China is leading a revolution in the way that products are made, industries integrate, and supply chains fuse. It's not the kind of revolution that makes headlines, because its innovations aren't the kind of innovations you're used to seeing. Flashy new products with newer and better features aren't the focus here. Instead, there's fundamental change in the way components form products in the first place.

It's called "architectural innovation" and at its most basic level is the idea that you can take an existing product or process, break down its components, and modularize them. This might seem like mere reverse-engineering and mimicry, but there's a crucial difference - by modularizing components you can also standardize them across an industry. That means you can establish a robust supply chain of components and produce goods on a massive scale incredibly quickly.

Since the year 2000, for example, China's manufacturing capacity for wind and solar energy production has quadrupled despite the fact that the two industries have significantly different labor needs, technologies, and supply chain components. Political scientists Jonas Nahm and Edward S. Steinfeld show in their research that this kind of growth can't be attributed to a simple combination of inexpensive labor and national subsidies. Architectural innovation, even when it's indirect, helps by creating a culture of interoperability and knowledge-transfer among disparate industries.

What does this mean for the Industrial Internet? With a future driven by software-defined machines leveraging big data on massive scales, creating modular devices that are interoperable and standardized will be vital for the Industrial Internet's success. China's architectural innovation serves as a shining example of the benefits in scale, cost, and time that comes with creating common platforms and sharing knowledge across industries.

About the author

Suhas Sreedhar

Strategic Writer at GT Nexus