The Dynamics of Implementing and Managing Modularity of Organizational Routines During Capability DevelopmentInsights From a Process Model

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800IEEETRANSACTIONSONENGINEERINGMANAGEMENT,VOL.54,NO.4,NOVEMBER2007TheDynamicsofImplementingandManagingModularityofOrganizationalRoutinesDuringCapabilityDevelopment:InsightsFromaProcessModelShanL.Pan,GaryPan,AdelaJ.W.Chen,andMingH.HsiehAbstractPastresearchusingtheresource-basedviewofafirmroutinesthatarereconfigurediterativelyduringtheprocessofsuggeststhatitisimportanttoconsiderhowfirmsdevelop,man-capabilitydevelopment.Thispaperprovidessomeinsightsintoage,anddeployresourcesandcapabilitiestoinfluencetheoverallhoworganizationscanbettercompeteindynamicenvironmentsprocessofstrategyformationandimplementation.Relativelylittlebyapplyingthemodulardesignprinciple.researchhasbeenconductedinconceptualizinghowfirmsimple-mentandmanagemodularityoforganizationalroutinesduringThegrowingimportanceofglobalmarketsandtheincreasingcapabilitydevelopment.Yet,mostcompanieswouldbenefitfromtendencyforcompetitorstothinkandactgloballyhaveincreasedimplementingmodularityinorganizationalroutineswhencom-thepressureonfirmstoobtainsignificantcompetitiveadvan-petingindynamicmarketconditions.Suchimplementationsmaytageinordertogainastrongfootholdinworldwidemarkets.requirefundamentalorganizationalreorientationthatincurssig-Competitiveadvantagecancomefrommanysources,includingnificantcoordinationcosts,andinsomecases,suchmodulariza-tionattemptsmayfail,costingorganizationssignificantamountsofafirmsoverallmanagementtalentandorganizationalcapabili-valuableresources.Thisstudyseekstoconceptualizehowmodular-ties[32].Theheterogeneityincapabilitiesandresourcesamongityoforganizationalroutinescanbeachievedduringthecapabilityfirmshasbeencommonlyexplainedbytheresource-basedviewdevelopmentprocess.Weinductivelydevelopaprocessmodelof(RBV)[5],[18],whichperceivesfirmsasbundlesofresourcesmodularization,usingqualitativedataofanin-depthcasestudyoffromwhichsustainableandrent-generatingorganizationalca-thecapabilitydevelopmentexperienceofacallcenter.Themodelrevealsthatmodularizationisacomplexprocess,wherebyanor-pabilitiescanevolve[5].Tocompeteintodaysvolatilebusinessganizationskeyfunctionalactivitiesaredecomposedintospecificenvironments,thedynamiccharacteristicsofhoworganizationsoperatingandstrategicroutinesthatarereconfigurediterativelyadaptandrespondtochangingmarketshavebecomeextremelyduringtheprocessofcapabilitydevelopment.Practitionersmaycrucial[26],[42],[50].Whiletheprocessesoforganizationalderivestrategiesandtacticsfromourfindingstohelpthemimple-adaptationandadjustmentstodynamicmarketconditionsmaymentandmanagethemodularityoforganizationalroutinesduringcapabilitydevelopmentsoastoachievesustainablecompetenceininvolveseveralcomplexissues[38],onemajorfeaturethatcon-fast-movingmarketplaces.Researchersshouldbeabletouseandtributestoafirmshighagilityandflexibilityinsuchmarketdevelopthetheoryfurtherwithnewcasestudies.conditionsistheadoptionandimplementationofthemodular-IndexTermsCapabilitydevelopment,casestudy,modularity,ityconceptinorganizationalprocessdesigns[45].routine.Modularizationhasbeenproposedasakeyprincipleforfirmsadaptingtodynamicmarkets[51].ThemodularityconceptwasI.INTRODUCTIONinitiallyintroducedintheengineeringmanagementdomain[34]asthedecompositionofaproductdesignintolooselycoupledODULARITY,asadesignapproachtocomplexorgani-modulesbyspecifyingstandardinterfacesthatdefinethein-Mzationalandtechnologicalsystems,hasdrawngrowingputsandoutputsthatflowbetweeninteractingmodules[51].attention.ThispaperinductivelydevelopsaprocessmodelofBesidesproductdevelopment,theconceptofmodularitycanmodularization,wherebyanorganizationskeyfunctionalac-alsobeextendedtothedesignofinformationtechnologyar-tivitiesaredecomposedintospecificoperatingandstrategicchitecture[21],[30].Moreimportantly,modularityhaspro-foundimplicationsfororganizationalroutinesandprocesses.ManuscriptreceivedMay1,2005;revisedNovember1,2005,February1,Organizationalroutinescanbedescribedasrepetitive,recog-2006,October1,2006,andJanuary1,2007.ReviewofthismanuscriptwasarrengedbyDepartmentEditorR.Sabherwal.nizablepatternofinterdependentactions,involvingmultipleS.L.PaniswiththeDepartmentofInformationSystems,SchoolofComput-actors[15,p.95].Themodularprocessarchitecturecanbeing,NationalUniversityofSingapore,Singapore119077,Singapore(e-mail:consideredtoinvolvethedecompositionofacompanyskeypansl@comp.nus.edu.sg).G.PaniswiththeSchoolofAccountancy,SingaporeManagementUniver-activitiesintospecificroutinesandinterfacesthatallowfre-sity,Singapore188065,Singapore(e-mail:garypan@smu.edu.sg).quentreconfigurationofprocesses[37].Whiledynamicorga-A.J.W.CheniswiththeDepartmentofManagementInformationSystems,nizationsmixandmatchresourcestomeetuniquecustomerTerryCollegeofBusiness,UniversityofGeorgia,Athens,GA30602USA(e-mail:chenadela@gmail.com).needs[22],thekeencompetitionfacedbyorganizationshasM.H.HsiehiswiththeDepartmentofInternationalBusiness,Na-madeitparamounttoconceptualizethedynamicsofimplement-tionalTaiwanUniversity,Taipei10617,Taiwan,R.O.C.(e-mail:mhhsieh@ingandmanagingmodularityoforganizationalroutinesduringmanagement.ntu.edu.tw).DigitalObjectIdentifier10.1109/TEM.2007.906854capabilitydevelopmenttoachievesustainablecompetencein0018-9391/$25.00©2007IEEE PANetal.:DYNAMICSOFIMPLEMENTINGANDMANAGINGMODULARITYOFORGANIZATIONALROUTINES801fast-movingmarketplaces.Eventhoughpreviousstudieshavetechnologiestomeetrapidchangingclientspecificationsandre-establishedthepropositionthatmodularityenhancesflexibilityquirements[1].Successfulcallcentershaverecognizedthattheoforganizationalsystemsinthefaceofdynamicmarketcon-beststrategyforcapabilitydevelopmentinvolvesmixingandditions[24],[35],thereisnotasinglestudythatexaminesthematchingresourcessothatresourcescanbetterbedeployedtomodularizationprocess.Therefore,thispaperaimstodevelopameetdiversifyingclientdemands[39].Overall,theTT&Tcaseprocessmodelofmodularityanditsinteractionswithcapabilityprovidesanopportunitytodemonstratehowtheloosecouplingdevelopmentprocessesatthefirmlevel.relationshipamongvariousfunctionalmodulesmademodular-Theresearchpresentedhereusesacasestudyasitsbasis.OurizationpossibleandprovidedTT&TwithflexibilityandagilitychosencaseisTaiwanTeleservicesandTechnologies(TT&T).duringcapabilitydevelopment.Before1998,TT&Twasabusinessunit(BU)ofTaiwanCellu-Theremainderofthispaperisorganizedasfollows.WefirstlarCorporation(TCC),basedinthecityofTaipei,Taiwan.ItsexplaintheconceptsofRBV,dynamiccapabilities,andmodular-mainfunctionwastoprovidecustomerswithtelephone-basedity.Next,wedescribeourresearchapproach.Acasedescriptionservices,suchastheactivationofnewaccountsandtheman-ofTT&Tfollows,whereweanalyzehowmodularityoforgani-agementofcustomerbillingaccounts.Inearly1998,TCCszationalroutinescanbeachievedduringcapabilitydevelopmentseniormanagementidentifiedapotentialmarketinprovidingprocess.Weconcludebyhighlightingtheimplicationsofourcustomerswithprofessionaltelephonyservices.Anewbusi-findingsforbothresearchandpractice,withanindicationofthenessentity,TT&T,wasestablishedtoexploitthisopportunity.limitationsofthisstudyandsuggestionsforfutureresearch.Theneworganizationwastaskedwithdevelopingacompletecustomercallservicesolutionforitspotentialclients.1FromII.THEORETICALBACKGROUND1998to2003,TT&Tsuccessfullytransformeditselffromanin-housecustomerservicedepartmenttoacallcenter.TT&TA.TheResource-BasedView(RBV)accomplishedthegoalbyimplementingmajorchangesinitsRBVisanemergentperspectivewithinthefieldofstrate-organizationalstructureandbusinessprocesses.Forexample,gicmanagementthatdescribesafirmasaspecificcollectionitrolledouttrainingprogramsforcustomerservicerepresenta-ofresourcesandcapabilitiesthatcanbedeployedtoachievetives(CSRs),implementedcloseworksupervision,madepro-competitiveadvantage[5].Firmresourcesaredefinedasallcessimprovements,andputinplaceasystemformoreeffectiveassets(tangibleorintangible)andcompetenciesownedorcon-manpowerallocations.Theaimwastoachievehighcustomertrolledbythefirmthatcanbeusedtoconceiveandimplementservicestandards.Byemphasizingknowledgesharingandre-competitivestrategies[22].Afirmsidiosyncraticcombinationtention,TT&Tcontinuouslylearnedfrompreviousexperiencesofresourcesformsthebasisofcompetitiveheterogeneity[19],andtransferredimportantcustomerinformationtoitsclients.wherethescarcityanddisproportionatevalueofresourcesre-Mostimportantly,itdevisedaminimalmodificationapproach,sultinmaximumrentgeneration[3],[18].Isolatingmechanismswhichallowedittocarryoutprojectsinvolvingdifferentin-mustprotectfirm-specificresourcesandcapabilitiesfromdif-dustriesinamoreefficientmanner.Inshort,themeasuresfusionthroughouttheindustrytosustainexistingcompetitivethatTT&Timplementedallowedittointegrateandreconfig-advantage[48]bymakingthemdifficulttobetransferred,imi-ureitsresources,anddevelopseveralcapabilitiestoadaptandtatedorreplicated,andnonsubstitutedbyotherresourcesorca-respondtothetransformationofitsbusiness.Bytheendofpabilitiesthatcanperformasimilarfunction[5].RBVhasbeen2003,TT&ThadoperationsinthecitiesofTaipei(northerncriticizedasbeingvagueandfailingtoexplainhowcompetitiveTaiwan),Taichung(centralTaiwan),andKaohsiung(southernadvantagecanbesustainedinhypercompetitiveenvironmentsTaiwan).Itemployed2000CSRs,deployed1500fullyequippedwhererapidandsuddenchangesarecommon[26],[38],[42].workstations,andservedmorethan7millioncustomers.Toaddressthisissue,thedynamiccapabilitiesperspectivehasThereareatleasttwoimportantreasonsforstudyingthebeenproposedtoexaminehowfirmsreact,adapt,andrespondTT&Tcase.First,thecallcentercontextissuitableforstudyingtochangesinvolatilebusinessenvironments[42],[50].themodularityphenomenonbecausecallcentersareviewedascoordinatedsystemsofmodulessuchaspeople,processes,B.DynamicCapabilitiestechnologiesandstrategies[8],andtheirmodularstructureshavesignificantimpactsonthedesignofthetasksandthecen-OrganizationalcapabilitiesarecharacterizedbyTeecetersoperatingprocess.Forexample,thefrontlineworkinetal.[44]asbeingdependentonthreefactors:1)thecoordina-callcentersishighlyscripted,unambiguouslydefined,andre-tion/integration,learning,andreconfigurationoforganizationalliesonconvergingtelecommunicationtechnologies,computerandmanagerialprocesses/routines;2)thefirm-specificstrategicsystems,andtheInternet(orintranet)thatresemblesthemodu-positionasdefinedbythefirmsassetstructureandresourcelarizedworkcentersinassemblylineproductions[41].Secondconfigurations;and3)firmhistory,whichaccountsforthepath-itisimportantforfirmsinthecallcentercontexttobeabletodependentnatureofcapabilities.Capabilitiesandresourcesadapttotheirdynamicallyevolvingenvironmentsbecausefirmsevolveovertimeasorganizationslearnandadapttochange.In-needtooptimizeworkflows,improveproductivity,anddeployterestingly,thetypeofcapabilitiesdevelopedhasbeensuggestedtobedependentonthelevelofmarketdynamismwithintheex-1Inthisstudy,wetermclientstobeorganizationswhoareTT&Tsdirectternalenvironment[13].Forinstance,capabilitiesdevelopedincustomers,andcustomerstobedirectcustomersoftheseorganizations.high-velocitymarkets,whereuncertaintyandunpredictability 802IEEETRANSACTIONSONENGINEERINGMANAGEMENT,VOL.54,NO.4,NOVEMBER2007thrive,arebasedoncomprehensiveprocessesdevelopedthroughbasedonananalysisoftheeventsthattranspiredatTT&Tservesrapid,iterative,andexperience-basedlearning[10].asthecentralcontributionofthisstudy.Anorganizationsstrategicapproachiscrucialtothedevelop-mentofcapabilitiesthatwouldenhancetheorganizationscom-III.RESEARCHAPPROACHpetitivestatus[33].Therefore,studyingorganizationallearningWechoseacaseresearchapproachforourinvestigationofthemechanismsthatrelateorganizationalknowledge[35]tocapa-researchquestion,asitprovidesresearcherswiththeopportunitybilitydevelopmentiscrucialforunderstandinghowdynamictoexplorecontemporaryeventsinthecasecompany[52].Thecapabilitiesevolveinresponsetofeedbackandstimulifromcasestudymethodisanappropriatemeansofempiricalinquirytheexternalenvironment[53].Thepath-dependentnatureofwhenthephenomenontobestudiediscomplexandnoteasilydynamiccapabilitiessuggeststhatrepeatedpracticeandincre-separatedfromitsorganizationalcontext[25],[31].FollowingmentallearningfromsmallmistakeswouldeventuallyleadtoEisenhardt[12],weusedthecasestudytobuildtheoryinacapabilitiesthatarecomplex,difficulttoimitate,andresponsivegroundedandinductivemanner.Wedrewonagroundedtheorytochange[13].Previousstudieshaveshowntheexistingpaucityapproach[16]todeveloptheoryfromqualitativedata.Groundedinresearchthatexaminesorganizationscapabilitydevelopmenttheoryisamethodofiterativelycollectingandanalyzingdataprocesses[48].Todate,thereisonlyoneprocessstudy[29]thattodevelopasubstantivetheoryofaparticularphenomenon,fol-providesvaluableinsightsintohowanorganizationdevelopslowedbyaformaltheoryonitsbasis.Ourcasestudyfocusesresourcesandcapabilitiestosupportitsbusinessstrategyoverontheactivitiesinvolvedintheimplementationandmanage-time.Issues,suchashowafirmmayswiftlyestablishitsstrate-mentofmodularityoforganizationalroutinesduringcapabilitygicdirection,ordiffuseandgrowastrategythroughitsranks,developmentwithinTT&T,alargecallcenterbasedinTaiwan.remainunaddressed,anddeservemuchattention[29].Itisherethatthemodularityconceptcanhelp.A.DataCollectionDatawerecollectedmainlythroughpersonalinterviewswithC.TheConceptofModularitythemiddleandtopmanagement,includingtheGeneralMan-OneimportantwaytoexaminehoworganizationsadaptandagersandDirectorsoftheorganization(seeAppendixA).Per-respondmorerapidlytodynamicmarketconditionsistostudysonalinterviewsweresupplementedbydirectobservations,ashowfirmslinktogethermodularresourcesandcapabilitiestowellasdocumentsandartifactsincludingorganizationcharts,formresourcechainsthatcanrespondflexiblytodynamicenvi-annualreports,andinternaldocumentation.Forexample,exten-ronmentalchange[36].SanchezandMahoney[39]definemod-sivedocumentationwasobtainedfromoneinformant(theGen-ularityasaspecialformofdesign,whichintentionallycreatesaeralManagerofCustomerService)oncustomerssatisfactionhighdegreeofindependenceorloosecouplingbetweenmod-surveyreports.Interviewswerebasedontopicguides,whichuledesignsbystandardizingmoduleinterfacespecifications.indicatedrelevantprobesatsuitablejunctures.TopicguidesMoreover,firmsneedcomplementaryorganizationalresourceswerecustomizedforeachinterview.Somesampleinterviewandcapabilitiestoexploittheeconomicsofsubstitutionaf-questionsarelistedinAppendixB.Here,weacknowledgethefordedbymodularstructures[9]thatincludeasystemforcon-limitationthatinterviewsasaprincipaldatacollectionmethodtinuousimprovementofworkprocessesthroughcodificationareproblematicsincetheyarelimitedtothosewhoareacces-andstandardization,appropriateorganizationalstructures,andsibleandwillcooperate[49].Toamelioratethiscriticism,theaninfrastructuretofacilitateknowledgesharingandreusesuchintervieweeswereencouragedtospeakfreelyabouthowtheyaselectronicnetworksanddatabases[51].implementedandmanagedmodularityoforganizationalrou-Theprincipleofmodularityhasbeenwidelyappliedinphys-tinesduringcapabilitydevelopment.Theinterviewswereret-icalsettings[9],[51].However,theconceptofmodularitycanrospectiveandsemistructuredinnature.Thestudydrewdeeplybeextendedtotheintangibleareasofprocessandorganizationontheperceptionsoftheinterviewees,asrevealedthroughtheirdesigninthesameway[21],[30],[37].Eventhoughmodu-interviewcomments.Historicalreconstructionofincidentswaslarcorporationscontinuetoflourishinmajorindustriesandsubsequentlyperformedbythefieldresearcher.Mostinterviewsmakeimpressivegainsinworldwidecompetitiveness[45],ourweretape-recordedandtranscribed,withadditionalnotesbeingliteraturereviewfailstofindasingleprocessmodelofmod-takenwherenecessary.Thesetextsbecamethemaincorpusularizationduringorganizationalcapabilitydevelopment.Theofthedatausedforsubsequentanalysis.Wherepossible,theprevailingwisdomseemstobethatmodularizationisacom-researcheralsotriedtogatherotherdocumentaryevidencetoplexprocess,asmodularorganizationsadoptaninternallinkingsupplementtheevidencegatheredfrominterviews.mechanismtocoordinatethedeploymentofarangeofcapabili-Oneoftheauthorsplayedtheroleofafieldresearcherandtiesandresourcesthatincludepeople,technology,andcodifiedcollecteddataatTT&Toverthreemonths(AprilJune2004).knowledge[35],[40].Giventheknowledgegap,ourstudyaimsTheDeputyDirectorofDevelopmentandPlanningprovidedthetoprovideadeeperunderstandingofthedynamicsofimple-access.Thisledtootherinterviewsattheorganizationinwhatmentingandmanagingmodularityoforganizationalroutinesmaybevividlydescribedasthesnowballingeffect[7].Severalduringorganizationalcapabilitydevelopmentsoastoenableparticipantswereidentifiedduringtheinitialphase.Interviewsfirmstoachievesuperiorcompetitiveadvantageintumultuouswereconductedwiththeseindividualsandothersidentifiedlater.andfast-movingenvironments.TheinductivelyderivedmodelAltogether,22face-to-faceinterviewswereconductedwithan PANetal.:DYNAMICSOFIMPLEMENTINGANDMANAGINGMODULARITYOFORGANIZATIONALROUTINES803TABLEIinternaldocuments,publishedbookseries,andmultimediama-OVERVIEWOFTHERESEARCHDESIGNADOPTEDINTHISSTUDYterial).Aspartofthecasedatabase,notessummarizingtheemergingthemesandissuesweretakenaftereachinterview.Directquotesfromtheinterviewswereclassifiedandcompiledaccordingtoemergingsubthemes.Inordertoreduceresearcherbiasandalsotovalidatethatnoimportantincidenthadbeenmissedinthecasesummaries,thefieldresearcherinvitedtwocolleaguestotakepartintheearlyanalysisofsomeofthedata.Bothwereuninvolvedinthefieldwork,andwere,therefore,unfamiliarwiththecase.Theroleofthetwocolleagueswastobringadifferentandpossiblymoreobjectiveeyetotheevidence[12,p.538].Theinformationtheyreceiveddidnotincludethefieldresearcherslistoffindings.Next,bothwereaskedtodeveloptheirlistsoffindings.Aseniorinformationsys-temsresearcherwasalsoinvolvedatlaterstagesofthestudy,averagedurationofbetween1and2hperinterview.Theinter-givingcommentsonthefieldresearcherslist.Thepurposeofviewtranscriptswereusedforpreparingacasesummarythatthiswastodetectanyobviousbiasintheresearchapproach.waslatershowntotheDeputyDirector,whodidnotrecom-Datafromvarioussourcescoalescedandbuiltaspecificnarra-mendanyamendments.Theuseoftheinterviewtranscripts,tivethatexplainedprocessoutcomes[31].documentsalongsideobservationaldataenabledacomparisonThenextstepwastocompileareconciledlistoffindings,betweentheresearchersobservationsandotherinformedac-whichcomprisedthekeyactivitiesthatformedthemechanismscounts.Thesesecondarydatasourcesplayedacrucialrolein2oftheentiremodularizationprocess.Theactivitieswereiden-establishingtriangulationandinmaintainingthechainofevi-tifiedbyexamininghowTT&Treorientateditsresourcesanddence[52].Thefieldresearcherwasinvolvedincreatingsum-adapteditselftomeetmarketdemands.Theentiredataanal-mariesandtranscribingtheinterviewsduringwhichtheinfor-ysisprocesswashighlyiterative.Theemergingconceptsandmationprovidedbydifferentintervieweeswascross-checkedthemeswereidentifiedanddevelopedbymovingbackandforthforinconsistencies.Observationsofmeetingsandindividualsbetweenthepriortheoreticalfoundationandtheloomingthemesatworkwereconductedasasustainedandintegralpartofthefromthefieldstudy[16].Intheinductivegenerationoftheoryfieldwork.Otherinformalobservationsandmeetingswithem-fromdata,wetriangulatedvarioussourcesofevidence[52]ployeesintheircoffeeloungewereconductedaswell.Duringthatisimportantforconceptdevelopmentininductivetheorythesemeetings,thefieldresearchertooknotesveryquicklyandbuilding[12].Inthefinalstepofouranalysis,wecomparedourtranscribedthemontocomputerfilesimmediatelyaftertheses-groundedframeworktovarioustheoriesfromthedynamiccapa-sion.Acasestudydatabase[52]wascreatedtoorganizethedatabilitiesandmodularityliterature,andconductedacomparativecollectedinthisstudy.Notethatthroughouttheentiredatacol-analysisassuggestedbyGlaserandStrauss[16].Theiterativelectionprocess,intersubjectreliabilitywasincreasedbyusingprocessendedwhentheoreticalsaturation[16]wasreached:thenarrativesfromonesubjecttoconfirmorcontradictothersnoadditionaldatawerecollected.Agoodexampleofhowweinsocialtriangulation[28].Buttherewasnoattempttoprivi-decidedtheoreticalsaturationwasreachedwasthatweidenti-legeoneaccountoveranother.Thefieldresearcherjudgedthatfiedtheorganizationscontinuousimprovementinitsoperationstherewasnoovertattemptbytheintervieweestosystematicallyanddeliveryofservicestobeemergingoperatingroutinessinceconcealdetailsordistortaccounts.AnoverviewoftheresearchtheinterviewswiththeManagerofBU1,theChiefConsultantdesignadoptedinthisstudyisshowninTableI.ofDevelopmentandPlanningandthecustomerssatisfactionsurveyhadallreachedsimilarconclusions.TableIIsummarizesB.DataAnalysistherolesplayedbybothprimaryandsecondarydatasourcesatInourdataanalysis,wesoughttousetherichinsightsavail-differentstagesofouranalyticalprocess.ableinthecase.Foranycase,insightsintothemodularizationprocessduringcapabilitydevelopmentcanonlybeobtainedIV.CASEDESCRIPTIONOFTT&Tfromthoroughimmersioninthetranscriptsforthecase.Ade-Thissectionpresentsthebackgroundinformationabouttailedcasedescription(narrativeasinstance)[31]oftheentireTT&Tandhighlightstheprocessbywhichthemodularstructuremodularizationprocesswasprepared.Thiswasdonesoonafteroftheorganizationalroutinestookshape.Thecasedescriptionscompletingthecasestudy.Theprocessfocusedonhowtoimple-arepresentedchronologicallyinthreephases.Thesectioncon-mentandmanagethemodularityoforganizationalroutinesdur-cludeswithasummaryofthecasedata.ingcapabilitydevelopment,interspersedwithstrategiesadoptedbythecompanytotransformitselffromanin-housecustomerservicedepartmenttoanoutsourcedcallcenter.2Forexample,wecategorizedmodulesandroutinesaccordingtotheirdef-Theentiredataanalysisreliedheavilyonthedatabaseofinitions.Therefore,VoiceRecordAuditingisanoperatingroutinesinceitwasbeingperformedonadailybasistosupportthequalitycontrolcompo-fieldevidencethatincludedbothprimarydata(i.e.,interviewsnent(module)thatwasanimportantpartofoverallcustomersupportservicesandnotesofobservations)andsecondarydata(webdocuments,(architecture). 804IEEETRANSACTIONSONENGINEERINGMANAGEMENT,VOL.54,NO.4,NOVEMBER2007TABLEIISUMMARYOFTHEROLESPLAYEDBYVARIOUSDATASOURCESATDIFFERENTPHASESOFTHEANALYTICALPROCESSFig.1.TT&Tsmarketexpansionplan.A.Phase1:EstablishingDirection(February1998–September2002)TobrieflyrecapitulatetheearlierintroductionofthecaseFig.2.CategoriesofTT&Tsserviceproducts.organization,TT&TwasoriginallyaBUofTCC.LocatedinTABLEIIITaipei,Taiwan,theBUwasfoundedinFebruary1998topro-TT&TSBUSANDTHETYPESOFINDUSTRIESANDCLIENTSSERVEDvidetelephone-basedservicestoTCCslargecustomerbase.TheBUconsistedofthreesubunitstheFront-LineOperationsDepartment,theSalesDepartment,andtheSystemsDepart-ment.Recognizingtheopportunityintheburgeoningcallcentermarket,theseniormanagementinchargeoftheBUmadethestrategicdecisionfortheBUtoseparatefromTCCandstartoutasanindependententity.TT&TwasestablishedonJune5,2001.Thenewarrangementwouldbringaboutmoreautonomyintermsofflexibilityindecisionmaking.TT&Tsseniorman-support),outboundsales(e.g.,telemarketing),andoutboundagementformulatedfourmajorgoals.TheDirectorofBU4,oneservice(e.g.,debtcollectionandmarketsurvey).oftheBUsatTT&T,explainedthegoalsasfollows.Themajorityofthecompanysresourceswereallocatedtoinboundoperations,whichprovidedtheorganizationwiththeFirst,tocontinuethecloserelationshipwithTCC,primarysourceofrevenue.whichhadaccountedfor80%ofourincome.Second,toachieveandsustainoperationalefficiencybycon-Weputmoreemphasisoninboundprojectssincesolidatingandstrategizinginternaloperations.Third,theygeneratedmajorportionsofourrevenue.Insuchtodiversifyfromrelyingentirelyontelecommunica-projects,wewouldensurehighqualityservicetosat-tionsclients.Lastly,toincreasetheratioofoutboundisfyourcustomerseventhoughitwouldutilizeaddi-businessinourrevenuescheme,asinboundofferingstionalresources.Insomesituations,thenatureandsizehadonlylimitedmargins.(DirectorofBU4,June8,ofourprojectsdifferedsignificantlywhichinevitably2004,TT&T#18.)resultedindifferentlevelsofattentiontoservicequal-ity.Forexample,inoutboundprojects,wepaidlessTT&Texpandeditsrangeofclientsfromsolelytelecommu-attentionandconsideredqualitycontrolaslessim-nicationscompaniestoorganizationsintheinsurance,airline,portantascomparedtoinboundprojects.(DeputyDi-government,transportation,andinformationtechnologysectors.rectorofDevelopmentandPlanning,April27,2004,ThemarketexpansionplanisshowninFig.1.TT&T#01.)Furthermore,severalnewserviceproducts,suchasdebtcol-lectionandtelemarketing,wereincludedtosatisfythediverseTT&TorganizeditselfintofiveBUs(seeTableIII).Whileneedsofitsclients.TT&TcategorizeditsserviceproductsintoBU1,BU2,andBU3focusedoninboundoperations,BU4dealtfourtypes(seeFig.2):inboundsales(e.g.,order-takinghotline),withbusinessdevelopment,andBU5specializedinoutboundinboundservice(e.g.,customerqueryhotlineandtechnicaloperations. PANetal.:DYNAMICSOFIMPLEMENTINGANDMANAGINGMODULARITYOFORGANIZATIONALROUTINES805Fig.3.EightkeyoperatingroutinesidentifiedinTT&T.Fig.5.ThreemajorpillarsofthecallcenteroperationatTT&TthatsupportthefrontlineoperationandtherespectiveoperatingroutinesinvolvedineachFig.4.TT&Tskeyfunctionalmodules.pillar.1)KeyFunctionalActivitiesWithinTT&T:Facingincreas-Wereckonedthatbygroupingthesekeyfunctionalingclientdemandsandmoresophisticatedcustomerservices,activitiesaccordingtoworkfunctionsthattheywereTT&Thadtobetterintegrateitsexistingclientandproductport-serving,wecouldplananddesigntheworkactivitiesinfolios.Withtheneedtodiversifybeyondthetelecommunicationnewprojectsmoreeffectivelyandefficiently.(Directorindustrytopursueotherexternalopportunities,TT&TfacedtheofBusinessUnit1,June1,2004,TT&T#12.)challengesofrapidlyseekingspecificknow-howsaboutnewmarketsandproducingalternativeproductconfigurationstoat-Fig.4showsthatbothHumanResourcesPlanningandtractandsatisfydiversifiedclients.TheorganizationwasforcedIT&TelephonySystemPlanningroutinesarecombined,andtoreexamineitsdailyoperationalactivitiestoassesshowitnamedasafunctionalmoduleservingtheresourceplanningcouldbestconfigureitsactivitiesandserveitsclientsbothef-function.Also,theCustomerSatisfactionSurvey,Voicefectivelyandefficiently.EightmajortypesofactivitieswithinRecordAuditing,andSpecialCaseTrackingroutinesserveditsdailyoperation(i.e.,operatingroutines)wereidentifiedbythequalitycontrolfunctionthathelpedtomonitortheleveloftheseniormanagement(refertoFig.3).servicequalitydeliveredtocustomers.Ingeneral,TT&Tsdailyoperationinvolvedthreemajorpillars:resourceplanning,Basically,theseactivitiesrepresentedthemainfunc-frontlinemanagement,andqualitycontrolthattogethertionsofthecallcenteroperationinTT&Twhichin-supportthefrontlineoperation.Fig.5showsthethreemajorcludedfront-linemanagement,resourceplanningandpillarsofthecallcenteroperationatTT&Tandtherespectivequalitycontrolactivitiesthatsupportthefront-lineop-operatingroutinesinvolvedineachpillar.eration.(DeputyDirectorofDevelopmentandPlan-Comprehensivedocumentationofthestandardoperatingpro-ning,April27,2004,TT&T#01.)ceduresforeachdepartmentallowedthediffusionofknowledgewithintheorganization.Furthermore,thesuccessfulintegrationEventhoughtheseactivitieswereimportanttoTT&TsofamyriadofsystemsandinfrastructuretosupportTT&Tsdailyoperation,notallwereincludedineverysingledailyroutineactivitieswasalsocrucialtotheorganizationsde-businessprojectsincethenatureofeachprojectmightvelopmentofitscapabilities.TT&Thadtosetupacomplexdiffer,especiallywiththediversifiedclientportfolio.telecommunicationssysteminfrastructuresuchasinteractive(ChiefConsultantofDevelopmentandPlanning,Mayvoiceresponsetechnology,computertelephonyintegration,au-24,2004,TT&T#11.)tomaticcalldistribution,andprivatebranchexchangesystemstoTheeightkeyoperatingroutinesweregroupedaccordingtooptimizeoperationalefficiency.TheSystemsDepartmentalsoseparatefunctionsthattheywereservingandthesegroupingsbuiltontheinfrastructuretocreateseveralcustomizedapplica-werecalledfunctionalmodules(seeFig.4).tionstomeettheneedsofitsclientsfromvariousindustries. 806IEEETRANSACTIONSONENGINEERINGMANAGEMENT,VOL.54,NO.4,NOVEMBER2007B.Phase2:FocusingonStrategyDevelopmentAsacallcenter,ourassetscompriseouremployees(September2002–June2003)skillsandknowledge.Therefore,itisnecessarytofullyutilizethesevaluableassets.(SeniorManagerfromInthisphase,TT&Tfocuseditseffortsonstrategydevelop-BU2,May11,2004,TT&T#07.)ment.Theaforementionedthreemajorpillarswerekeystruc-turesandfunctionalitiesforTT&Tsdiversifiedprojects(seeSucharrangementsenhancedTT&TsoperationalefficiencyFig.5).Thesepillarsweredeterminedbytheseniormanage-intermsofbetterarrangementofshiftwork.Theyalsoimprovedmentandwereidentifiedbyexamininghowthesestructuresandjobsatisfactionastherateofattritionwasreducedby20%duefunctionalitieshadbeensupportingTT&Tspastandpresenttolowerlevelsofjobstress.operations,andadaptingcontinuouslytochangingclientre-AtTT&T,theSystemsDepartmentsmajorroleinvolvedde-quirements.WhenaskedhowTT&Tdecidedthatthesetofkeyvelopingapplicationprograms,whichwereusedtofacilitatestructuresandfunctionalitieswasviewedasanoptimalsolution,projectworkflows.ToaidthemaintenanceanddevelopmenttheDeputyDirectorofDevelopmentandPlanningexplainedtheofinformationtechnologyandtelephonysystems,TT&Tcon-following.structedaflexiblemodulartechnologicalplatform.TheDeputyDirectoroftheSystemsDepartmentexplainedthefollowing.Throughlearningfrompastexperiencesandourim-provedknowledgeofthemarketconditions,weiden-Amajorbenefitofthemodularplatformisthatalltifiedthethreepillarsasthemajormodulesformostapplications(orprograms)couldeasilybepluggedin(ifnotall)ofourprojectactivities.Ourprogress(e.g.,andout.Adjustmentscouldbeperformedwithinapar-increasedmarketpenetrations)sofarcouldbeastrongticularapplicationwithminimummodificationtoitsindicationthatourofferingswereworkingverywell.interfacewiththeplatform.(DeputyDirectoroftheNevertheless,wealsoacknowledgedtheneedtocon-SystemsDepartment,June8,2004,TT&T#17.)stantlyadjustingthesekeystructuresandfunctionali-tieswhenevertheneedarisesinthisdynamicenviron-Furthermore,TT&Tchosetoretainitsin-houseSystemsDe-ment.(DeputyDirectorofDevelopmentandPlanning,partment,whichtoitsseniormanagerswascrucialtotheorga-April27,2004,TT&T#01.)nizationsoperationalperformance.In-housedesignandcodinghadimprovedTT&Tsresponsetoclientsrequestsfromanav-Toadvanceprojectcompletion,coremodulesfrompreviouserageof3045daysto1520days,dependingonthecomplexityprojectswereoftenreused.Forexample,whenawelcomecallleveloftherequests.projectwassetupforanewclient,suitablepartsfromsimilar2)FrontLineManagementFunction:Frontlinemanage-projectswereidentified.Thereuseallowedthecomplexityandmentinvolvedkeycustomerserviceactivities.Generally,frontcostinimplementingnewprojectstobereduced,asonlyperiph-lineprocedureswouldvaryacrossprojects.However,therewereeralalterationswererequiredtotailortheprojectstosuitclientsomeservicemodulesthatcouldfitintomostsalessituationsneeds.AsupervisorfromBU5describedhowshepreparedasuchasgreetingthecustomers,endingthecall,andafter-newproject.callclosures.Furthermore,TT&ThadengagedanEnglishinstitutionthatspecializedinbehavioralresearchtojointlyde-Iusedoneofthewelcomecall;projectsasmypre-velopasetofcustomerinteractiontechniques.Inaddition,sev-definedformat.AllthatwasleftformetodowastoeralmeasureswereusedtoevaluateCSRsperformances.Thesecustomizethetelephonescriptsandresetthestandardperformancecriteriaincludedqueuingtime,responsetime(du-valuesofkeyperformanceindex.(Supervisorfromrationofaphonecall),CSRsengagementrate,andseveralBU5,June21,2004,TT&T#22.)others,andwererecordedinrealtime.Theassessmentwasfun-1)ResourcePlanningFunction:TT&Twouldformerlydamentaltoseniormanagementfacilitatingbettersupervisiononlyrecruitpotentialjobseekerswhopossessedtheappropriateandmanagement.TheGeneralManagerofCustomerServiceabilitiesandpersonalitiesfortypicalservice-orientedfunctions.commentedthefollowing.Beforestartingwork,newemployeeshadtomasterbasiccus-tomerserviceskillsandanyotherindustry-specificknowledge.Afterweimplementedreal-timeassessment,thenum-TheDirectorofBU1estimatedthefollowing.berofcustomercomplaintsreducedfrom35tolessthan10permonth.(GeneralManagerofCustomerCustomerserviceknowledgeaccountsfor80%ofanService,June7,2004,TT&T#15.)agentsskillsetwhileindustrialknowledgecomprisesonly20%.(DirectorofBU1,June1,2004,TT&T#12.)3)QualityControlFunction:TT&Timplementedseveralqualitycontrolmeasuresthataimedtoimprovefrontlineopera-Theseniormanagementendeavoredtopromotemultiple-skilltionthroughthedeploymentofsystematicanalyticaltools:cus-trainingandinterfunctionaljobrotationsamongstaff.Generally,tomersatisfactionsurveys,servicequalityaudits,phonemon-CSRshadtoworkinareasoftheirprimaryexpertiseandalsoitoringsystem,andcasetrackingprocedures.Theresultswereservedasbackupforotherhotlineswheretheirsecondaryknowl-compiledasperformanceevaluationreports,wheretheperfor-edgewasrelevant.TheSeniorManagerfromBU2commentedmancesofCSRswereevaluatedandanalyzedbothquantita-asfollows.tivelyandqualitatively.Theorganizationalsoputinplacea PANetal.:DYNAMICSOFIMPLEMENTINGANDMANAGINGMODULARITYOFORGANIZATIONALROUTINES807policyofinvestigatingandanalyzingissuesthataroseindailyimproveastheorganizationlearnedfromeachiterativeuseofoperations.TheManagerofBU1explainedthefollowing.itsprototypes.Consequently,theneedforalterationsdeclinedtremendously.Forexample,theGeneralManagerofCustomerWeidentifyproblemsintheexistingoperationsandServicecommentedthefollowing.tracethesources,basedonpriorexperiencesandper-formanceevaluationreports.(ManagerofBU1,MayThecustomersurveyreportsweobtainfromcus-18,2004,TT&T#08.)tomersallowustoreducealterationworkby25%.(GeneralManagerofCustomerService,June7,2004,C.Phase3:InstitutionalizingtheStrategyTT&T#15.)(June2003Onwards)Duringsystemandprocessredesigns,employeefeedbackHavingidentifiedanddevelopeditskeyfunctionsinthepre-wasimportanttodevelopingoptimalandnewuser-friendlyor-cedingphase,TT&Tstrengthenedandcentralizeditsopera-ganizationalroutines.TT&Tappliedthesamecapabilitiestotionalprocessesbyinstitutionalizingthestrategicsupportfunc-deliverdifferentservicestodifferentindustries,leveragingitstions.TT&TrestructureditsorganizationbycreatinganewBU.expertisetodeliverawiderrangeofservicestothesameclientTheDevelopmentandPlanningDepartmentbecameBU6,andwhileservingdifferentclientsinsimilarindustries.itsmaintaskwastocoordinatetheoperationsofBU1,BU2,andBU3.TT&TalsoaimedtoimproveitsoperatingroutinesV.CONSEQUENCES:MAJORTRANSFORMATIONOFTT&TSbyconductingseveralprocessimprovementmeetings.Initspro-BUSINESSOPERATIONcessimprovementinitiative,TT&Treliedonthejointeffortsofseveraldepartmentstoimproveitsprocesses.TheChiefCon-Overall,TT&Tmanagedtotransformitselffromanin-housesultantofDevelopmentandPlanningcommentedthefollowing.customerservicedepartmenttoaprivatecallcenterservingclientsfromawiderangeofindustries.TheentirebusinessTheprocessimprovementmeetingisaweeklyevent,transformationwasagreatsuccess:1)TT&Tsclientbaseex-whererelatedpersonnelwouldexamineongoingpandedfromasingleindustryin1998toeightindustriesin2003.projects,andexploreopportunitiestoimprovetheop-ThelistofclientsincludedmajorcorporationssuchasToyota,erations.(ChiefConsultantofDevelopmentandPlan-Microsoft,andmanyothers.2)InTaiwan,TT&ToutpaceditsningDepartment,May10,2004,TT&T#04.)rivalsintermsofservicequalityandoperationalefficiency.Re-sultsfrominternalreportsindicatedthatTT&TsmarketshareExistingprocesseswerereexaminedandnewprocesseswereintheTaiwancallcenterindustryrosesharplyfrom2%to38%implemented.Employeesweremotivatedtocontinueimprovingwithinsixyearsofoperation.3)TT&Thadconcreteoverseastheircurrentworkroutineprocesses,andmanagerswereopenexpansionplans.Asitsfirststep,TT&Tboosteditsbrandnametodiscussingnewideaswiththeirsubordinates.Thispositiveinthecallcenterindustrybypublishingabookseriestoprop-attitudetowardcontinuousimprovementcanbeowedlargelyagateitscustomerserviceconceptsandbestpracticesincalltoTT&Tsattractiveincentivescheme.Forexample,toencour-centeroperations.Fig.6depictsatimelinedisplayingmajoragecontributionofnewideas,eachemployeewouldobtainevents(toillustratethedynamismincallcenterscontext)incashrewardsofuptoUS$200foranypositiveideaheorsheTT&Tscapabilitydevelopmentprocess.proposed.Furthermore,TT&Tsseniormanagementwascom-mittedtosupportinganopenlearningenvironment,wheretheVI.DISCUSSION:REVISITINGTHEFINDINGSINLIGHTOFTHEexperiencesofitsemployeeswerehighlyvalued.Specialmul-PROCESSOFMODULARIZATIONtilevelmeetingsspanningvariousfunctionaldepartmentswereconducted,whereemployeeswereencouragedtosharetheirex-BasedontheTT&Tcasestudyandthefindingsthatemerged,periencesandideas.TT&Tsmiddlemanagementwasencour-wedevelopedaprocessmodelofmodularization,asdepictedinFig.7.3Asourmodelsuggests,modularizationisacom-agedtoviewtheoperationsfromawiderandmorestrategicperspective,andtheyservedasspokespersonsfortheirindivid-plexprocessinwhichanorganizationskeyfunctionalactivitiesaredecomposedintospecificoperatingandstrategicroutines4ualdepartments.Suchsharingofinformationwouldresultinthecreationofneworganizationalknowledgebasedontacitdepart-thatarereconfigurediterativelyduringtheprocessofcapabil-mentalexperientialknowledgeamongmanagersduringtheiritydevelopment.Interestingly,itisnotedthatTT&Tscapa-discussions.Absorptionofoperation-levelinformationwouldbilitydevelopmentprocessislargelyconsistentwiththethreealsoensurethattheseniormanagementhadup-to-dateinforma-stagessuggestedbypreviousstrategyliterature:founding,de-tiononissuesrelatingtodailyoperations.velopment,andmaturity[19].Forexample,atthefoundingAtTT&T,experimentation,prototyping,andsystemtestingstage,TT&Tpreconditionedtheemergenceofcapabilitiesandweremechanismsusediterativelytocontinuouslyimproveop-seekopportunitiesforrevenueexpansion.Atthedevelopmenterationsanddeliveryofservices.TT&Tsstrategyofreusingpartsofexistingprocessesduringnewprocessdesignsprovided3Inthispaper,werefertomodularityoforganizationalroutinesandcapabil-usefulvalidationandofferednewopportunitiesforimprove-ities,andhowtheyareachievedattheorganizationallevel.ment,astheseroutineprocesseswereviewedasworkingproto-4Inthisstudy,weconceptualizeorganizationalroutineasfallingintotwotypes:operatingroutine,whichaccountsfortheoperationalfunctionsofatypesforfutureprojects.Thefitbetweenclientsrequirementsfirm,andstrategicroutine,dedicatedtothemodificationofoperatingroutine,andtheorganizationsdeliveryofcustomerservicecontinuedtoespeciallyinahigh-velocitymarket[53]. 808IEEETRANSACTIONSONENGINEERINGMANAGEMENT,VOL.54,NO.4,NOVEMBER2007Fig.6.TimelinedisplayingmajoreventsinTT&Tscapabilitydevelopmentprocess.portingTT&Tspastandpresentoperations,andcontinuouslyadaptingtochangingclientrequirements.Usually,inacomplexsystemoforganizationalroutines,theconceptualizationofmod-ulesinvolvesaprocessthatisbasedontheidentificationofmod-ulesbysegmentingtheentiresystem[27].Afunctionalmoduleisdescribedasperformingaspecificfunctionthatsuggeststhatthecollectiveroleofagroupoforganizationalroutinesandeachproduct,whethertangibleorintangible,comprisesfunc-tionsthatdistinguishoneproductfromanother[36].Theeightoperatingroutinesidentified(seeFig.3)weregroupedintothreefunctionalmodules:resourceplanning,frontlinemanagement,andqualitycontrol(seeFig.5).Theoperatingroutinesofemer-gencyreaction,systemproblemescalation,andfrontlinesupervisordutywouldbeagoodexampleofafunctionalmod-ulethatperformedafrontlinemanagementfunctionatTT&T.Havingidentifiedthethreefunctionalmodules,TT&Tmixedandmatchedthesemodulesandformulatedfunctionalarchitec-Fig.7.ProcessmodelofmodularizationderivedfromthecaseofTT&T.turesforindividualbusinessprojects.Thesefunctionalarchitec-turescanbeviewedasTT&Tsoveralloperatingstructuresandfunctionalities[43]forcarryingouteachindividualbusinessstage,theorganizationcontinuouslyadjustedandadaptedtoproject.Afunctionalarchitectureisconsideredadesignforthetheenvironment,capturedandexploitedexistingorganizationalarrangementandinteroperationoffunctionalmodulesthatto-knowledge,andprovidedtrainingandincentivestoenhancegetherprovidetheoverallfunctionalitiesdeliveredbyaservicestrategicplanning,flexibility,andcommitment.Atthematurityproduct[46].Themixingandmatchingoffunctionalmodulesstage,TT&Troutinizeditsprocessesandleveragedtheexistingisimportant[21]sincetheprocessmayhelptoformulateanknow-how.Also,thekeyresourcesusedinTT&Tscapabilityoptimalfunctionalarchitecturethatcouldrespondtoclientdevelopmentprocesscanbecategorizedasleadership,orga-demandsinthemostefficientmanner[45].Besides,asone-nizationculture,technology,andlong-termvision.Giventhatform-fit-allserviceoftenfailstomeetdiversifiedclientsneeds,thismodelwasinductivelyderivedfromtheTT&Tcasestudyafixedarrangementofresourcesandprocessesmaypreventthedata,wepresenthowtheexistingliteraturecorroboratestheorganizationfromrealizingthefullbenefitsofmodularity[27].modelandhowthemodelenrichesourpresentunderstandingAfterall,modularityinorganizationalroutines,asmanifestedinofmodularization.functionalarchitectures,callsfordifferentconfigurationsofor-ganizationalresourcesthatcangeneratenewwaysofdevelopingA.TheEvolutionofOperatingRoutinesintheProcessorganizationalcapabilities[36].ofModularizationTheselectiondecisionwaslargelybasedontheorganizationsFig.7suggeststhattheprocessbeginswiththeidentificationknowledgeofitspastprojectexperiences.Anexampleofafunc-offunctionalmodules.tionalarchitectureinTT&TwouldbetheamalgamationoftheThesemodulesweredeterminedbytheseniormanagementthreefunctionalmodules:resourceplanning,frontlinemanage-andwereidentifiedbyexamininghowtheyhadbeenbothsup-ment,andqualitycontrolthatmadeupthekeyarchitecturesfor PANetal.:DYNAMICSOFIMPLEMENTINGANDMANAGINGMODULARITYOFORGANIZATIONALROUTINES809theentirecallcenteroperation(seeFig.5).Nevertheless,notallindicatorsandaspecialcasetrackingandanalysisfacilitywereprojectsrequiredallthreefunctionalmodules.Forexample,theusedwithinfrontlinemanagement.functionalarchitecturesforbothinboundandoutboundprojectsFollowingtheevaluationphase,ourmodelindicatesthatweredifferent.Ininboundprojectswhosemainfocuswastolearningoccursattwolevels:modulelevelandarchitectureconductsalesordertakingandanswercustomerqueries,thelevel.Module-levelknowledgefocusesonalternativeskillsorfunctionalmoduleofqualitycontrolwouldtakecenterstage.technologicaladvancementsthathelptoturnfunctionalmod-However,inoutboundprojects5whosefocuswasonconduct-ulesintobetterperformingmoduleswithinanexistingfunc-ingtelemarketingandmarketingsurveys,qualitycontrolwastionalarchitecture[37].ExamplesinthecaseofTT&Tthatincludedonlypartiallyintheprojectsfunctionalarchitecture.demonstratelearningatthemodulelevelincludetheknowl-Thisisbecause,insomecases,projectsmightbesmallerinscaleedgegainedbytheworkersininterfunctionaljobrotationsthatandcouldcompromiseonthequalityaspectofthesurveyscon-helpedeasetheprocessofarrangingshiftworksinceworkersducted.Giventheprojectnature,thecompleteinclusionofthehadmasteredadditionalskills,andcouldtherefore,handlemorequalitycontrolmodulecouldbecometoocostlyandredun-diversifiedjobs[35].Thiscouldhelpimprovehumanresourcedant.Itisnotedherethatmoduleswithinfunctionalarchitecturesplanningactivities.Also,theSystemsDepartmentbuiltonex-storetransactivememoryofanorganizationsoperationthatmayistingsysteminfrastructureanddevelopedseveralcustomizedeasethecoordinationofvariousfunctionalmodules[10]andal-applicationstosuittheindividualneedsofthediversifiedportfo-lowefficientresourcemanagement[36].Forinstance,TT&Tlioofclients.Architecture-levelknowledgeconcernsbusinessreusedsimilarmodulesacrossarangeofprojects,whichhelpedenvironmentchangesinthelonghaul,whichmayresultinasavesignificanttimeandswitchingcost[51]duringtheprocessnewfunctionalarchitecturenewwaysofmoduleconfigura-ofarchitecturebuilding.Thewelcomecallprojectwassetuption[37].Forexample,inthecase,theneedtoservecustomersforanewclientinvolvingonlyperipheralalterationsasduplicatebeyondthetelecommunicationsindustryhadforcedtheorgani-partsfromsimilarprojectswereused.Furthermore,TT&Talsozationtoreconfigureitsfunctionalarchitecturesinaccordanceadoptedstandardinterfacestoaidthereconfigurationprocesswiththerequirementsofclientsfromvariousindustriesbyat-withinorbetweenmodules.Forexample,inthemaintenancetaching,detaching,andcombiningitsvariousfunctionalmod-anddevelopmentofinformationtechnologyandtelephonysys-ules.Ingeneral,knowledgeobtainedatbotharchitectureandtems,TT&Tconstructedastandardmodulartechnologicalplat-modulelevelsiscrucialtorenewalanddevelopmentoforga-formthatallowsallapplications(orprograms)tobepluggedinnizationalroutines[11]especiallysincerepeatedpracticeandandouteasily.Adjustmentscouldalsobeperformedwithinaincrementallearningfromsmallmistakeswouldeventuallyleadparticularapplicationwithminimummodificationtoitsinter-tocapabilitiesthatarecomplex,difficulttoimitate,andrespon-facewiththeplatform.sivetochange[13].Besides,itiscrucialtostudyorganizationallearningmechanismsthatrelateorganizationalknowledgetoB.TheEvolutionofStrategicRoutinesintheProcesscapabilitydevelopment[53].ofModularizationAfterobtainingnewknowledgeatmoduleandarchitecturelevels,ourmodelsuggeststhatthestructuresandfunctionalitiesThenextphasesuggeststhatthemodularizationprocessin-oftheoperatingroutineswouldberenewedandreconfigured.volveshowfunctionalmodulesandarchitecturesevolveinre-Strategicroutinerepresentsthemodificationofoperatingrou-sponsetofeedbackandstimulifromtheexternalenvironmenttinesthroughwhichfirmsachievenewresourceconfigurations(i.e.,businessmarkets)throughexecutioninthemarketplace.especiallyinvolatilemarkets[13].AnexampleofhowoperatingThisisinevitablesince,indynamicmarketplaces,thereareandstrategicroutinescanbereconfiguredinthecaseisthroughrarelyanypermanentandstablefitsbetweenbusinessopera-surfacingandresolvingoperationalissuesduringweeklypro-tionsandtheirexternalenvironments[47].Toobtainsuperiorcessimprovementmeetings.Duringthemeetings,variousheadsperformances,organizationsoughttomaintainadynamicfitofdepartmentsexploredalternativeprocessandresourcecon-betweenthetwoentities[14].Toassessthefit,organizationsfigurations,anddevelopedsolutionstoaddresstheoperationalneedtoconductanevaluationprocessthataimstoidentifytheissues.Throughoperationalenhancement,suchfeedbackanddegreetowhichtheoperatingroutinesandthebusinessenviron-discussionscouldleadtoimprovementattheoperationallevelmentarecongruous[2].Evaluationisusefulasexecutioninthe(infiltratedintooperatingroutines)asmodulelevelknowledgemarketplacemayleadtotheidentificationofdiscrepanciesorwasappliedtorefinefunctionalmodulesofoperatingroutines.gaps[47].Besides,organizationsdolearnfromtrial-and-errorForexample,oneimprovementmadeasaresultofthediscus-processes[4].InthecaseofTT&T,theorganizationdevotedsionwasthespeedofcustomerresponse.Thiswasachievedbycontinuouseffortstoevaluatingpotentialmismatchesbetweenempoweringfrontlinestafftomodifyexistingtelephonescriptsitsoperatingroutinesandthemarketexpectations.Theorgani-whenevertheneedarisessincetheyaretheoneswhoidentifyandzationusedbothquantitativeandqualitativemethodstoevaluatemanagemistakesduringthereal-timeproductionandconsump-theoutcomesoftheexecutionofitsoperatingarchitecturesintionofcustomerservice[6].Throughstrategicenhancement,businessprojects.Forexample,toassesswhethercustomerser-thefeedbackanddiscussionscouldleadtoprocessrationaliza-vicewaswellreceivedamongclients,asetofkeyperformancetion,beforetheyareactivatedandroutinizedthroughoutthe5RefertoFig.2fortheexplanationsofthenatureofinboundandoutboundorganization[1].Inthisenhancementprocess,thearchitecture-projects.levelknowledgewasappliedtorefinefunctionalarchitectures 810IEEETRANSACTIONSONENGINEERINGMANAGEMENT,VOL.54,NO.4,NOVEMBER2007Fig.8.Detailedexplanationofthemodularizationprocess.ofoperatingroutines.AnexamplewouldbeTT&TssuccessinTABLEIVSUMMARYOFKEYCONCEPTSANDTHEIRDEFINITIONSADOPTEDINTHEstrategizinganddevelopingcapabilitiestodeliverawiderrangePROPOSEDMODELofservicestothesameclientwhileservingdifferentclientsinsimilarindustries.Overall,theloosecouplingrelationshipamongvariousfunc-tionalmodules[21],[30],[37]mademodularizationpossibleandprovidedTT&Twithflexibilityandagilityduringcapabil-itydevelopment.Byimplementingandmanagingmodularityoforganizationalroutines,thishasprofoundimplicationsfortheorganizationalprocess.Itsetsinplaceasystemforcontin-uousimprovementoftheroutinizedactivitiesandleveragingthemodularstructurestoexploittheeconomicsofsubstitu-tion[9].Fig.8illustratesaclearexplanationofthemodular-izationprocess.TableIVprovidesasummaryofkeyconceptsandtheirdefi-nitionsadoptedintheproposedmodel.itclearthatapatternedsequenceofphasesdoestakeplaceduringmodularization.ThemodelmayserveasthebasisforVII.THEORETICALANDMANAGERIALIMPLICATIONSfurtherinvestigation.Forresearchers,oursrepresentsoneoftheTheprocessmodelofmodularizationpresentedinthispa-firstprocessmodelsthatdescribeandanalyzehowmodular-perhassignificantimplicationsforresearchersandpracti-ityoforganizationalroutinesareimplementedandmanagedtioners.Whilepreviousstudieshavesuggestedthatsuccessfulduringcapabilitydevelopment.Whilepreviousstudieshaveintroductionofmodularsystemsrequiresfundamentaltechno-establishedthepropositionthatmodularityenhancesflexibil-logicalandorganizationalreorientation[51],ourmodelmakesityoforganizationalsystemsinthefaceofdynamicmarket PANetal.:DYNAMICSOFIMPLEMENTINGANDMANAGINGMODULARITYOFORGANIZATIONALROUTINES811conditions[24],[35],thereisnotasingleprocessmodelthatuseofsecondarydata,wehaveidentifiedkeyactivitiesthatformexaminesthemodularizationprocess.Thepapercontributesathemechanismsoftheentiremodularizationprocess.Wehavenovelprocessmodelofmodularityanditsinteractionswithca-donesobyexamininghowthecaseorganizationreorientateditspabilitydevelopmentprocessesatthefirmlevel.Thisisanim-resourcestomeetmarketdemands.TheTT&Tcasehasprovidedportantcontributiontowardthedynamiccapabilitiesliteratureanopportunitytodemonstratehowtoimplementandmanagesinceissuesonhowfirmscouldreducetheirtimeinestablishingmodularityoforganizationalroutinesduringcapabilitydevel-astrategicdirectionordiffusingandgrowingastrategyrapidlyopment.Thefindingsofthisstudy,however,shouldbeviewedthroughthefirmhasremainedunaddressedtillnow[29].Ourwithinthecontextofitslimitations.First,wecouldnottimeprocessmodelofmodularizationcouldprovidesomeanswerstheinterviewstocoincidewiththedecisionsbeingmadeintheinthearea.organization,andhadtorelyinsteadontheintervieweesretro-Astheprocessmodelpresentedinthispaperisgroundedspectiveviewofthedecisions.AdisadvantageofretrospectiveinthecapabilitydevelopmentpathasrevealedintheTT&Tresponsesisthattheymightbeaffectedbyerrorsofrecall[17].case,aspectsofthismodelshouldgeneralizetoothercasesofWehaveattemptedtominimizeerrorsofrecallbyhavingkeycapabilitydevelopment.However,moreempiricalworkisnec-informantswhowereeitherintheseniorormiddlemanagementessarytotesttheapplicabilityofthemodelinothersettings.andhadbeenpersonallyinvolvedinthecapabilitydevelopmentThisisespeciallysosinceourinvestigationhasfocusedonaprocess.Thesecondlimitationconcernsthegeneralizabilityofdevelopingcountry,andgiventhenatureofmarketcompeti-asinglecasestudy.HerriottandFirestone[20]suggestthepref-tion,webelievethatindevelopedcountries,firmsmayhaveerenceofmultiple-casestudydesignoversingle-casestudyde-tobeevenmoreflexibleandinnovative.Researcherscouldsignforobtainingmorecompellingandrobustdata.However,compareifthereisvastdifferenceintermsofmodulariza-wepositthatonemustfollowamoreopportunisticapproachtionphasesinthetwosettings.Furtherresearchcouldalsoevenifthatmeanssettlingforasinglecasestudy[23,p.447]studywhenspecificresourceswillbemosteffectiveinim-especiallywherequalityandin-depthdataaredifficulttoobtain,plementingmodularityoforganizationalroutines.Forexam-asinthisstudy.Besides,asinglecaseisalsousefulintheoryple,whetherresourcesaremorelikelytobetransformedintobuilding[12].Despitethelimitations,webelievethatourstudyroutinemodulesduringtheearlyphaseofcapabilitydevel-hasproducedaveryusefulprocessmodelofmodularizationopment,orwhenthedevelopmentandinstitutionalizationofthatoffersavocabularyforframingexperiencesandlearningstrategyhavetakenplace.Finally,moreresearchshouldalsofromthecapabilitydevelopmentprocessintermsofhowre-explorethedegreeofmodularizationinfluencedbyenviron-sourcescanbedevelopedandtransformed.Webelievethatitmentalfactors.Specifically,futureresearchcouldexplorehowisimportantfororganizationstoobtainadeeperunderstandingorganizationsmayadjusttheirmodularityimplementationstrat-onhowtoembracethemodularityconceptduringcapabilityegyaccordingtotheirstrategicpositioninginacompetitivedevelopment;suchunderstandingwouldshortenthetimeanmarket.organizationwouldneedtoestablishastrategicdirectionandForpractitioners,thisstudyprovidesusefulinsightsintodiffuseastrategyrapidlythroughitsranks.howtomanagemodularityoforganizationalroutinesduringcapabilitydevelopmenttoachievesustainablecompetenceinfast-movingmarketplaces.TheTT&TcaseunderscorestheneedAPPENDIXAformanagerstoadopttheconceptofmodularityasastrategicLISTOFINTERVIEWEES,JOBPOSITIONS,INTERVIEWDATES,tooltoenableandshapethedevelopmentoforganizationalrou-ANDTRANSCRIPTNUMBERStineprocesses.Thefunctionalmodulesandarchitecturescanserveasadaptableplatformsfordeployingvarietyandchangeduringcapabilitydevelopment.Furthermore,itisunlikelythatmanagerswillbeconstantlymakingvastchangestotheiroperat-ingandstrategicroutines;therefore,itisimportantformanagerstogainsomeawarenessofhowtheseorganizationalroutinesmayevolve.VIII.CONCLUSIONThepurposeofourpaperhasbeentooutlineagroundedpro-cessmodelofmodularizationduringorganizationalcapabilitydevelopment.Bydrawingonthecasestudyofthecapabilityde-velopmentexperienceofacallcenterinTaiwan,wehavedevel-opedaprocessmodelthatdepictsmodularizationasacomplexprocess,wherebyorganizationskeyfunctionalactivitiesarede-composedintospecificoperatingandstrategicroutinesthatarereconfigurediterativelyduringtheprocessofcapabilitydevel-opment.Throughinterviewswithrelevantstakeholdersandthe 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