When the founders of Palm Computing set out to create what would become history's hottest computer gadget, they didn't go it alone. Instead, they wrote detailed specifications for a hand-held electronic organizer called the Pilot--then they invited other companies to create parts of the product that eventually sold more than 1 million units in its first 18 months.
One company that contributed to the project was The Windward Group, a 75-person software developer in Los Gatos, California, that created desktop applications with a link to the Pilot. "We decomposed the system into chunks which we developed on their behalf," president Doug Engfer explains.
The system benefits both Palm and those who build the pieces and, in many cases, sell them independently, says Donna Dubinsky, president of Palm Computing, now a subsidiary of networking giant 3Com Corp. "The metaphor that springs to mind is the Russian Matreshka dolls, where each layer takes from the layer above and gives to it as well," she says.
The strategy is called modularity, and it's the up-and-coming thing in business, according to Carliss Baldwin, a Harvard Business School professor and co-author of the forthcoming book Design Rules: The Power of Modularity (MIT Press). The message of modularity, says Baldwin, is that "you don't have to do everything to be important."
Mark Henricks is an Austin, Texas, writer specializing in business topics.