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Michael Marti
Complexity Management

Michael Marti
Complexity Management
Optimizing Product Architecture
of Industrial Products
With a foreword by Prof. Dr. Thomas Friedli
Deutscher Universitäts-Verlag

Bibliografische Information Der Deutschen Nationalbibliothek
Die Deutsche Nationalbibliothek verzeichnet diese Publikation in der
Deutschen Nationalbibliografie; detaillierte bibliografische Daten sind im Internet über
<http://dnb.d-nb.de> abrufbar.
1. Auflage September 2007
Alle Rechte vorbehalten
© Deutscher Universitäts-Verlag | GWV Fachverlage GmbH, Wiesbaden 2007
Lektorat: Frauke Schindler / Sabine Schöller
Der Deutsche Universitäts-Verlag ist ein Unternehmen von Springer Science+Business Media.
www.duv.de
Das Werk einschließlich aller seiner Teile ist urheberrechtlich geschützt.
Jede Verwertung außerhalb der engen Grenzen des Urheberrechtsgesetzes
ist ohne Zustimmung des Verlags unzulässig und strafbar. Das gilt insbe-
sondere für Vervielfältigungen, Übersetzungen, Mikroverfilmungen und die
Einspeicherung und Verarbeitung in elektronischen Systemen.
Die Wiedergabe von Gebrauchsnamen, Handelsnamen, Warenbezeichnungen usw. in diesem
Werk berechtigt auch ohne besondere Kennzeichnung nicht zu der Annahme, dass solche
Namen im Sinne der Warenzeichen- und Markenschutz-Gesetzgebung als frei zu betrachten
wären und daher von jedermann benutzt werden dürften.
Umschlaggestaltung: Regine Zimmer, Dipl.-Designerin, Frankfurt/Main
Gedruckt auf säurefreiem und chlorfrei gebleichtem Papier
Printed in Germany
ISBN 978-3-8350-0866-3
Dissertation Universität St. Gallen, 2007

Foreword
The discussion about increased product complexity in Western European companies
has been omnipresent for decades. This is due to ever new demands (real or con-
ceived) from the market and new possibilities (technical and others) open to the pro-
viders of products and services to come up fast with very specific solutions. The man-
agement of this complexity inside the company so as to achieve a balance between the
market benefits of more customer specific solutions and the internal costs induced by
this is still a big challenge. After years of research in this area there is still a lack of
tools to help practitioners to take decisions about the right degree of complexity for a
product or the right design of a product architecture.
Mr. Marti brings together three perspectives on this topic in an easily understand-
able and communicable way: The strategy of the company (combined with the matur-
ity of the product), the functionality, and the physical complexity on a component
level. The visualization in a complexity matrix is an important new tool especially for
fostering the understanding for complexity issues in a company!
With this book Mr. Marti has come up with an outstanding contribution to product
complexity management, which is crucial for the future competitiveness of companies
in Western Europe. I hope that this book will find a broad distribution as well in prac-
tice as in theory for the sake of our countries!
Prof. Dr. Thomas Friedli

Preface
During the period of conducting the research for this thesis, I worked as a product
manager for Siemens. I found the many interactions between theory and practice in-
triguingly fruitful, and by actively participating in both worlds I was also shown the
different attitudes and needs of theorists and practitioners. I learned that it is of prime
importance to companies to cope with the complexity surrounding them and ensure the
competitive edge of their products without causing excessive complexity inside the
firm. Doing research in the field of complexity management was a very rewarding task
to me as it is a subject strongly related to applications in industry, all the while requir-
ing a good theoretical understanding of complexity and its effects on enterprises.
This work would never have been possible without the contributions and intellec-
tual support I received from many sides. Therefore, I have quite a long list of people to
acknowledge for helping me with my dissertation.
First and foremost, I owe special thanks to Prof. Dr. Fritz Fahrni, who was my ad-
visor and contributed decisively to the successful accomplishment of my dissertation. I
benefited heavily from his many decades of industry experience, and he was able to
give me a feel of what matters in management and what does not. I would also like to
thank him for encouraging me to participate in a triathlon competition.
The next person I wish to thank is my co-advisor Prof. Dr. Thomas Friedli, who
has always been there to give advice and guidance. I very much appreciated his sup-
portive attitude and the excellent comments, which tremendously enhanced my disser-
tation.
I would also like to acknowledge all the people at my industrial partners who I
worked with while conducting my case studies. I am especially grateful to Dr. Dirk
Brusis, Dr. Jan Göpfert, Dr. Werner Hälg, Dr. Axel Hoynacki, Dr. Michael Ilmer, Dr.
Klaus Mecking, and Dr. Thomas Rapp.

viii Preface
Special thanks go to Dr. Rolf Wohlgemuth, who enabled me to travel to Taiwan
and attend the R&D Management Conference in Taipei and Hsinchu, where I pre-
sented my research results.
Next are the people with whom I had numerous discussions about product plat-
forms, modularization, product architecture, my model and its application in the case
studies, and complexity management in general. I am grateful to Dr. Björn Avak,
Christoph Baur, Dr. Luca Bongulielmi, Noëlle Jufer, Michael Furrer, Rahel Parnitzki,
and Katrin Tschannen.
I would also like to thank Barbara Heck for proofreading my thesis from a lin-
guist’s perspective and Patrick Fuchs for reading through the text and giving welcome
comments from a fellow PhD candidate’s point of view.
To my colleagues back at Siemens who had to handle an extra load of work during
my absence of several months to finish my thesis: special thanks therefore also go to
Dirk Bödeker, Jeanette Mai, and Walter Wögerer for their great support.
My wonderful fiancée Nina Schilling receives my deep gratitude for her loving
support and her patience.
Winterthur, May 2007 Michael Marti

Brief Contents
Foreword ................................................................................................................... v
Preface .....................................................................................................................vii
Brief Contents........................................................................................................... ix
Table of Contents ..................................................................................................... xi
List of Figures........................................................................................................ xvii
List of Tables .......................................................................................................... xxi
List of Acronyms .................................................................................................. xxiii
Management Summary......................................................................................... xxv
Management Summary (Deutsch)...................................................................... xxvii
1 Introduction.......................................................................................................... 1
1.1 Problem Statement........................................................................................ 1
1.2 Research Objectives and Research Question ................................................. 3
1.3 Reference Frame ........................................................................................... 5
1.4 Methodological Approach............................................................................. 5
1.5 Thesis Structure ............................................................................................ 9
2 Background and Fundamental Concepts.......................................................... 13
2.1 Complexity as a Challenge for Enterprises.................................................. 13
2.2 The Complexity of Systems ........................................................................ 33
2.3 The Importance of Product Architecture ..................................................... 39
2.4 Concluding Remarks................................................................................... 46
3 Literature Review: Existing Concepts............................................................... 47
3.1 Assessment Criteria .................................................................................... 47
3.2 Managing Complexity on a Conceptual Level............................................. 48
3.3 Tools for Managing Complexity ................................................................. 58
3.4 Assessment Summary ................................................................................. 88
4 Complexity Management Model ....................................................................... 91
4.1 Overview .................................................................................................... 91
4.2 Strategy and Product Life Cycle Assessment .............................................. 92

x Brief Contents
4.3 Product Complexity Assessment............................................................... 114
4.4 Deriving Guidelines for Action ................................................................. 133
4.5 Summary of Complexity Management Model........................................... 152
5 Case Studies...................................................................................................... 155
5.1 Introduction .............................................................................................. 155
5.2 Railroad Signal ......................................................................................... 156
5.3 Liquid Handling Platform ......................................................................... 172
5.4 Process Industry Compressor .................................................................... 185
5.5 Railroad Switch Lock................................................................................ 197
6 Conclusion ........................................................................................................ 209
6.1 Reflecting on the Research Achievements................................................. 209
6.2 Limitations................................................................................................ 211
6.3 Reflecting on the Research Methodology.................................................. 214
6.4 Suggestions for Future Work..................................................................... 216
Appendix A List of Definitions ........................................................................... 219
Appendix B Classification of Strategies ............................................................. 221
Appendix C Ballpoint Pen Example................................................................... 223
Appendix D Complexity Matrix Calculations.................................................... 225
Reference List........................................................................................................ 235

Table of Contents
Foreword ................................................................................................................... v
Preface .....................................................................................................................vii
Brief Contents........................................................................................................... ix
Table of Contents ..................................................................................................... xi
List of Figures........................................................................................................ xvii
List of Tables .......................................................................................................... xxi
List of Acronyms .................................................................................................. xxiii
Management Summary......................................................................................... xxv
Management Summary (Deutsch)...................................................................... xxvii
1 Introduction.......................................................................................................... 1
1.1 Problem Statement........................................................................................ 1
1.2 Research Objectives and Research Question ................................................. 3
1.3 Reference Frame ........................................................................................... 5
1.4 Methodological Approach............................................................................. 5
1.5 Thesis Structure ............................................................................................ 9
2 Background and Fundamental Concepts.......................................................... 13
2.1 Complexity as a Challenge for Enterprises.................................................. 13
2.1.1 The Two Sides of Complexity.............................................................. 14
2.1.2 External Complexity – Understanding the Market Needs ..................... 20
2.1.3 Internal Complexity – The Cost Side of Complexity ............................ 27
2.2 The Complexity of Systems ........................................................................ 33
2.3 The Importance of Product Architecture ..................................................... 39
2.3.1 Definition and Implications of Product Architecture............................. 39
2.3.2 Modular and Integral Product Architectures ......................................... 43
2.4 Concluding Remarks................................................................................... 46
3 Literature Review: Existing Concepts............................................................... 47
3.1 Assessment Criteria .................................................................................... 47
3.2 Managing Complexity on a Conceptual Level............................................. 48

xii Table of Contents
3.2.1 Mass Customization............................................................................. 49
3.2.2 Lean Management................................................................................ 54
3.2.3 The Concept of Optimum Variety ........................................................ 57
3.3 Tools for Managing Complexity ................................................................. 58
3.3.1 Quality Function Deployment (QFD)................................................... 59
3.3.2 Target Costing...................................................................................... 64
3.3.3 Design for Variety................................................................................ 68
3.3.4 Design for Configuration...................................................................... 69
3.3.5 Product Modularization........................................................................ 70
3.3.6 Modular Function Deployment............................................................. 75
3.3.7 Product Platforms................................................................................. 77
3.3.8 Variant Mode and Effects Analysis ...................................................... 83
3.3.9 Variety Reduction Program.................................................................. 86
3.4 Assessment Summary ................................................................................. 88
4 Complexity Management Model ....................................................................... 91
4.1 Overview .................................................................................................... 91
4.2 Strategy and Product Life Cycle Assessment .............................................. 92
4.2.1 Strategic Considerations....................................................................... 93
4.2.1.1 Standardization versus Customization......................................... 93
4.2.1.2 Porter’s (1980) Framework of Generic Strategies........................ 97
4.2.1.3 Hybrid Competitive Strategies .................................................... 99
4.2.1.4 Different Strategies for Different Industries .............................. 105
4.2.1.5 Strategic Considerations: Intermediate Summary...................... 106
4.2.2 Product Life Cycle Considerations..................................................... 107
4.2.3 Summary of Strategy and Product Life Cycle Assessment ................. 112
4.3 Product Complexity Assessment............................................................... 114
4.3.1 Introduction........................................................................................ 114
4.3.2 Quantifying Functionality .................................................................. 116
4.3.3 Quantifying Physical Complexity....................................................... 120
4.3.3.1 Introduction .............................................................................. 120
4.3.3.2 Component Variety and Number of Parts.................................. 121

Table of Contents xiii
4.3.3.3 Interface Variety and Number of Interfaces............................... 125
4.3.3.4 Calculating Physical Complexity .............................................. 128
4.3.4 Drawing the Complexity Matrix......................................................... 130
4.3.5 Summary of Product Complexity Assessment.................................... 132
4.4 Deriving Guidelines for Action ................................................................. 133
4.4.1 Introduction........................................................................................ 133
4.4.2 Basic Norm Strategies........................................................................ 136
4.4.2.1 “Lucky Strike” Quadrant........................................................... 136
4.4.2.2 “Stars” Quadrant....................................................................... 137
4.4.2.3 “Standard” Quadrant................................................................. 139
4.4.2.4 “Money Burners” Quadrant ...................................................... 140
4.4.3 Influence of Strategic Considerations................................................. 145
4.4.4 Influence of Product Life Cycle Considerations ................................. 148
4.4.5 Summary of Guidelines for Action..................................................... 150
4.5 Summary of Complexity Management Model........................................... 152
5 Case Studies...................................................................................................... 155
5.1 Introduction .............................................................................................. 155
5.2 Railroad Signal ......................................................................................... 156
5.2.1 Introduction to the Case ..................................................................... 156
5.2.1.1 Company Profile....................................................................... 156
5.2.1.2 Situation at Beginning of Case Study........................................ 156
5.2.2 Application of Complexity Management Model................................. 159
5.2.2.1 Strategy and Product Life Cycle Assessment ............................ 159
5.2.2.2 Product Complexity Assessment............................................... 160
5.2.2.3 Deriving Guidelines for Action................................................. 167
5.2.3 Result of Optimization ....................................................................... 169
5.2.4 Discussion.......................................................................................... 171
5.3 Liquid Handling Platform ......................................................................... 172
5.3.1.1 Company Profile....................................................................... 172

xiv Table of Contents
5.3.4 Discussion.......................................................................................... 182
5.4 Process Industry Compressor .................................................................... 185
5.4.1.1 Company Profile....................................................................... 185
5.4.4 Discussion.......................................................................................... 194
5.5 Railroad Switch Lock................................................................................ 197
5.5.1.1 Company Profile....................................................................... 197
5.5.4 Discussion.......................................................................................... 204
6 Conclusion ........................................................................................................ 209
6.1 Reflecting on the Research Achievements................................................. 209
6.1.1 Answering the Research Question...................................................... 209
6.1.2 Concluding Model Assessment .......................................................... 209
6.2 Limitations................................................................................................ 211

Table of Contents xv
6.3 Reflecting on the Research Methodology.................................................. 214
6.4 Suggestions for Future Work..................................................................... 216
Appendix A List of Definitions ........................................................................... 219
Appendix B Classification of Strategies ............................................................. 221
Appendix C Ballpoint Pen Example................................................................... 223
Appendix D Complexity Matrix Calculations.................................................... 225
D.1 Calculating Physical Complexity .............................................................. 225
D.2 Quadrant Borders in the Complexity Matrix.............................................. 229
D.3 Taking the Logarithm for Complexity Driver Calculations ....................... 231
Reference List........................................................................................................ 235

List of Figures
Figure 1.1 Research procedure and corresponding chapters....................................... 9
Figure 1.2 Structure of the thesis ............................................................................. 10
Figure 2.1 External and internal complexity from a product perspective.................. 15
Figure 2.2 Complexity drivers forming external and internal complexity................. 17
Figure 2.3 Conceptual description of costs and benefit associated with product
variety .................................................................................................... 19
Figure 2.4 Overlap of offer and market requirements............................................... 20
Figure 2.5 The Kano model of customer satisfaction ............................................... 22
Figure 2.6 Basic market-preference patterns of ice cream buyers for the two product
attributes creaminess and sweetness........................................................ 23
Figure 2.7 The concept of customer value ............................................................... 24
Figure 2.8 Relative importance of product attributes of a spot remover for carpets and
upholstery............................................................................................... 26
Figure 2.9 Potential sources of complexity costs...................................................... 28
Figure 2.10 Complexity cost structure of an automobile manufacturer ...................... 29
Figure 2.11 Remanence of complexity costs.............................................................. 30
Figure 2.12 Number of variants and sales in the course of a product’s life cycle........ 30
Figure 2.13 Shift from high-volume to low-volume product variants and their cross-
subsidization........................................................................................... 32
Figure 2.14 Complexity of a system .......................................................................... 35
Figure 2.15 Elements, relationships, and system structures as a measure of
complexity.............................................................................................. 36
Figure 2.16 Complexity-based typology of systems................................................... 37
Figure 2.17 System architecture classification based on strength of external and
internal relationships............................................................................... 38
Figure 2.18 Schematic product architecture............................................................... 41
Figure 2.19 Trade-off between distinctiveness and commonality............................... 42
Figure 2.20 Classification of product architectures based on Göpfert......................... 44

xviii List of Figures
Figure 3.1 Four approaches to mass customization .................................................. 52
Figure 3.2 The progression of product variety and production volume depending on
the prevailing production paradigm ........................................................ 56
Figure 3.3 Determining the optimum variety ........................................................... 58
Figure 3.4 Quality function deployment matrix, or “house of quality”..................... 60
Figure 3.5 House of quality for an automobile outside mirror.................................. 62
Figure 3.6 Cascade of QFD charts ........................................................................... 63
Figure 3.7 Determining the target cost..................................................................... 65
Figure 3.8 Value control chart ................................................................................. 67
Figure 3.9 Types of modularity................................................................................ 71
Figure 3.10 Modular function deployment................................................................. 75
Figure 3.11 Product family derived from a product platform ..................................... 78
Figure 3.12 The power tower..................................................................................... 80
Figure 3.13 Procedure outlined by VMEA................................................................. 84
Figure 3.14 Variant tree for an automotive exhaust system........................................ 85
Figure 4.1 Three-step procedure of the complexity management model................... 91
Figure 4.2 Three generic competitive strategies....................................................... 98
Figure 4.3 Matrix of competitive strategies............................................................ 101
Figure 4.4 Complexity management strategies....................................................... 102
Figure 4.5 Three-dimensional extension of Porter’s framework............................. 103
Figure 4.6 Productivity frontier defining the best possible trade-off between
relative cost position and buyer value delivered.................................... 104
Figure 4.7 Strategic positioning of industries......................................................... 106
Figure 4.8 Sales and profit during the product life cycle........................................ 108
Figure 4.9 Product variety management decisions during a product’s life cycle..... 112
Figure 4.10 Summarizing depiction of strategy and product life cycle assessment... 113
Figure 4.11 Complexity matrix for one product consisting of several components... 115
Figure 4.12 Excerpt of the ballpoint pen’s structure of functionality and physical
components with percentages assigned to functions and components.... 118
Figure 4.13 Visualization of physical product structure ........................................... 120
Figure 4.14 Component classification...................................................................... 123

List of Figures xix
Figure 4.15 Design structure matrix (DSM) and complexity calculations for
ballpoint pen......................................................................................... 126
Figure 4.16 Complexity matrix for the ballpoint pen example ................................. 131
Figure 4.17 Summarizing depiction of product complexity assessment ................... 132
Figure 4.18 Steps involved in deriving guidelines for action.................................... 134
Figure 4.19 Definition of four quadrants within the complexity matrix.................... 134
Figure 4.20 Directions of action for the “lucky strike” quadrant .............................. 136
Figure 4.21 Directions of action for the “stars” quadrant ......................................... 138
Figure 4.22 Directions of action for the “standard” quadrant ................................... 139
Figure 4.23 Directions of action for the “money burners” quadrant ......................... 141
Figure 4.24 Coupled and decoupled interfaces in a trailer........................................ 144
Figure 4.25 Influence of strategic considerations on complexity matrix................... 147
Figure 4.26 Relative importance of complexity matrix axes during the product life
cycle..................................................................................................... 149
Figure 4.27 Summary of basic norm strategies in the complexity matrix ................. 150
Figure 4.28 Summary of complexity management model ........................................ 153
Figure 5.1 ABC analysis of the railroad signal sales .............................................. 157
Figure 5.2 Schematic sketch of the signal module.................................................. 159
Figure 5.3 Product architecture of railroad signal module (excerpt)....................... 162
Figure 5.4 Complexity matrix for the railroad signal module................................. 167
Figure 5.5 Complexity matrix for the railroad signal module after the optimization
process.................................................................................................. 170
Figure 5.6 Product overview of liquid handling platform....................................... 173
Figure 5.7 Sales values of individual modules contained in the product................. 174
Figure 5.8 Evolving strategic positioning for the liquid handling platform............. 176
Figure 5.9 Complexity matrix for the liquid handling platform.............................. 178
Figure 5.10 Attribute-value matrix and corresponding sales figures for module A... 181
Figure 5.11 Complexity matrix after the optimization process................................. 182
Figure 5.12 Multi-stage centrifugal compressor....................................................... 187
Figure 5.13 Compressor modules and their corresponding functional elements and
attributes............................................................................................... 188

xx List of Figures
Figure 5.14 Complexity matrix for the process industry compressor........................ 191
Figure 5.15 Splitting module A into two new modules ............................................ 193
Figure 5.16 Complexity matrix after forming design chunks ................................... 195
Figure 5.17 Overview of the railroad switch lock .................................................... 198
Figure 5.18 ABC analysis of the railroad switch lock sales...................................... 199
Figure 5.19 Sales distribution of product variants designed for one customer .......... 200
Figure 5.20 Complexity matrix for the railroad switch lock..................................... 202
Figure 5.21 Value control chart for the railroad switch lock .................................... 206
Figure B.1 Continuum of strategies........................................................................ 221
Figure C.1 Sketch of ballpoint pen showing all components................................... 223
Figure D.1 Complexity matrix for the ballpoint pen example ................................. 230
Figure D.2 Number of variants for the modules of the liquid handling platform..... 232
Figure D.3 Logarithm with base ten of the number of variants (liquid handling
case study)............................................................................................ 233

List of Tables
Table 1.1 Strengths and weaknesses of case study research........................................ 8
Table 2.1 Attributes and corresponding values of coffee-makers.............................. 25
Table 3.1 Deploying functions to components.......................................................... 66
Table 3.2 Module indication matrix for a vacuum cleaner........................................ 77
Table 3.3 Assessment summary ............................................................................... 89
Table 4.1 Characteristics of the customization and standardization strategies........... 96
Table 4.2 Summary of PLC objectives and strategies............................................. 110
Table 4.3 Attributes and corresponding values for the ballpoint pen....................... 122
Table 4.4 List of components with corresponding characteristics........................... 124
Table 4.5 Complexity drivers for the ballpoint pen................................................. 128
Table 4.6 Functionality and physical complexity coordinates of the ballpoint pen.. 131
Table 4.7 Summary of guidelines for action........................................................... 151
Table 5.1 Railroad signal: summary of strategy and product life cycle assessment. 161
Table 5.2 Attribute-value matrix of the railroad signal module............................... 163
Table 5.3 List of components with corresponding characteristics (excerpt) ............ 164
Table 5.4 Design structure matrix (DSM) for the railroad signal module (excerpt). 165
Table 5.5 Complexity drivers for the railroad signal module (excerpt)................... 166
Table 5.6 Functionality and physical complexity coordinates (excerpt).................. 166
Table 5.7 Liquid handling platform: summary of strategy and product life cycle
assessment.............................................................................................. 176
Table 5.8 Complexity drivers for the liquid handling platform (excerpt) ................ 179
Table 5.9 Process industry compressor: summary of strategy and product life
cycle assessment..................................................................................... 189
Table 5.10Railroad switch lock: summary of strategy and product life cycle
assessment.............................................................................................. 201
Table 5.11Functionality and physical complexity coordinates (excerpt).................. 203
Table 6.1 Model assessment with respect to the five criteria of Section 3.1............ 211
Table A.1 Summary of definitions .......................................................................... 219

xxii List of Tables
Table C.1 Bill of materials for the ballpoint pen ..................................................... 224
Table D.1 Inputs for Equation 4.1 for the ballpoint pen example............................. 227
Table D.2 Functionality and physical complexity coordinates of the ballpoint pen.. 230

List of Acronyms
ABC Activity-based costing
CAM Computer aided manufacturing
CAS Computer aided selling
CODP Customer order decoupling point
CPV Customer perceived value
DFA Design for assembly
DFC Design for configuration
DFM Design for manufacturing
DFV Design for variety
DFX Design for X
DSM Design structure matrix
IMVP International Motor Vehicle Program
LHD Left hand drive
METUS Management Engineering Tool for Unified Systems
MFD Modular function deployment
MIM Module indication matrix
NBIC National Bicycle Industrial Company
OPP Order penetration point

xxiv List of Acronyms
PIMS Profit impact of market strategies
PLC Product life cycle
QFD Quality function deployment
RHD Right hand drive
ROI Return on investment
SBU Strategic business unit
SRS System requirement specification
URS User requirement specification
USB Universal serial bus
USP Unique selling proposition
VCR Video cassette recorder
VMEA Variant mode and effects analysis
VW Volkswagen

Management Summary
In the field of complexity management, the two dimensions of external and internal
complexity receive special attention from theorists and practitioners alike. The two
complexity dimensions pose a major challenge to enterprises because they require dif-
ferent and often conflicting treatment. External complexity (customer requirements,
competitive forces, technological changes, etc.) pushes companies to broaden their
product portfolios and introduce product variety, which in turn increases the enter-
prise-internal complexity (such as product complexity, organizational complexity,
production complexity, etc.). Efforts to reduce internal complexity and slash the corre-
sponding complexity costs typically require compromising the customization of prod-
ucts. This in turn complicates the task of differentiating oneself from competitors.
This difficult situation calls for a procedure that investigates the two dimensions of
external and internal complexity and provides guidelines for action as to how the two
can be balanced. The complexity management model introduced in this work is based
on the reasoning that product architecture determines to a considerable extent how ex-
ternal complexity is translated into physical products. The model exhibits a three-step
procedure to optimize a product’s architecture: (1) strategic and product life cycle as-
pects are assessed; (2) the product’s complexity is assessed quantitatively by means of
the complexity matrix, which considers the product’s functionality and physical com-
plexity; (3) based on the previous two steps, guidelines for action are derived as to
how product architecture can be optimized.
The model was applied to four industrial products and was able to shed light on the
sources of complexity. Product architecture was optimized according to the functional-
ity and physical complexity of the products, and it was shown that the same or even
increased customer benefit can be delivered while causing less internal complexity. As
less internal complexity is associated with lower complexity costs, the complexity
management model supports companies in their quest to increase product competitive-
ness.

Management Summary (Deutsch)
Auf dem Gebiet des Komplexitätsmanagements erfährt das Spannungsfeld zwischen
externer und interner Komplexität eine erhöhte Aufmerksamkeit sowohl von der Theo-
rie als auch der Praxis. Die beiden Dimensionen der Komplexität stellen eine grosse
Herausforderung für Unternehmen dar, weil sie unterschiedliche und sich oft wider-
sprechende Massnahmen erfordern. Externe Komplexität (Kundenanforderungen,
Wettbewerbskräfte, technologische Veränderungen etc.) drängt Unternehmen dazu, ihr
Produktsortiment auszuweiten und neue Produktvarianten einzuführen, was wiederum
die unternehmensinterne Komplexität (Produktkomplexität, Organisationskomplexität,
Produktionskomplexität etc.) steigert. Typischerweise bedingen Anstrengungen, die
interne Komplexität zu verringern und die damit einhergehenden Komplexitätskosten
zu senken, eine weniger stark ausgeprägte Individualisierung der Produkte. Dies er-
schwert aber die Aufgabe, sich von Wettbewerbern zu differenzieren.
Diese schwierige Situation verlangt nach einem Vorgehen, das externe und interne
Komplexität untersucht und Handlungsempfehlungen abgibt, wie eine Balance zwi-
schen den beiden Dimensionen erreicht werden kann. Das in dieser Arbeit vorgestellte
Komplexitätsmanagement-Modell geht von der Erkenntnis aus, dass die Produktarchi-
tektur zu einem massgeblichen Teil bestimmt, wie externe Komplexität in physische
Produkte übersetzt wird. Das Modell besteht aus drei Schritten, um die Produktarchi-
tektur zu optimieren: (1) Strategische Aspekte und solche des Produktlebenszyklus
werden beurteilt; (2) die Produktkomplexität wird mit der Komplexitätsmatrix quanti-
tativ untersucht, indem Funktionalität und physische Komplexität bewertet werden; (3)
basierend auf den beiden vorhergehenden Schritten werden Handlungsempfehlungen
abgeleitet, wie die Produktarchitektur optimiert werden kann.
Das Modell wurde bei vier Industrieprodukten angewendet und konnte die Ursa-
chen von Komplexität aufzeigen. Die Produktarchitektur wurde anhand der Funktiona-
lität und der physischen Komplexität der Produkte optimiert, und es wurde gezeigt,
dass derselbe oder sogar ein erhöhter Kundennutzen bereitgestellt werden kann, wäh-

xxviii Management Summary (Deutsch)
rend weniger interne Komplexität erzeugt wird. Weil weniger interne Komplexität
weniger Komplexitätskosten bedeutet, unterstützt das Komplexitätsmanagement-
Modell Unternehmen im Bestreben nach erhöhter Wettbewerbsfähigkeit ihrer Produk-
te.

1 Introduction
1.1 Problem Statement
A successful product must satisfy customer requirements and preferences. As this
bundle of market needs has many facets and is highly complex in its nature, it is called
external complexity here. To comply with these diverse demands, companies design
their product portfolios accordingly, i.e. they introduce variety to their products. This,
in turn, increases not only the product’s complexity but affects the complexity within
the entire company. This enterprise-internal complexity spreads to all functional areas
(product development, logistics, production, and sales, to name a few) and is called
internal complexity.2
The products of an enterprise are exposed to external complexity
and cause internal complexity. Therefore, products must be designed to cope with the
implications of both external and internal complexity because they are a very impor-
tant instrument for achieving sustained profits and assuring long-term survival.
Complexity is not an evil per se, though. Both the benefit created by product vari-
ants and the costs they cause must be weighed against each other in order to find the
optimum combination (Rathnow, 1993, pp. 1-4 and pp. 41-42). The benefit side is ex-
plained by the purpose of product variety, which is to match the product with custom-
1
As cited in Klir and Elias (2003, p. 1)
2
The terms of external and internal complexity are widely used in literature about complexity man-
agement. A sample of sources is given here. Schuh and Schwenk (2001, pp. 13-17) emphasized the
effects of excessive customer orientation (i.e. responding to external complexity) on internal com-
plexity and complexity costs. Kaiser (1995) used the terms external (exogenous) and operative (en-
dogenous) complexity (pp. 16-18) as well as external and internal complexity (pp. 100-101). Bliss
(2000, pp. 5-7) introduced exogenous and endogenous complexity drivers.
If one does not begin with a right atti-
tude, there is little hope for a right ending.
Kung Fu meditation.1

2 1 Introduction
ers’ requirements as closely as possible and to acquire new customers, which increases
sales, and retain existing ones. On the cost side, introducing product variants entails
additional complexity costs that are effective initially (when the product is launched)
as well as continuously over the product’s life cycle. As the product variety benefits
cannot be harvested without a rise in complexity costs, the goal is not to reduce prod-
uct complexity as far as possible but to find the optimum level of complexity that takes
into account the benefits as well as the costs generated by product variety.
As the product portfolio grows and variants proliferate, complexity costs do not
spread equally among all product variants (Schuh & Schwenk, 2001, pp. 17-19). Due
to a lack of economies of scale, low-sales variants generate more per unit costs than
the high-sales variants, which are produced in larger numbers. A problem of traditional
cost accounting systems lies in their insufficient capability of transparently tracing
back all costs to the respective variants. As a result, low-sales variants are priced too
low,3
effectively being subsidized by the high-sales variants (Cooper & Kaplan,
1988a).
The product architecture inherently determines the nature of the complexity costs
generated by all the variants of that product. It is a very important element in defining
the internal complexity necessary to respond to the external (market) complexity. De-
pending on how the architectures of its products are structured, an enterprise can take
advantage of a high degree of commonality – which keeps costs low – while still
maintaining a sufficiently high level of distinctiveness – what customers care about.4
Bearing in mind that complexity costs affect virtually all enterprise functions over the
entire product life cycle, one can appreciate the importance of well-founded decisions
concerning the product architecture.
3
The price of low-sales variants depends on the pricing strategy. Because the costs of these variants
appear to be lower than they actually are, the price tends to be too low to be profitable as well, no
matter what the pricing strategy.
4
Robertson and Ulrich (1998, p. 21) gave an excellent overview of how the product architecture in-
fluences the trade-off between commonality and distinctiveness.

1.2 Research Objectives and Research Question 3
Many methods exist that attempt to reduce complexity in product portfolios. The
underlying rationale in all concepts is to trade off cost-cutting standardization and
sales-increasing customization. Such methods include, among many others, the prod-
uct platform (Meyer & Lehnerd, 1997; Robertson & Ulrich, 1998), mass customiza-
tion5
, modularization (Baldwin & Clark, 1997; Ulrich & Tung, 1991), design for vari-
ety (Martin & Ishii, 1996), and modular function deployment (Erixon, 1998). These
and other concepts will be presented in more detail in Chapter 3. However, none of
them addresses product complexity explicitly and in a quantitative way and investi-
gates the dependencies between a product’s complexity and its architecture.
It can be said, therefore, that no method so far has been developed that attempts to
quantify the complexity of a product in order to optimize the product architecture.
Such a method is characterized by its potential to give valuable advice about how to
structure a product’s architecture, which reduces its complexity and the costs associ-
ated with complexity. Provided that the product’s attractiveness from a customer per-
spective can be maintained, the product’s competitiveness is increased and, as a result,
the company’s profits rise.
1.2 Research Objectives and Research Question
As can be seen from the current situation described in the previous section, a product’s
costs and its sales potential depend strongly on the product architecture. A means must
be found to describe the complexity of a product and, based on such an evaluation, de-
sign the product architecture in such a way so as to decrease complexity costs as much
as possible while at the same time providing as much customer value as possible. Such
an optimization procedure must be complemented by product and enterprise strategy
aspects. This ensures that a product’s broader surroundings and the company’s long-
term direction are taken into account. Only in such a way can quantitative, “hard” fac-
tors be balanced with qualitative, “soft” aspects.
5
See Pine II (1993a), Pine II (1993b), Pine II, Victor, and Boynton (1993), Gilmore and Pine II
(1997), Piller (2003), and Levering (2003) for an introduction to the subject.

4 1 Introduction
This work assumes the complexity of a product to be determined by essentially two
dimensions, which will be explained in more detail in the subsequent chapters:
• Functionality. Describes customer requirements towards the product; provides cus-
tomer value; represents the external (market) complexity encountered by the prod-
uct and the enterprise.6
• Physical complexity. Accounts for how the market requirements are translated into
the physical product; drives costs; represents a product’s enterprise-internal aspects
of complexity.7
The objective of the model presented in this work is to increase the competitive-
ness of the product. Therefore, the following research question lies at the center of this
thesis:
Can a product’s competitiveness be increased by designing the product archi-
tecture according to functionality and physical complexity?
Because the objective of this thesis is to provide a model that can be applied in an
industry context and optimizes the complexity of a product’s architecture, it must take
into account the very situation of the individual enterprise the model is applied to. Be-
sides practical relevance, however, the model must show testability – which will be
considered by action research conducted as case studies. Once such a model has been
developed and proven valid, theorists as well as practitioners have at their disposal a
powerful means to manage product complexity.
6
In some manufacturing companies, the document describing customer requirements is referred to as
user requirement specification (URS). The term used in German is “Lastenheft.”
7
In some manufacturing companies, the document describing the details of translating market re-
quirements into an actual product is referred to as system requirement specification (SRS).

1.3 Reference Frame 5
1.3 Reference Frame
The thesis’ research is confined to industrial products as all case studies are performed
in the machinery and process equipment industries. Electronics, software, and services
are excluded from the research. Furthermore, all case studies are European-based.
However, the literature considered in this work has a worldwide focus.
1.4 Methodological Approach
As opposed to “pure” basic science, where theories are developed to explain observed
phenomena, applied science employs hypotheses and explanations that are provided
by basic science and aims at applying them to practical problems (Ulrich, 1981, pp. 3-
5). Business economics as an applied science provides the foundation of this work and
should – following the St. Gallen management model – be perceived as a discipline
that is concerned with forming, directing, and developing purpose-oriented social sys-
tems.8
Ulrich and Hill (1979, pp. 165-168) divided the research process of manage-
ment science into an explorative, an explicative, and an application context. Based on
these fundamental considerations, the objective of this work is to investigate and de-
scribe a problem occurring in business reality, give explanations by means of develop-
ing a model, and test the practical applicability of the model and show the benefit it
provides.
The research performed in this work is qualitative. For a quantitative investigation,
a larger and more homogeneous sample would be needed (e.g. many comparable
products in the same industry) to acquire the necessary data. Qualitative researchers
maintain a tight relationship with the research object because they feel “a strong urge
to ‘get close’ to the subjects being investigated – to be an insider” (Bryman, 1999, p.
38). As the application of this thesis’ model in practice requires the researcher to take
part in optimizing the product architecture, I consider qualitative research the more
8
See Dyllick and Probst (1984, pp. 10-11) for an introduction to the system-oriented concept of
management science.

6 1 Introduction
suitable method for the purposes of this work. The research procedure followed by this
thesis is explicit (or deductive), i.e. the model is developed in a first step and tested
thereafter.9
The existing work in the research area is abundant and provides a sufficient
basis to derive a model. An exploratory investigation previous to the model develop-
ment is therefore not considered necessary.
The model presented in this work is developed and tested by action research con-
ducted as case studies. I believe relying both on action research and case study re-
search is a viable combination as their underlying principles reinforce each other. They
both emphasize the research object’s real-life context and the research’s relevance for
practitioners.10
According to Susman and Evered (1978, pp. 589-590), the characteris-
tics of action research can be summarized as follows:
• Future oriented. As action research deals with the practical problems of people, it
is oriented toward creating a more desirable future for them.
• Collaborative. Interdependence between researcher and practice is an essential fea-
ture of action research. Therefore, the interests of both sides take part in the re-
search process.
• Action research implies system development. The system under investigation is en-
abled to develop itself within a cyclical process of diagnosing, action planning, ac-
tion taking, evaluating, and specifying learning.
• Action research generates theories grounded in action.
• Action research is agnostic. The action researcher’s recommendations for action
are themselves the product of previously taken action, and the consequences of the
actions cannot be fully predicted.
9
An implicit (or inductive) procedure would imply that an introductory case is investigated in a first
step. A model or theory is then developed based on the findings of that case. In a third step, the
model is verified (or falsified) using additional cases.
10
As an example of combining action research and case studies, see the cases presented by Green-
wood and Levin (1998, pp. 33-49 and pp. 129-148), which they termed “action research cases.”

1.4 Methodological Approach 7
• Action research is situational. The research object is a function of the situation as it
is currently defined and, therefore, not free of its context.
I actively take part in the case studies and my research influences the architecture
and complexity of the products I consider. Once I have applied the model I compare
the situations before and after. Action research provides a very well suited methodo-
logical frame for such a type of investigation. Furthermore, the characteristics of ac-
tion research as listed above provide considerable leverage for this work’s research,
especially the first, second, and fourth points.
It was said above that I first develop the complexity management model and then
test it in real-life cases. This should not, however, obscure the fact that the model has
been improved greatly based on just those very applications, i.e. the model has been
partly developed and optimized thanks to the research performed. In that sense, this
work’s research has many aspects in common with grounded theory, which is “a re-
search strategy whose purpose is to generate theory from data” (Punch, 2005, p. 155).
Also, the work here does not attempt to verify some existing theory but aims at devel-
oping a new model and applying and testing it in practice. This objective is somewhat
similar to the grounded theory approach, which uses deduction as well and does not
solely employ inductive techniques.11
The advantage of building theories from cases comes from the increased likelihood
of generating novel theory that is empirically valid and whose hypotheses prove test-
able (Eisenhardt, 1989, pp. 546-547). Table 1.1 summarizes the strengths and weak-
nesses of case study research. The research performed in this work draws on four case
studies, which allows for a very direct and intimate connection to empirical reality.
This, in turn, enables the proposed complexity management model to be mirrored very
closely with business reality.
11
Punch (2005, p. 158) argued that while the primary objective of grounded theory is to create a the-
ory, “it is not long into the theorizing process before we are also wanting to test theoretical ideas
which are emerging.”

8 1 Introduction
Table 1.1 Strengths and weaknesses of case study research12
Strengths Weaknesses
• Likelihood of generating novel theory: the
complex reality forces the researcher to
“unfreeze” thinking and abandon his / her
bias.
• Increased testability: hypotheses can be
proven false, results are measurable.
• Empirical validity: theory-building process
is intimately tied with evidence.
• Lacks simplicity: empirical evidence leads
to overly complex theory that tries to cap-
ture everything.
• Narrow and idiosyncratic theory.
Yin (2003, p. 13) defines a case study as “an empirical inquiry that investigates a
contemporary phenomenon within its real-life context, especially when the boundaries
between phenomenon and context are not clearly evident.”13
Therefore, conducting
case studies ensures very close ties to the real-life frame of the research and increases
its relevance for practice. Multiple (four) cases will be considered in this thesis,14
which gives a sufficient breadth of research material. The data collected is qualitative
and quantitative evidence.15
While the case study research process proposed by Eisen-
hardt is divided into eight steps,16
Yin (2003, p. 2) outlined four case study phases: de-
sign, data collection, analysis, and reporting. The case study research performed in this
work follows the latter procedure.
The research procedure pursued in this thesis is based on Ulrich’s (1981, p. 20)
conception of systematically conducting applied research. Figure 1.1 outlines the re-
12
Developed from Eisenhardt (1989, pp. 546-547).
13
When considering case studies, it must be distinguished between case studies for research purposes
and case studies as teaching devices (Yin, 2003, p. 2 and p. 10). Leenders and Erskine (1989) give
an introduction of the case method used for teaching purposes.
14
Case study research can be classified either as single-case or multiple-case design (Yin, 2003, pp.
39-40).
15
Eisenhardt (1989, pp. 534-535) distinguishes qualitative (e.g. words) and quantitative (e.g.
numbers) evidence.
16
The respective steps are: getting started, selecting cases, crafting instruments and protocols, entering
the field, analyzing data, shaping hypotheses, enfolding literature, and reaching closure (Eisenhardt,
1989, p. 533).

1.5 Thesis Structure 9
Identify and typify problems
relevant in practice

Identify and interpret theories
and hypotheses of the
empirical social sciences
relevant for the problem
Identify and specify formal
scientific methods relevant
for the problem
Identify and investigate the
relevant context of
application
Derive assessment criteria,
and rules and models for
management
Test rules and models in the
context of application
Give advice to management
practice

Procedure according to Ulrich
Analyze and assess existing
concepts relevant for the
problem
Identify the research subject;
develop fundamental
aspects; provide definitions
Develop and embed com-
plexity management model
within enterprise context
Test and apply model by
action research
Procedure in this thesis Chapter
1 + 2
3
4
5 + 6
Identify and integrate
relevant methods of the
formal sciences
2 + 4
4
Derive rules for management
from complexity
management model
Give advice to management
practice
5 + 6
Figure 1.1 Research procedure and corresponding chapters
spective steps and how they are implemented in this work. The corresponding chapters
are indicated as well.
1.5 Thesis Structure
The thesis structure is shown in Figure 1.2, starting with the present Chapter 1 fol-
lowed by Chapter 2, which provides fundamental aspects on complexity in an enter-
prise setting and introduces the concept of external and internal complexity. A short

10 1 Introduction
1 Introduction
Problem statement; research objectives and research question; reference frame;
methodological approach; thesis structure
2 Background and Fundamental Concepts
3 Literature Review: Existing Concepts
5 Case Studies
6 Conclusion
Reflecting on the research achievements;model limitations; reflecting on the research
methodology; suggestions for future work
5.2 Railroad Signal
5.3 Liquid Handling Platform
5.4 Process Industry Compressor
5.5 Railroad Switch Lock
4 Complexity Management Model
4.1 Overview
4.2 Strategy and Product Life Cycle Assessment
4.3 Product Complexity Assessment
4.4 Deriving Guidelines for Action
3.1 Assessment Criteria
3.2 Managing Complexity on a Conceptual Level
2.1 Complexity as a Challenge for Enterprises
2.2 The Complexity of Systems
2.3 The Importance of Product Architecture
2.4 Concluding Remarks
3.4 Assessment Summary
3.3 Tools for Managing Complexity
4.5 Summary of Complexity Management Model
5.1 Introduction
Figure 1.2 Structure of the thesis

1.5 Thesis Structure 11
overview of complexity within any system in general is given, and the importance of
product architecture when managing product complexity is pointed out.
The current research status in the field is described in Chapter 3. Several models
developed to cope with product complexity are presented and evaluated with respect to
what they contribute to the thesis’ research subject.
Chapter 4 develops the complexity management model proposed in this work. In
the course of the chapter, the explanations draw on a simple and insightful example to
present the model. The two major steps of the model – strategy and product life cycle
assessment (Section 4.2) and product complexity assessment (Section 4.3) – form the
basis for deriving the guidelines for action presented in Section 4.4.
In Chapter 5 the model is tested by applying it to four real-life products. The cases
are all set in the machinery and process equipment industries. At the end of each sec-
tion covering one case study, a critical evaluation is given showing the benefits and
limits of the model.
Chapter 6 concludes this thesis and summarizes the major findings gathered in the
course of the research. Based on a list of the most important open questions, sugges-
tions for future research are given.

2 Background and Fundamental Concepts
2.1 Complexity as a Challenge for Enterprises
Introductory Example: Shimano
When Shimano, one of the leading manufacturers of racing bicycle components, con-
siders an extension of one of its product lines or even attempts to launch a completely
new product, it must cater to a wide range of customer expectations. Cycling profes-
sionals all the way to occasional cyclists purchase their racing bicycles equipped with
cranksets, brakes, hubs, derailleurs, chains, and cassette sprockets manufactured by
Shimano. It is clear that a professional user, who sits on his / her bicycle for several
hours per day, has very different requirements considering quality and functionality as
compared to the occasional user, who is much more price sensitive.
Shimano grouped its product portfolio for racing bicycle components around the
five brands Dura Ace, Ultegra, 105, Tiagra, and Sora, each designed for one specific
customer segment. Even more variety is added to the portfolio by allowing for varying
components, such as double or triple cranksets, different crank arm lengths, a variety
1
Lancaster (1990, p. 189)
The full degree of variety potentially demanded will not, in gen-
eral, be supplied because scale economies (even to a small degree)
mean that the potential welfare or revenue gain from greater vari-
ety must be balanced against the lower unit production costs with
fewer variants.
Kelvin Lancaster.1

14 2 Background and Fundamental Concepts
of cassette sprocket combinations, etc. Browsing Shimano’s product catalogue reveals
interesting insights on how the company decided to respond to the large diversity of
market needs: it provides a certain level of product variety which it believes to match
with customers’ preferences to a large extent. While this strategy certainly is more
costly than producing one single standardized product, it allows Shimano to appeal to
a wide range of customers. Source: Shimano (2006).
2.1.1 The Two Sides of Complexity
The above example illustrates two fundamental dimensions an enterprise is confronted
with: on the one hand, it offers a product2
on the marketplace that must fulfill certain
customer requirements and preferences. On the other hand, the company chooses to
develop and produce its product in its very specific way in order to respond to these
market needs. It is obvious that the diverse demands of a large number of customer
segments is difficult to cope with, especially when keeping in mind that customer re-
quirements are dynamic. Furthermore, supplying a product to the market must also
take into account the competitors, suppliers, legal regulations, technological develop-
ments etc.
As this bundle of market requirements and the other external factors are highly
complex, the term of external complexity is introduced here to describe all influences
on a product external to the company. The way in which the enterprise-internal value
chain is formed strongly depends on the external complexity. The RD department –
to highlight the extreme positions – either develops a product to be sold several ten
thousand times or designs it to one single customer’s specifications. The production
process might boast fully automated manufacturing equipment geared to an output of a
large number of standardized goods or, alternatively, could be based on highly skilled
workers manufacturing and assembling products in small lot sizes. External complex-
2
I use the term “product” to include both products in the common sense as well as services.

2.1 Complexity as a Challenge for Enterprises 15
Product
Market requirements Value chain
External complexity
Internal complexity
Figure 2.1 External and internal complexity from a product perspective
ity also affects the way in which the product’s architecture is designed, i.e. what mod-
ules it consists of, how much variety it offers, which components are standardized, etc.
This cluster describing the translation of market requirements into a physical product
is called internal complexity. Figure 2.1 illustrates the situation described above.
Very similar to the above concept of external and internal complexity, Bliss (2000,
pp. 5-7) introduced exogenous and endogenous complexity drivers. He identified three
exogenous complexity drivers determining market complexity:
• Demand complexity. The increasingly individualized demand leads to fragmented
markets with decreasing customer target group sizes and fast changing customer
needs.
• Competitive complexity. Global and deregulated markets, powerful competitors and
the shift from seller to buyer markets increase the market intensity and dynamics.
These factors often cause a necessity for competitive differentiation and a broad
and individualized product portfolio.
• Technological complexity. New technologies based on formerly distinct technolo-
gies merging into one discipline and shortening product life cycles cause a high
degree of technological complexity.
These market complexity drivers, combined with society complexity – including
aspects such as politics, economics, and legal issues as well as ecological and cultural

aspects (Kirchhof, 2003, p. 39) – entail a certain degree of external complexity which
the enterprise must adapt to by forming its internal complexity accordingly. Therefore,
the above complexity drivers are complemented by a set of endogenous complexity
drivers determining the enterprise-internal complexity:
• Customer complexity. Companies choose to serve a large number of heterogeneous
customers and customer groups (e.g. different industries and / or different geo-
graphic segments), often with weak demand.
• Product portfolio complexity. Wide and diversified product portfolios are based on
a large number of product variants.
• Product complexity. Product concepts are characterized by a large variety of raw
materials, components, subassemblies, etc.
As the above complexity drivers are directly affected by the exogenous complexity
drivers, they describe what Bliss (2000) termed correlated enterprise complexity. Bliss
introduced four additional endogenous complexity drivers describing what he called
autonomous enterprise complexity. They do not directly reflect the company’s envi-
ronment:
• Production complexity. The production is based on the philosophy of producing a
considerable number of components and piece-parts in-house and is characterized
by an order penetration point (OPP)3
at a very early stage of the value chain.
• Organizational complexity. Enterprise processes become highly fragmented due to
a strong orientation along functional lines and due to specialization. The interface
density and fragmented responsibilities generate a high degree of organizational
complexity.
3
The order penetration point describes the location within the value chain where the production is no
longer standardized but determined by a specific customer order. The terms customer order decoup-
ling point (CODP) and point of variegation (Ramdas, 2003, p. 83) are used as synonyms.

EXTERNAL COMPLEXITY
Market complexity:
- Demand complexity
- Competitive complexity
- Technological complexity
Society complexity:
- Politics
- Economics
- Legal issues
- Ecology
- Culture
INTERNAL COMPLEXITY
Correlated enterprise complexity:
- Customer complexity
- Product portfolio complexity
- Product complexity
Autonomous enterprise complexity:
- Production complexity
- Organizational complexity
- Task complexity
- Fabrication system complexity
Figure 2.2 Complexity drivers forming external and internal complexity; slightly altered from Sekolec
(2005, p. 15)
• Task complexity. Enterprises pursue a large variety of objectives in parallel.4
• Fabrication system complexity. Manufacturing systems adhering to a horizontally
and vertically undifferentiated value chain are directed by a central and determinis-
tic control system.5
Figure 2.2 summarizes the complexity drivers introduced above and depicts their
allocation to external and internal complexity.
In a 1991 study, Cummings presented a list of what he called symptoms of com-
plexity. They underscore the effects of the external complexity drivers on the enter-
prise. Among them are, according to Cummings, a large and increasing number of
products or customers per sales dollar (e.g. 20 percent of the products generate 80 per-
4
See Campbell (1988) for details on task complexity. Campbell identifies four sources rendering a
task complex: (1) presence of multiple paths to a desired end-state, (2) presence of multiple desired
end-states, (3) presence of conflicting interdependence, and (4) presence of uncertainty or probabil-
istic linkages. Finally, Campbell presents a classification of complex tasks: decision tasks, judgment
tasks, problem tasks, and fuzzy tasks.
5
Fabrication system complexity and production complexity are somewhat similar. Bliss (2000, pp. 7-
8) argues that differentiating between the two complexity drivers is necessary because, for instance,
a firm with a short value chain can avoid production complexity while still suffering from high fab-
rication system complexity.

cent of sales), a large and increasing number of unique inputs and suppliers, a high la-
bor content (job shop operations rather than continuous batch processing), and large
inventory pools (pp. 60-61). One further very common response of firms to cope with
external complexity is introducing product variety. According to Kaiser (1995, pp.
100-101), the enterprise’s task consists of designing appropriate output clusters (i.e.
product variety) to fit with the heterogeneous market requirement clusters in the best
possible way. The optimum state is achieved by matching the level of internal com-
plexity to the degree of external complexity.
As shown above, complexity has many facets and cannot be fully described by one
or two aspects. To illustrate this point, let’s assume that a complexity level of 1 is de-
fined by 50 customers, 145 product variants, 950 components, and 60 suppliers. If the
number of components is reduced to 900, the complexity is unequivocally reduced. In
this case, the number of components can be viewed as a measure of complexity –
when applying the ceteris paribus condition. When the number of components is re-
duced by 50, the product variants by 10, and the customers by 4, the complexity is re-
duced, too, but a value for the complexity reduction cannot be determined. If some of
the above complexity indicators are reduced and some increased, it is not even possi-
ble to decide whether the complexity has been raised or lowered (Adam Johann-
wille, 1998, pp. 10-11).
It is of great importance to an enterprise to describe the effects on the costs (i.e. en-
terprise-internal complexity) and the benefits (i.e. responding to market requirements)
associated with complexity. The example in the previous paragraph shows that one in-
dicator (or, if possible, several) must be chosen as a measure of complexity. Rathnow
(1993) based his considerations on product variety as a complexity indicator, leading
to the concept of optimum variety, which considers the benefits and costs associated
with product variety. It is based on the premise of increasing marginal costs and de-
creasing marginal benefits of variety. Conceptually, the optimum variety is defined by
the point where the marginal benefit equals the marginal costs (see Figure 2.3). Rath-
now pointed out that cost and benefit must be considered simultaneously to solve the

Costs of variety
Benefit of variety
Product variety
Costs
Benefit
Maximum
net benefit
Optimum
variety
Figure 2.3 Conceptual description of costs and benefit associated with product variety; source:
Rathnow (1993, p. 44)
optimization problem. This view is shared by Child, Diederichs, Sanders, and Wis-
niowski (1991), who contended:
In order to optimize variety, a company must assess the level of variety at which
consumers will still find its offering attractive and the level of complexity that will
keep the company’s costs low. Key to this decision is understanding the distinction
between internal complexity and external variety. (p. 74)
Now that the fundamental concept of external and internal complexity has been in-
troduced, the following two subsections cover the two dimensions in more detail. Sub-
section 2.1.2 on external complexity presents several existing concepts to assess mar-
ket requirements and customer needs. The subject of subsection 2.1.3 on internal com-
plexity is assessing the costs incurred by complexity.

2.1.2 External Complexity – Understanding the Market Needs
A product must be designed to match the target market’s customer requirements6
as
closely as possible. These requirements mainly reflect – in terms of Figure 2.2 – the
demand aspect of external complexity. The functionality offered by the product must
therefore be compared with the customers’ expectations, which allows the determina-
tion of the overlap of product offer and requirements. An under-engineered product
(i.e. less functionality than required) compromises its competitive edge, while over-
engineering (i.e. more functionality than required) causes costs that cannot be turned
into profits (Figure 2.4). When the requirements are fulfilled at least to a large extent,
the customers are satisfied and will stick with the product in the future – provided that
price and quantity are in a favorable range and delivery is on-time (Seghezzi, 2003, p.
83).
The Kano model of customer satisfaction outlines a very useful classification of
customer requirements. The three quality attributes that are identified by Kano,
Seraku, Takahashi, and Tsuji (1984) include:
Market needs and
requirements
Offer
Pointless or non-
perceived characteristics
Unfulfilled
expectations
Effectiveness
of offer
Under-engineering
Over-engineering
Figure 2.4 Overlap of offer and market requirements; sources: Teboul (1991, pp. 29-47) and Seghezzi
(2003, p. 83)
6
Following Ulrich and Eppinger (1995, p. 35), I choose to use the terms customer requirements, cus-
tomer needs, and customer attributes as synonyms. They all label any attribute of a potential product
that is desired by the customer.

• Basic requirements must necessarily be fulfilled because they are taken for granted.
Customers do not normally spend much thought on basic requirements and, there-
fore, do not express them. Their presence does not result in customer satisfaction,
but their absence causes strong dissatisfaction. An example of a basic requirement
is providing toilet paper in a hotel room. Kano et al. (1984) call this type of quality
attribute “must-be.”
• Performance requirements are at the top of customers’ minds when deciding on
which product to buy. Hence, they will typically speak about them. Performance
requirements can both satisfy and dissatisfy customers, depending on how well
they are executed. A car’s fuel economy is an example of this type of customer
need, termed “one-dimensional” quality attribute by Kano et al. (1984).
• Excitement requirements are unarticulated by customers and – when executed
properly – delight customers and differentiate a company from its competitors.
They mostly yield higher margins and are often referred to as USPs (unique selling
propositions). While excitement requirements fascinate the customer (e.g. provid-
ing a 110 or 220 volt outlet in a car), they do not result in any dissatisfaction when
they are absent. “Attractive quality” is the term Kano et al. (1984) coined for this
type of market need.
Additionally, Kano et al. (1984) introduced the two quality attributes “indifferent”
and “reverse.” Indifferent quality refers to aspects that are neither good nor bad and,
therefore, do not result in either customer satisfaction or dissatisfaction. Reverse qual-
ity causes a high degree of dissatisfaction when included in the product (and vice
versa). For example, some customers prefer the basic model of a product and are an-
noyed when too many features are included (Löfgren Witell, 2005, p. 10). Depend-
ing on the dynamics of a market, a customer requirement will change from excitement
to performance to basic. Kano provided empirical evidence for the dynamics of the
television remote control, which has followed such a life cycle: Remote controls were
an excitement requirement in 1983, a performance requirement in 1989, and a basic

requirement in 1998 (as cited in Löfgren Witell, 2005, p. 10). Figure 2.5 illustrates
the Kano model and depicts the three types of customer requirements.
While the Kano model is able to classify customer requirements in general, it does
not prove useful when simultaneously considering all potential customers. Market
segmentation7
jumps into this gap as it is a very powerful instrument for analyzing
markets and coping with external (demand) complexity. Kotler and Keller (2006, pp.
240-242) introduced a typology of market segmentation based on customer prefer-
ences (see Figure 2.6):
• Homogeneous preferences. All consumers have roughly the same preferences;
Degree of
achievement
Customer Satisfaction
Very satisfied
Very dissatisfied
Not at all Fully
Performance
requirements
Basic
requirements
Excitement
requirements
Figure 2.5 The Kano model of customer satisfaction (based on Löfgren Wittell, 2005, p. 9)
7
A market segment is defined here as “a group of customers who share a similar set of needs and
wants” (Kotler Keller, 2006, p. 240). Market segmentation can be performed in many different
ways: geographical segments, preference segments, demographic segments, etc.

Sweetness
Creaminess
Homogeneous
preferences
Sweetness
Creaminess
Diffused
preferences
Sweetness
Creaminess
Clustered
preferences
Figure 2.6 Basic market-preference patterns of ice cream buyers for the two product attributes
creaminess and sweetness (Kotler Keller, 2006, p. 242)
• Diffused preferences. Consumers vary greatly in their preferences; and
• Clustered preferences. The market reveals distinct preference clusters.
From a customer perspective, it is important to differentiate between customer
benefit and customer value. Customer benefit refers to what the buyer receives by pur-
chasing the product: functionality, assistance, warranty, brand name, etc. The costs (or
total customer costs) consist of all costs a customer incurs to evaluate, buy, use, and
dispose of the market offering (including monetary, time, energy, and psychic costs).
Customer value (or customer perceived value, CPV) is the difference between benefits
and costs (Kotler Keller, 2006, p. 141). Therefore, a product will only be sold if the
sum of all benefits is valued higher than all costs (see Figure 2.7).
A powerful concept to achieve a competitive edge and provide customer value was
introduced by Clark and Fujimoto (1990), who reasoned that product integrity is the
key to success. The extent to which a new product manages to balance basic functions
and economy with more subtle characteristics is a measure of its integrity. Product in-
tegrity has both an external and an internal dimension. Internal integrity is character-
ized by the consistency of a product’s functionality and its structure, while external
integrity refers to the consistency between a product’s performance and customers’
expectations. In Clark and Fujimoto’s understanding, a company that develops suc-
cessful products is itself coherent and integrated. The strength of the product integrity

Customer benefit
Total customer costs
Customer value
Figure 2.7 The concept of customer value; source: Rathnow (1993, p. 12)
concept resides, on the one hand, with the integration of both listening to customer
needs as well as finding ways to actually organize the development of market-oriented
products. On the other, the difficulty of capturing the full complexity of customers’
requirements and expectations with all their facets is addressed, too, and ways to deal
with such challenging situations are shown.
A quantitative approach widely used by marketing managers to assess customer
preferences is provided by conjoint analysis8
, a set of techniques for measuring buy-
ers’ trade-offs among multi-attributed products (Green Srinivasan, 1990, p. 3).9
Customers commonly choose product alternatives by weighing characteristics that fall
along more than one single dimension – they are multi-attribute (Green Wind, 1975,
p. 108). For example, one’s preference for various houses may depend on the joint in-
fluence of such attributes as nearness to work, tax rates, quality of school system, and
anticipated resale value (Green Rao, 1971, p. 355). Conjoint analysis aids marketing
managers in determining the relative importance of a product’s multidimensional at-
tributes, revealing to what extent they contribute to the product’s overall attractive-
ness. Vriens (1994, pp. 39-40) provides an excellent example of how conjoint analysis
is applied. Coffee-makers can be defined by the following attributes: price, brand
8
The terms conjoint analysis and conjoint measurement are used as synonyms here.
9
According to Green and Srinivasan (1978, p. 103), it is generally agreed that the start of conjoint
measurement is marked by the work of Luce and Tukey (1964).

name, capacity, color, and the presence / absence of a flavor cap. Each of these attrib-
utes can adopt several values, shown in Table 2.1. The values of one attribute can be
combined with all values of the other attributes, which adds up to 512 (4 × 4 × 4 × 4 ×
2) possible variations of the coffee-maker.10
The strength of conjoint analysis now un-
folds: Respondents to a customer survey need only be asked to evaluate a limited
number out of the complete set of 512 full profiles11
(in this case, only 16 profiles
were sufficient). The computation that then follows ranks the attributes according to
their importance from a customer perspective, providing valuable information about
how the different product characteristics are balanced against each other.
Table 2.1 Attributes and corresponding values of coffee-makers; as an example, one full profile is in-
dicated by the line; source: Vriens (1994, p. 39)
Attribute Value 1 Value 2 Value 3 Value 4
Capacity Max. 6 cups Max. 8 cups Max. 10 cups Max. 14 cups
Price $20 $30 $40 $50
Brand Philips Moulinex Rowenta Ismet
Color White Black Brown Red
Flavor cap Present Absent
Conjoint measurement can even go one step further and assign relative importance
levels to the product attributes. Such a comparison is given in Figure 2.8, which de-
picts the relative importance of five attributes for a spot remover for carpets and up-
holstery. As can be seen from these examples, the fields of application for conjoint
10
Displaying product attributes and their values as shown in Table 2.1 is called an attribute-value ma-
trix.
11
A full product description by one possible combination of its attributes and values is called full pro-
file. An example of a full profile for the coffee-maker is indicated by the line in Table 2.1: max. 10
cups (capacity), $50 (price), Philips (brand), white (color), present (flavor cap).

measurement are wide and include marketing segmentation12
, product decisions13
,
competitive analyses, pricing decisions, promotional decisions, and distribution pur-
poses (Vriens, 1994, p. 41).
This subsection has shown a selection of the many facets of external complexity
surrounding enterprises. The focus has clearly been placed on the demand aspects of
external complexity as this will be one of the main subjects in the remainder of this
work. The basic concepts and models presented above offer a first valuable assistance
for the task of structuring the complex reality of market requirements and understand-
ing what customers want. The next subsection covers the enterprise-internal aspects of
complexity – i.e. how the market needs are reflected by products and processes and
what costs are incurred thereby.
0% 5% 10% 15% 20% 25% 30% 35%
Money-back
guarantee
Good
Houskeeping seal
Retail price
Brand name
Package design
Figure 2.8 Relative importance of product attributes of a spot remover for carpets and upholstery;
source: Green and Wind (1975, p. 110)
12
See Green and Krieger (1991) for a conceptual framework describing market segmentation in the
context of conjoint analysis.
13
Page and Rosenbaum (1987) presented a case study showing how decisions on redesigns of product
lines can be supported by conjoint analysis. Moore, Louviere, and Verma (1999) applied conjoint
analysis to the design process of entire product platforms and argued this to be an approach that is
superior to considering products individually.

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Fig. 23. Front and top
views
IV
MECHANICAL DRAWING: Continued
The next day, as they were about to resume their study, Ralph said:
There is so much to drawing that I hardly know where to begin, or
what to leave out; but in shop drawing, a picture will not do;
imagine an architect trying to build a skyscraper from a picture. The
shop drawing must tell the mechanic everything he needs to know
about the object he is making. He cannot keep running to the office
asking questions; the drawing must answer them all. That is the
reason why the draughting-room is such an important part of every
manufacturing plant. Drawing is the language the designer uses to
tell the workmen what he wants made. It is doubly important when
the designer is hundreds or thousands of miles away from the
workman.
A battle-ship can be designed in Australia and built in England, so
this language of the shop has grown to be a very interesting and
important art. Every one who works with tools must learn it sooner
or later, the sooner the better.
Usually it is necessary to represent
even the simplest object by at least
two views. For example, suppose I
hand you this sketch a (Fig. 23), and
tell you to make two out of wood. You
wouldn't know what to do because no
thickness is shown, but if I give you
this sketch b, you would see
immediately that it has practically no

thickness and might be a sheet of paper. You learn that from the top
view looking down on it.
Fig. 24. Showing necessity for top view
The first view is called the front view. Now, suppose I change the
top view to this c; thickness is shown here, and if I say, make two of
these out of white pine, you would know all that would be necessary
to go ahead.
Again, suppose I give you this sketch a (Fig. 24), and ask you to
make two out of gum wood. You would be completely at sea,
because that front view might have any one of these top views
shown at b, c, d, e (Fig. 24). In other words, it might be a triangle
without thickness, a wedge, cone, or pyramid.
So you see, two views are absolutely necessary, and very often a
third, taken from the right or left side. The three views of a book
would look like Fig. 25. The side view is not necessary in this case,
but that is the way it would be drawn if a third were needed. You
will have plenty of opportunities for practising this as we get along
with our tool work, because in order to understand drawings you
must be able to make them. Suppose you try your hand now, by
drawing the two views of a cylinder, two inches in diameter and
three inches high.

Fig. 25. Three views of
a book
Ralph rolled a sheet of paper up until
the ends met, to illustrate a cylinder,
and the drawing produced by Harry
looked like a. (Fig. 26.)
Fig. 26. Mechanical drawings of cylinder and cone

Now, said Ralph, no shop drawing is complete unless it shows all
the necessary dimensions; so I will put them on to show you how it
is done, but after this you must dimension every drawing you make.
The finished drawing of the cylinder is shown at b.
Harry was told to make the mechanical drawing of a cone, 2 inches
in diameter, and 3 inches high. While he was working at this
problem, Ralph disappeared, and when he returned Harry asked
where he had been.
Fig. 27. Making a tip cat

Never mind. Let me see your drawing, c (Fig. 26). All right. Then
he laid a little wooden object on the table.
Why, it's a cat, said Harry.
Yes, a tip cat, and as soon as you make a working drawing of it,
you are going to manufacture one with your knife. Please notice that
the tip cat is a cylinder with a cone at each end, and two views will
show everything about it.
The drawing took longer to make than Harry imagined it would; or it
seemed longer because he was so impatient to get to work with his
knife. His finished drawing is shown at a (Fig. 28).
The different stages in the making of the tip cat are shown in Fig.
27.
Fig. 28. Second tip cat

First came the squaring up, shown at a. Then the two ends were
whittled down to wedges as shown at b, and these two ends
reduced to square pyramids, as at c.
Lines a quarter of an inch from each edge were drawn on the four
sides of the square part and continued out to the points of the
pyramids, as at d. Cutting to this line changed the square to an
octagon, and the square pyramids to octagonal ones.
The edges were again whittled off until there were no more to be
seen; the cat was smoothed with sand-paper, and called finished.
Harry was delighted, but Ralph said: That is not the best form for a
tip cat, because it will roll. We will make a bat for it now, and after
we have played with it awhile, we'll make a better one; just the
same except that the centre part will be left square and only the
ends rounded. (Fig. 28, b.)
The bat they made is shown in Fig. 29. Its handle was cut out with
the coping saw and whittled to the lines. Ralph explained that
anything to be held should be rounded, or it would be hard on the
hand, so all the edges were curved with the knife and finished with
sand-paper.
Fig. 29. Bat for tip cat
They had so much fun with the cat and bat that woodwork was
forgotten for two afternoons. The third day it rained, so the boys
were glad to get at work again in the shop.

Ralph suggested that, as they were doing so much drawing, it might
be well to make a pencil sharpener.
The drawing they produced is shown in Fig. 30. This was easily
worked out in 1⁄8-inch wood with a piece of sand-paper glued in the
oblong space.
Fig. 30. Pencil sharpener
The sand-paper suggested match scratchers, and as they are useful
articles, several designs were worked up for Christmas gifts. Three
of these are shown in Fig. 31, but after a good deal of discussion it
was decided that for scratching matches a longer space for sand-
paper was necessary, and three other designs (Fig. 32) were the
result of several hours' work.
Fig. 31. First match scratchers

I'm getting tired of match scratchers, exclaimed Harry; let's make
some toys!
Fig. 32. Later designs in match scratchers
Very well, we'll get ready for Santa Claus, and provide a stock of
things for our numerous young cousins, replied Ralph. This will
give us a chance to use our coping saw, and I have been wanting to
do that for a long time.

V
TOYS
In making presents for little children, said Ralph, we must always
remember that the toys will be played with and receive a great deal
of rough handling. So to begin with, they must be strong and of
simple construction. The youngsters don't care so much for finely
finished articles as older people do, and they tire very quickly of
things that are so complicated that they get out of order easily.
Suppose we first make some neat boxes. They can be filled with
candy, and after that is gone they will be used for a long time to
keep treasures in.
Fig. 33 shows the drawing of the first box the boys made. The two
oblong pieces form the top and bottom. The latter was nailed on
with 3⁄8-inch brads. The two cleats were nailed to the under side of
the top to hold it in place, while the sides and ends were fastened
with a little glue, and one brad in the centre. This made a very
serviceable box, the material being basswood 3⁄16 of an inch thick.

The sled shown in Fig. 34 came next, made of the same material as
the box. Ralph was delighted with its strength and graceful lines.
Two cleats were glued into the grooves in the sides, and the top
nailed on with 3⁄8-inch brads.
Fig. 34. The toy sled
In each case the drawing was made directly on the wood, which was
sawed close to the lines with the coping saw, and finished to the
lines with the knife.
The dog house (Fig. 35) brought out some new features of
construction. The opening in front was cut out with the saw and
finished as usual. Sides and ends were then put together with glue.
The two pieces forming the roof were nailed together with 3⁄8-inch
brads, to make a right angle and were then placed in position and
nailed to the front and back pieces.
Ralph explained that it was a saving of time and trouble to draw a
light pencil line to mark the location of the brads. If this is not done,
the brads are apt to come out in the wrong place and will then have
to be withdrawn and placed again. This is a waste of time and it very

Fig. 36. Indian chief
often spoils the looks of the work, so that the drawing of the pencil
lines really saves time in the end, and the lines can be erased.
Fig. 35. The dog house
We can make any amount of this
dolls' furniture, said Ralph. In fact
we could build a doll's house and
equip it with chairs, tables, and beds,
but what the youngsters really like
best is something that works,
something that moves, so I move—no
pun intended—that we design a toy
that has some life to it. We can cut it
out with the coping saw and there
need not be a great deal of knife work
to it. Suppose we make an Indian
paddling a canoe! This was more of a
problem than they had bargained for,
as it was necessary to look through an
encyclopædia to find pictures of
canoes, Indians, tomahawks, etc.
Harry traced the figure of an Indian
chief, transferred it to the surface of a

piece of 1⁄8-inch basswood, and on sawing it out found that he had
a very good silhouette of an Indian, but it did not move (Fig. 36).
The problem was still unsolved, and experiments along that line
used up several afternoons.
Fig. 37. Indian paddlers

Fig. 38. Indian paddlers. Separate parts cut out and
assembled
What was finally worked out is shown in Fig. 37. The arms were
made separate from the body, and were fastened to both the

paddles and the bodies by brads, which acted as pivots. The bodies
were then fastened to the canoe in the same way, but a little glue
was used as well as brads, as they were to be immovable. How to
make the paddlers move in unison was a hard problem, finally
solved by fastening a narrow strip of wood to the lower part of each
paddle. It was found that by moving this strip back and forth the
two figures moved with the precision of a machine. In each case
where a pivot was required it seemed only necessary to drive in a
3⁄8-inch brad. (Fig. 38.)
The success of this moving toy was so great that the boys went
rushing into the house to show it to the family.
Soon they came rushing back again, determined to try their skill on
something else. Ralph had to remind Harry that the Indian paddlers
were not yet finished, as the toy would not stand up, so the
standards shown at b were sawed out, smoothed with the knife, and
one fastened at each end, as a support, by means of brads and glue.
Fig. 39. The fencers
After much boyish arguing, it was decided next to try two
swordsmen fencing. This called for some posing, and looking in

books to get the correct position of a man fencing. The drawing
shown in Fig. 39 was finally copied from a book on athletic sports.
The different parts of the figures are shown clearly in the illustration.
It was found, by experimenting with paper figures, that by making
one leg of each figure in two parts, the body, arms, and other leg
could be sawed out of one piece.
The work of cutting out and assembling this combination, seemed
much easier now that the boys had gotten into the swing of it, and
they were so anxious to see it work that they almost spoiled it in
their haste. The swords, or foils, were made of two pieces of soft
iron wire.
Ralph insisted on filing these out flat near the ends to make them
look realistic, and they were fastened by drilling a hole in each hand,
passing the wire through and clinching it with a pair of pliers. It was
much safer to drill these holes, as a brad awl sometimes splits wood
that is very thin. This combination worked to perfection, and while
they were trying it Harry caught a glimpse of its shadow on the
table. The silhouette in black looked even more realistic than the toy
itself, and it gave the boys an idea. (Fig. 40.)
These toys could be used for moving shadow pictures, and
immediately their imagination began to conjure up the programme
of a show.
Our first selection, ladies and gentlemen, will be a shadow picture,
entitled 'Before the Coming of the White Men', exclaimed Harry,
moving the Indian paddlers.

Fig. 40. The fencers. Pieces assembled
And our next will be entitled 'The Duel', said Ralph.
Not a very good historical show, said Harry. We ought to have the
'Landing of the Mayflower'.
Not a bad idea, either, said Ralph. I think we could rig up a ship in
a storm. Let's try that next.

VI
MOVING TOYS
The problem of making a ship roll proved somewhat of a strain on
the engineering corner of Ralph's brain, and after awhile Harry grew
restless.
Can't you give me something to do while you are designing that
ocean? he said.
Ralph, pausing a moment, replied, Yes, try two men sawing a log.
Harry began to draw, but found that he knew very little about saws,
so had to go out and look at one, measured it, and after awhile
produced the sketch shown in Fig. 41. Ralph criticised it rather
severely, suggesting the addition of a log and saw buck, and advised
that the arms of the men and saw be cut out of one piece. The
drawing shows the separated pieces, two bodies, four legs, a saw
and arms in one piece, two straight pieces for the saw buck, the log,
and a little triangular piece to go between log and saw buck. The
object of this triangle is to leave a space between the log and saw
buck for the passage of the saw back and forth, as shown in the
sectional view.
The two pieces forming the buck were halved together, and the log,
triangle, and buck are fastened with glue and two brads.

Fig. 41. The sawyers
After all the pieces had been cut out, the men were first put
together by fastening both legs to the body with one 3⁄8-inch brad.
The feet were next fastened to the straight piece, 10 inches long,
representing the ground, by one brad through each foot, the bodies
standing upright, and the feet two inches apart. The arms came
next, with one brad through each man's shoulder, and lastly, the saw
buck, with the log already fastened rigidly to it, was nailed on the
back of the ground piece with the log in front of the saw. To make
this toy stand up, two standards were fastened to the ends of the
ground piece, the same size as those attached to the fencers in Fig.
40.

It took Harry two hours to make this figure in wood, after he had
the drawing finished. In the meantime Ralph had worked out a
scheme for giving a boat a rolling motion.
We'll be mechanical engineers by the time we finish this, he told
Harry. This piece of mechanism calls for a crank, a shaft, two
bearings, and a cam, not to mention a ship, an ocean, and a few
miscellaneous articles too trivial to mention.

Fig. 42. Boat in storm
The various parts of the ship in a heavy sea are shown in Fig. 42.
At a is the cam, at b the crank and handle, and at c the shaft. The

boat was sketched free hand and cut out with the coping saw in one
piece by sawing exactly on the lines. The ocean was represented by
two pieces corresponding to the ground piece in the sawyers, and
the wavy outline was not made until everything had been cut out
and the combination was ready for assembling.
The most difficult part—the shaft—was made first, and entirely with
the knife: A piece of basswood was cut exactly a quarter of an inch
square, a section was marked in the centre of this 3⁄16 inch wide,
and notches were made on each corner. The two ends were then
whittled to an octagonal shape and rounded. The square section in
the centre was reduced to 1⁄8 inch wide and the rounded ends sand-
papered smooth.
Next, the cam was cut out, and the square hole made. This was
accomplished, after spoiling one, by drilling a quarter of an inch hole
in the square and cutting the opening square with the point of the
knife.
The object of the square opening was to prevent the cam from
slipping when in operation. The cam was then placed over the round
part of the shaft and glued to the square section, over which it fitted
snugly. Next came the crank. This was made the same shape as the
cam, but the 1⁄4 inch hole drilled in one end was left round, while
the other was cut square as in the cam. The shaft fitted into the
round hole and was glued in after the assembling. For the handle on
the crank, a piece 1⁄4 inch square was fitted into the square hole,
and the rest of it whittled round and sand-papered.
Two cleats, 2 inch × 1⁄4 × 3⁄16 inch, were cut out with the saw and
everything was ready for assembling. The two sides of the ocean
were held together and the 1⁄4-inch hole at d drilled through both
pieces at once.
The two notches at e were cut after the assembling was finished.
After the holes were drilled, the wavy line was sawed, and the two
ends of the shaft inserted in the holes with the cam inside.

The two cleats were inserted in the ends of the ocean and fastened
with brads and glue.
Next, the boat was slipped in between the two sides, with the
sloping stern just touching the cam, and a 3⁄8-inch brad was driven
through the three thicknesses, sides and boat.
The crank was next slipped over the shaft and glued in position. The
crank handle was inserted into the square hole and fastened with
glue, and lastly a light rubber band was slipped over the notch on
the stern of the boat and the two corresponding notches on the
bottom of the ocean. This was to hold the boat against the cam,
which gives the motion.
To make this toy more realistic, the boys got out a box of water
colors, painted the body of the boat black, the ocean green, and left
the basswood sails their natural color—white.

Fig. 43. Turkey and executioner
There, said Ralph when it was finished, the youngsters can raise a
storm at any time they like by simply turning the crank. This toy
ought to be very serviceable, as it can't very well get out of order
and is almost unbreakable.
The subject of moving toys is almost endless, being limited only by
the imagination of the designer. Thanksgiving suggested the turkey
and the axe, and in the toy these boys worked out the turkey evades
the axe every time.
The parts are shown in Fig. 43. The legs of the turkey are stuck
rigidly to the body by brads and a little glue, and they are fastened
to the ground piece by one brad, which acts as a pivot.
The axeman's body and right leg are in one piece, the left leg being
in two pieces. The arms adhere rigidly to the body, and the axe to
the hands, by means of brads. The operating strip is 1⁄4 inch wide
and 9 inches long.
It is fastened between the legs of the turkey, and to the rigid leg of
the man, by one brad for pivot in each case.
The stump is nailed to the ground strip from the front.

VII
DESIGNING MOVING TOYS
The boys found this making of toys so fascinating that one was
barely finished before another was suggested. So absorbed did they
become that even meals were forgotten, and they regarded it as a
hardship to be called in to supper, while to be told that it was
bedtime was absolute cruelty. They found that it saved time to be
systematic, and the usual method of procedure was about as
follows:

Fig. 44. The boxers
First, to decide on the practicability of the idea. Second, to sketch
out a skeleton figure, as in a (Fig. 44), the boxers. When the proper
action was secured in these skeleton figures, the bodies were
sketched roughly around them as shown at b. Third, the movement

of the figures was thought out, and separate drawings traced from
the assembled drawing on tracing paper. Fourth, these separate
pieces were traced on 1⁄8-inch basswood with the grain of the wood
running the long way of the piece, wherever it was possible. Fifth,
the pieces were sawed out, and the edges smoothed with knife and
sand-paper. Very often, through anxiety to see how it worked, the
smoothing of the edges was neglected. Sixth, the parts were put
together with brads, and where the points came through they were
bent over or clinched on the further side. Seventh, after
experiments to discover the best position for it, the moving strip was
fastened to the legs by 3⁄8-inch brads, and last of all the feet were
pivoted to the ground piece in the same way.

Fig. 45. The boxers assembled
The boys learned many things not to do: for example, all the finer
details of the face and hands must be omitted, as they are very apt
to be broken off in sawing. It was found best to make the feet nearly
round or the brads would split the wood. For that reason wherever a
brad has to be driven through, the arm or leg should be made larger
than the proportionate size.

Fig. 46. The racing automobile
The most surprising feature about the figures was the fact that the
shadow they cast on a white wall or sheet was more realistic than
the figures themselves, and our boys never tired of exercising these
toys in order to watch the shadow pictures.
Of all combinations, perhaps the design and construction of a racing
automobile, that would actually go, gave them the greatest amount
of amusement as well as the largest number of problems to solve.
The history of trials and failures need not be given, but the machine,
as finished, is shown in Fig. 46. The body and hood are
comparatively simple. The principal trouble, as with larger machines,
was with the motive power, and the boys finally compromised by
using a rubber band. The four wheels were sawed out of 3⁄16-inch
basswood, and smoothed with sand-paper, the two driving wheels
for the rear having a 1⁄4-inch hole drilled to receive the ends of the
axle. The rear axle was 1⁄4 inch square at the centre for half an inch,
and the rest of it 1⁄4 inch in diameter, rounded with the knife and
sand-paper. The total length of the axle was four inches, and the
wheel base seven and one-half inches.
For the driving gear, three disks shown at a (Fig. 47) were sawed
out, the two large ones, 11⁄4 inches in diameter, from 1⁄8-inch
basswood. The edges of these two were rounded with knife and

sand-paper. The small disk, 3⁄4 inch in diameter, was cut from 1⁄4-
inch wood or two 1⁄8-inch pieces placed together and glued.
Fig. 47. Pieces of racing automobile

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