Architectural theory of digital innovation contends that, to enhance physical products with digital capabilities, a layered modular architecture is required. This architecture hybridizes hierarchically arranged components of physical products with modules of digital functionality configured into layers. Despite considerable research adopting this architectural perspective on digital innovation, questions of how this hybrid architecture is accomplished organizationally and technologically lack both conceptual clarity and empirical illustration. Noting pervasive tensions that characterize digital innovation efforts and the contradictions between hierarchical and layered modular configurations, this paper seeks to answer the following research question: Given that the layered modular architecture needs to hybridize modular arrangements with opposing logics, how is it accomplished? Employing the concepts of digitalization, physical product hierarchy and digital control system to better theorize a product architecture’s movement from a modular to a layered modular architecture accompanied by organizational structures that enable this change, we abductively analyze the increasing digitization of a car’s Driver Information Module (DIM) over a 10 year period. We conclude by proposing three transformations through which the layered modular architecture is accomplished. © 2020 Elsevier B.V. All rights reserved.