For many years, the people designing, managing, and delivering user experiences have pursued the LEGO ideal – making experiences modular.
Content teams have aimed to make content modular so that it can be assembled in multiple ways. UI design teams have worked to make user interfaces modular so they can be assembled in different ways as well.
More recently, vendors have embraced the LEGO ideal. The IT research firm Gartner labeled this modular approach as “composable” and now scores of SaaS firms endorse composability as the most desirable approach for building user experiences.
The LEGO ideal has become a defining North Star for many digital teams.
The appeal of LEGO is easy to fathom. LEGO is familiar to almost everyone.
Though LEGO was not the first construction kit toy that allowed parts to be connected in multiple ways, it has by far been the most successful. LEGO is now the world’s largest toymaker.
But LEGO’s appeal stems from more than its popularity or the nostalgia of adults for pleasant childhood memories. LEGO teaches lessons about managing systems – though those lessons are often not well understood.
What LEGO figured out: Clutch Power
What’s been the secret to LEGO’s success? Why has LEGO, more than any other construction toy, achieved sustained global success for decades?
Many people attribute LEGO’s success to the properties of the bricks themselves. The magic comes from how the bricks fit together,
The Washington Post noted in 1983 the importance of “the grip that holds one piece to another. Measurements have to be exact down to minute fractions of an inch, which requires high-precision machinery and closely monitored quality control.”
The ability of the bricks to fit together so well has a name: clutch power.
The fan blog Brick Architect defines clutch power as “Newtons of force to attach or remove the part.”
The Washington Post noted that the bricks’ clutch power translated into “market clutch power”: how solidly the bricks built a grip with consumers.
Clutch power makes bricks more powerful:
Bricks can connect easily – they snap together
Bricks can be disassembled easily by pulling them apart
Bricks are not damaged or deformed through their repeated use
Bricks are infinitely reusable.
Clutch power is an apt metaphor for how brinks connect. Like the clutch in a car that shifts between gears, clutch power allows bricks of different sizes and roles to work together to deliver a bigger experience.
What makes content and design LEGO-like?
Truth be told, most content and design modules don’t snap together like LEGOs. Content and design modules rarely exhibit clutch power.
Even if the original intent was to create a LEGO-like kit of parts, the actual implementation doesn’t deliver a LEGO-like experience. It’s important to move past the pleasing metaphor of LEGOs and explore what makes LEGOs distinctive.
LEGO bricks aren’t for very small children – they are a choking hazard. Similarly, some teams figuratively “choke” when trying to manage many small content and design elements. They are overwhelmed because they aren’t mature enough to manage the details.
Attempts to create modularity in content and design often fall short of the LEGO ideal. They resemble LEGO’s junior sibling, DUPLO, offering simple connections of a limited range of shapes. In addition to generic bricks, DUPLO includes less general pieces such as specialized shapes and figures. It reduces the choking hazard but limits what can be built.
We find examples of DUPLO-like modularity in many UX processes. A small interaction pattern is reused, but it only addresses a very specific user journey such as a form flow. Small UI “molecules” are defined in design systems, but not more complex organisms. Help content gets structured, but not marketing or app content.
The limitation of DUPLO approach is the modularity isn’t flexible. Teams can’t create multiple experiences from the pieces.
When teams can’t create complex experiences out of small pieces, they resort to gluing the pieces together. Pieces of content and design get glued together – their connections are forced, preventing them from being reused easily. The outputs become one-off, single-use designs that can’t be used for multiple purposes.
Some people glue together LEGO bricks, even though doing so is not considered an approved best practice. They create an edifice that is too fragile and too precious to change. Their design is too brittle to take advantage of the intrinsic clutch power of the bricks. They create a single-use design. They use modularity to build a monolith.
Digital teams routinely build monolithic structures from smaller pieces. They create content templates or frontend design frameworks that look and behave a certain way but are difficult to change. They build an IKEA product that can’t be disassembled when you need to move.
So what gives content and design clutch power? What allows pieces to connect and be reconfigured?
The digital equivalent of clutch power is systems interface design – how the interfaces between various systems know of and can interact with each other. It determines whether the modules are created in a way that they are “API-first” so that other systems can use the pieces without having to interpret what’s available.
More concretely, giving content and design modules clutch power involves defining them with models. Models show how pieces can fit together.,
Models define things (resources) and their relationships, highlighting that things have a rich set of potential connections. They can snap together in many ways, not just in one way.
Defining things and their relationships is not easy, which is why the LEGO ideal remains elusive for many digital teams. It requires a combination of analytic and linguistic proficiency. Relationships are of two kinds:
Conceptual relationships that express the properties that things share with each other, which requires the ability to name and classify these properties clearly, at the right granularity (abstraction), to enable connection and comparison with appropriate precision.
Logical relationships that express the constraints and requirements of things and their values, which calls for the ability define what is normal, expected, exceptional, and prohibited from the perspective of multiple actors engaged in an open range of scenarios.
Modeling skills transcend the priorities of UI and content “design”, which focus on creating a product intended to support a single purpose. Modeling skills are more akin to engineering, without being cryptic. Modular pieces must be easy to connect, cognitively and procedurally.
We sometimes find organizations hire content engineers, content architects, information architects, or UI engineers, but most often designers and developers are in charge of implementation. We need more folks focused on creating clutch power.
What LEGO is still learning – and their lessons for digital teams
LEGO created a system that could grow. It expanded by offering new brick shapes that allow a wider range of items to be built.
LEGO has proved remarkably enduring. But that doesn’t mean it doesn’t need to adapt. To maintain market clutch power, LEGO needs to adapt to a changing market. Its past formulas for success can no longer be relied upon.
LEGO’s bricks are made from ABS plastic. ABS plastic gives the bricks their clutch power. But they are also environmentally bad as they are petroleum-based and have a big carbon footprint. As the world’s biggest toymaker, producing billions of plastic bricks, LEGO needs to change its model.
LEGO has tried to change the formula for their bricks. They’ve sought to replace ABS with recycled polyethylene terephthalate (RPET) but found it too soft to provide the needed clutch power. Additives to RPET, which would make it safer and more durable, require too much energy consumption. After intensive research, LEGO is discovering there’s no simple substitute for ABS.
LEGO’s dilemma highlights the importance of creating a system that can adapt to changing priorities. It’s not that clutch power became less important. But it had to fit in with new priorities of reducing carbon emissions.
One option LEGO is looking at is how to enable the “recircling” of bricks. How can bricks in one household, when no longer needed, be re-entered into the economy? LEGO is looking at a “circular business model” for bricks.
A circular model is one that digital teams should look at as well. The aim should not just be how a team can reuse their content and design modules, but also how other parts of their organization can reuse them, and perhaps, how outside parties can use them too. An API-first approach makes recirculation much easier. Better collaboration from vendors would also help.
Taxonomy, like the money supply or the ozone layer, is a stealthy — yet fundamental — concept in our lives that, unfortunately, only a few people know much about. Taxonomy makes the world go around: all kinds of things would stop moving without it. But only a small number of people — either inside or outside of the world of the web that manages our lives online — can explain what a taxonomy actually does. It’s generally a vague concept to designers and developers. Business people often have little idea what it is or why it matters. Even many information architects, and other people with backgrounds in library science, tend to ignore the social and economic significance of taxonomies.
Taxonomy matters because it is the basis of numerous decisions that affect us. But it can be misunderstood when seen as being primarily about making individual decisions: specifically, looking up information. Taxonomy’s true influence comes from how it supports collective, repeatable decisions and enables the aggregation of data and actions. Rule-based decisions, whether applied by humans or machines, depend on taxonomies.
Taxonomies shape many of the most important decisions in our world — those that are made again, and again. Four taxonomies in particular influence the basic dimensions of our lives:
What we eat
How money is made and used
What goods and services are produced
How we evaluate our impact on the environment
All these taxonomies share a common focus on process changes as forming the basis for categorization. Why? When items change state or are susceptible to change, distinctions emerge that are useful to classify.
Codex Alimentarius: Classifying what we eat
Eating is an elemental need: it supplies nourishment. Something so basic seems far removed from the abstraction of taxonomy. And few would expect a taxonomy with a Latin name to be important to the modern world economy.
The Codex Alimenatrius means “food code.” It is defined by a United Nations organization based in Rome (a joint effort of the FAO and WHO, in case you care about the acronyms, instead of the Latin). The “Codex” provides a “classification of foods and feeds.”
Please don’t get turned off by the jargon — the stakes here are important.
If you have ever wondered how we can safely eat food items produced from around the world, it is thanks to the Codex Alimentarius. It defines in great detail criteria for food commodities, specifying their composition and safety. The Codex provides a detailed set of guidelines relating to food covering:
Standards covering processed, semi-processed or unprocessed foods
The scope of food products is enormous. To provide useful guidance, the Codex should be able to identify the universe of products needing standards. The Codex Classification of Foods and Animal Feedsprovides this needed classification. It divides food into classes based on three dimensions:
How basic or changed, is it? Primary v Processed
Who is it for? Food for people v Feed for animals
What’s it made of? Plant-origin v Animal-origin
In all, five classes exist:
Primary food commodities of plant-origin
Primary food commodities of animal-origin
Primary animal feed commodities
Processed food of plant-origin
Processed food of animal-origin
Each of the five classes is divided into types that are “based on physical characteristics and traditional use and to a lesser extent on botanical or zoological associations.”
Types are subdivided into groups and subgroups “whose members show similarities in their behavior with respect to residues and in the nature of the agricultural practices to which they are subjected.”
Finally, within each group, different commodities are enumerated with a code identifier having a 2-letter preface followed with a 4-number suffix.
The standards themselves are narrative documents. But what the standards address is determined by the taxonomic classification. They can be relevant to individual commodities — but also higher-level classifications.
Let’s explore how the Codex’s classification works by reviewing how it classifies anise, one of my favorite flavorings, an herb that has been used since ancient Roman times. Anise commodities belong to “Class A: Primary Food Commodities of Plant Origin.”
Anise commodities more specifically belong, within Class A, to Type 05: “Herbs and Spices.”
Multiple anise-related commodities exist (a few of them flagged in bold below), which get classified in various ways:
Herbs (group 27), whose commodities have a code prefix of “HH”
027A Herbs (herbaceous plants), broken into commodities with 6 character codes, for example:
HH 3191 Anise, leaves
027B Leaves of woody plants (leaves of shrubs and trees)
027C Edible flowers
Spices (group 28), whose commodities have a code prefix of “HS”
028A Spices, seeds
HS 0771 Anise, seed
028B Spices, fruit or berry
HS 3303 Anise pepper
028C Spices, bark
028D Spices, root or rhizome
028E Spices, buds
028F Flower or stigma
028G Spices, aril
028H Citrus peel
The Codex refers to its enumeration as a classification rather than as a taxonomy. Within the Codex, the term “taxonomy” is reserved for biological descriptions of living plants, animals, and microbes rather than for non-living or man-made food items. Biological taxonomies are also based on identifying distinctions arising from the process of change — distinctions which are increasingly determined through DNA analysis.
Because the Codex is based on science, it is constantly evolving. Experts must account for a growing range of synthetic inputs and outputs that become available, such as lab-grown “meat.” The classification undergoes revision as needed.
The Codex has been in place for over half a century, achieving something remarkable: it’s made possible the confident trade of food around the world. We can buy imported food that’s labeled clearly and meets agreed standards. It’s enriched us all, whether we get access to better and less expensive food, or simply have more varied and interesting options.
The GAAP taxonomy: Is a company profitable and viable?
If you work for a company or have invested your retirement savings in companies, you want to know if a company is profitable.
And you need to know their statements are reliable. Several high-flying firms, including Wirecard in Germany, Greensill Capital in the UK, and Evergrande in China, have collapsed quite suddenly in recent months. People need to trust financial data.
The GAAP (Generally Accepted Accounting Principles) has been the accounting standard for many decades. But only in 2013 was the GAAP transformed into taxonomy: the US GAAP Financial Reporting Taxonomy (UGT), based on the Extensible Business Reporting Language (XBRL) markup.
If the GAAP has been around for decades, why is it suddenly a big deal that it’s now a taxonomy?
This development has promoted much greater transparency and global harmonization in financial reporting.
Accounting, fundamentally, is about the categorization of income and expenses, and of assets and liabilities. These can be split or lumped according to the granularity sought. Accounting is taxonomic in its orientation. Providing precision enables traceability.
The GAAP taxonomy, when encoded with markup, transforms difficult-to-analyze documents into structured data that can be compared.
Bob Vause, in his book the Guide to Analyzing Companies, notes the power of the taxonomy to describe individual financial items. “This involves ‘tags’ — tagging all the individual items of information appearing in financial reports.”
The GAAP taxonomy is being adopted globally, sometimes unofficially, which is promoting a global convergence in approaches. This is an important development, as different counties sometimes use divergent terminology when describing financial events. Those inconsistencies have hindered the comparison of companies operating in different markets.
Today, the differences in terminology are less important than in the past because the taxonomy tags provide a standard way to present financial data. Vause notes: “There will be an international standardised form of presentation; language or terminology will no longer be a barrier to analysis.” He adds: “Moves towards the standardisation of financial report information are leading to significant improvements in the quality, value and accessibility of corporate financial information.”
The GAAP taxonomy helps financial analysts track inputs and outputs, and follow transfers and allocations.
NAICS taxonomy: what’s the composition of the economy?
It’s difficult to know what’s important in the economy, such as how big a sector is or how fast it is growing. Some sectors seem to get more media attention than others. And it’s not always clear what is different about sectors. For example, is fintech different from banking? Companies and governments need to understand changes in the economy when making investment decisions.
Industrial classification taxonomies help analysts dissect the complex composition of an economy. Since 1997, the United States, Canada, and Mexico have agreed to follow a common system to classify businesses called the NAICS (the North American Industry Classification System). The EU uses a similar classification called the NACE. Governments define these taxonomies and use them to collect all kinds of data. By being structured as a taxonomy, with broader and narrower classifications, it’s possible to aggregate and dissect data about production, orders, hiring, and other activities.
According to the official NAICS Manual, “NAICS divides the economy into 20 sectors. Industries within these sectors are grouped according to the production criterion.” But industries could be services as well as manufacturing. For “activities where human capital is the major input… each [is] defined by the expertise and training of the service provider.”
The NAICS uses hierarchical numeric codes, an approach referred to in the field of taxonomy as “expressive notation.” These codes don’t look like the more familiar style of taxonomy that uses text labels. But codes provide many benefits. They provide a persistent identifier that allows the description to be revised when necessary. And they enable expansion of the code from 2-6 digits to get the appropriate level of granularity. They allow the retrieval of either root classes or subordinate classes (subclasses), and the comparison of equally ranked classes. For example, the taxonomy supports retrieval of data on all performing arts groups, or it can allow the comparison of data for different kinds of performing arts groups (theater companies, dance companies, or music groups).
The NAICS taxonomy
When you look at the NAICS, you might disagree with how industries are categorized. You may think the balance or emphasis is wrong. But the NAICS isn’t based on any single person’s opinion or even a card sort by a group of people. It’s a highly governed taxonomy. Persistence in categories is necessary to allow data to be tracked over time. Even when a sector is losing importance, it is still useful to understand how it has declined. And sometimes, obscure sectors can be more important than non-specialists realize. They aren’t scoring headlines in the news, but they still matter.
The NAICS is the product of a well-defined methodology. It classifies sectors according to how products or services are created. “Economic units that have similar production processes are classified in the same industry, and the lines drawn between industries demarcate, to the extent practicable, differences in production processes. This supply-based, or production-oriented, economic concept was adopted for NAICS.” Much like the GAAP, the NAICS allows analysts to track inputs and outputs.
The Green taxonomy: classifying climate impacts
Lastly, we turn our attention to another thing humans produce, but one that’s less desirable: greenhouse emissions.
As I write this, world leaders will soon gather in Glasgow for COP26, the UN Climate Change Conference. Countries and companies are pledging to be carbon-neutral or even carbon-negative by specific dates. But what do these commitments really mean? How will emissions and outsets be calculated? And how will everyone agree these commitments are measured?
These important questions will require a slightly longer explanation.
Over the past year, momentum has been growing for climate change-focused taxonomies. These initiatives classify energy usage according to their emissions. They are discussed using various terms:
Green taxonomy
Climate taxonomy
Sustainable finance taxonomy
But how can a taxonomy influence the climate? In many of the same ways that taxonomies influence other human activities such as food, finance, and the economy. Taxonomies can help individuals understand processes relating to what we produce and consume. And they can help institutions follow common standards to track and direct energy usage behavior.
A major motivation for green taxonomies is capital allocation: both the capital used in market debt financing of infrastructure projects and the institutional equity investments into energy-consuming enterprises. Power plants and grids are expensive. Converting existing infrastructure to be more green forms is as well. The aspiration is to create new financial products such as green bonds or sustainable index funds to promote such investments.
EU environmental taxonomy
Multiple green taxonomy initiatives are underway globally, which vary in their designs. At the moment, the bulk of media attention has been focused on the EU’s environmental taxonomy, which is currently in draft. Some reports suggest it may be finalized by the end of 2021 and that China might join the EU initiative in some capacity. The ASEAN group of Southeast Asian countries is working on their own taxonomy that is heavily modeled on the EU one.
The EU’s environmental taxonomy is based on the NACE, their industrial classification system. It looks at various economic sectors and identifies “sustainable” activities within each sector.
The Commission states: “A common language and a clear definition of what is ‘sustainable’ is needed. This is why the action plan on financing sustainable growth called for the creation of a common classification system for sustainable economic activities, or an ‘EU taxonomy’.”
“The Taxonomy sets performance thresholds (referred to as ‘technical screening criteria’) for economic activities.”
Member states and financial institutions within the EU will be required to report on the sustainability of projects they sponsor. Those activities deemed sustainable will presumably be more attractive to long-term investors.
The Commission’s “green list” of those activities it has decided are sustainable has created some controversy.
Notably, the Commission has been unable to decide whether nuclear power and natural gas are environmentally desirable.
In the United States, interest in green taxonomies has also been growing. Compared with the EU, it is more driven by interest from institutional investors, though US government regulators have also called for better and more consistent standards.
The EU’s approach to a green taxonomy is prescriptive — indicating what activities are sustainable. The US approach, in contrast, is more descriptive — classifying a range of activities that could support or hinder sustainability and promoting reporting of harms and well as benefits.
The SASB taxonomy in the United States
In the United States, green taxonomies fall under the broader umbrella of “ESG” (Environment, Social, and Governance) — that is, non-financial information relating to company performance. US investors increasingly favor ESG-positive firms and funds. But ESG indicators haven’t been standardized across companies, which has triggered concerns from the US General Accountability Office. The ESG landscape has emerged organically, which partly explains their uneven application. But some enterprises and investment funds have been faulted by environmentalists and financial regulators for using imprecise standards and metrics to engage in “greenwashing.”
“Investors are using ESG-related information to make investment decisions and to allocate capital more than ever before. They are increasingly looking for sustainable investments, albeit investors have different thoughts about what ‘sustainability’ means.”
Securities and Exchange Commissioner Caroline A. Crenshaw
Commissioner Crenshaw adds: “To be useful to investors, disclosures need to be meaningful. That’s particularly true for ESG-related disclosures, as they are too often inconsistent and incomparable. What we should be working toward is a clear disclosure regime that yields consistent, comparable, reliable, and understandable ESG disclosures to investors.”
ESG is broader in scope than sustainability. But environmental metrics so far have been the major driver of ESG interest.
Following a period of competing initiatives in the US, a unified approach has coalesced under the auspices of the Sustainability Accounting Standards Board (SASB), a nonprofit organization that cooperates with several other like-minded organizations.
The SASB has chosen a different approach to define a green taxonomy. They have re-imagined the NAICS to focus it on environmental performance. It has created what it calls the Sustainable Industry Classification System® (SICS®). “The differences between SICS® and traditional industry classification systems can be categorized in three types: (1) new thematic sectors; (2) new industries with unique sustainability profiles; and (3) industries classified in different sectors.” The SICS classifies 77 industries are grouped into 11 categories.
“SASB Standards identify the subset of environmental, social, and governance issues most relevant to financial performance in each of 77 industries.”
In addition to drawing inspiration from the NAICS, the SASB also modeled its work on the GAAP taxonomy.
It worked with PwC to convert SASB’s taxonomy into the XBRL format (the “SASB XBRL taxonomy”) to allow data exchange between reporting companies and investors and regulators evaluating the reporting.
As a recent news report concludes: “SASB Standards Taxonomy in XBRL format…make[s] digital reporting simpler for issuers of environmental, social, and governance (ESG) disclosures and to improve data aggregation and analytics for investors.”
“Having the taxonomy in XBRL, an open standard used in business reporting, will enable reported metrics to be machine-readable via digital tags, and improve usefulness and comparability of ESG reports.”
The next emerging area of focus for green taxonomies is looking at what are called “scope 3” emissions, which consider emissions across the value chain of products. Instead of looking at individual industries or companies, this work will evaluate the emissions associated with the entire lifecycle of production, consumption, and disposal. Companies will be more accountable for the actions of their suppliers and customers.
Taxonomies support exchange
I learned about the value of taxonomies in the late 1980s during my first full-time job after leaving grad school. I worked as an online researcher at the US Commerce Department. This was before Tim Berners-Lee launched the World Wide Web — there were no browsers or Google then. But already online information providers recognized the need to categorize information to make it accessible. Accessing information at that time was extremely expensive.
Taxonomy is a form of infrastructure, much like the undersea fiber optic cable that transmits internet traffic is. The scholar Elizabeth Cullen Dunn talks about the role of infrastructure by introducing a Greek word, oikodomi, which she defines as“the infrastructures from which standards emerge and that shape the way they actually effect production.” Taxonomy is oikodomi, in the sense that it shapes decisions.
Many people lately are talking about the importance of “systems” (or “systemic” influence) to understand how things work now and how they should in the future. That’s exactly what taxonomy is doing: defining systems.
Taxonomy standards facilitate global exchange by
Promoting harmonization between stakeholders in different places
Connecting descriptions between different fields
Taxonomy standards connect our diverse world. They can thread together different domains: food, which influences health, companies, the economy, and the environment. They provide the transparency that can reveal the relationships between these dimensions through their precise classifications.
