of its kind”. If you dismantle the so-called customized products, there are many common components like motors, riveted joints or bolted connections, pipes, flanges etc. Most of these customized products are created out of subassemblies which in turn are assembled by parts based on specific rules or norms (ISO, DIN, etc.).

Basic machine plus options

The key to reduce the complexity is to slice the entire construction in well-considered subgroups which could be used complementary. The machine is therefore divided into a so-called torso – a body, which is not functional on its own – and several options with clear defined interfaces. By a combination of these options the torso will be adapted to the needs of the customer. It is even possible that one or the other option is either changed to customers’ needs or even totally modified. Most important is that the basic construction kit stays unchanged.

Standardised platform product vs. customer-specific product

Standardised platform product vs. customer-specific product

The difficulty of building such kind of construction set is to find the right level of details. If you slice the product into too small subgroups, the puzzle becomes too confusing. It is very likely to fall into the same trap of customization again. If you are too generous and the subgroups become too large, you will end up in the conflict that you might not be able to fulfill the individual customer specifications.

The main enemy of such module approach is the own sales department, namely due to the reason mentioned above: differentiation from the competition and therefore maximal diversification of the product range. That’s why it is important to integrate the sales right from the beginning in this cultural change process.

Ein Gedanke zu „Battle of complexity: the Cato principle

  1. Pingback: Kampf der Komplexität: das Cato-Prinzip | BeyssOnManagement

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