Page 101 - Operations Strategy

76 CHAPTER 2 • OPERATiOns PERfORmAnCE
‘the tyranny of either/or’. Rather than accepting the either/or approach, they recommend
the more positive ‘and/also’ approach, which works towards ‘having it all’. New forms
of operations organisation and practice could overcome the ‘technical constraints’ of
any operation, this being especially true if they are applied with a radical creativity
hitherto unexpected in operations managers.
In spite of the appealing positive approach of this school, it could not fully explain
away the intuitive appeal of the trade-off concept, and several attempts at an inclusive
compromise that brings the two schools together were proposed. For example, it was
suggested that some trade-offs did still, and would always, exist, while others had, for
all practical purposes, been overcome by the new technologies and methodologies of
manufacturing. Others suggested that while all trade-offs were real in the very short
term, they could all be overcome in the long term. Most recent authors hold that ‘trad-
ing off’ and ‘overcoming trade-offs’ are in fact distinct strategies, either of which may
be adopted at different times by organisations. No rare they are mutually exclusive;
operations may choose to trade off by repositioning the balance of their performance,
both as a response to changes in competitive strategy and to provide a better starting
point for improvement. And key to overcoming trade-off constraints is the building
of appropriate operating capabilities. Thus, operations performance improvement
is achieved by overcoming trade-offs, which, in turn, is achieved through enhanced
operations capabilities.
The position taken in this book is close to the last school of thought. That is, while
there is a clear requirement for operations managers to position their operation such
that they achieve the balance between performance objectives that is most appropriate
for competitive advantage, there is also a longer-term imperative that involves finding
ways of overcoming the intrinsic trade-offs caused by the constraints imposed by the
operations resources.

trade-offs and the efficient frontier
Figure 2.11(a) shows the relative performance of several companies in the same indus-
try in terms of their cost efficiency and the variety of products or services that they
offer to their customers. Presumably all the operations would ideally like to be able to
offer very high variety while still having very high levels of cost efficiency. However,
the increased complexity that a high variety of product or service offerings brings will
generally reduce the operation’s ability to operate efficiently. Conversely, one way of
improving cost efficiency is to severely limit the variety on offer to customers. The
spread of results in Figure 2.11(a) is typical of an exercise such as this. Operations A,
B, C and D all have chosen a different balance between variety and cost efficiency.
But none is dominated by any other operation in the sense that another operation
necessarily has ‘superior’ performance. Operation X, however, has an inferior perfor-
mance because operation A is able to offer higher variety at the same level of cost
efficiency, and operation C offers the same variety but with better cost efficiency. The
convex line on which operations A, B, C and D lie is known as the ‘efficient frontier’.
They may choose to position themselves differently (presumably because of different
market strategies) but they cannot be criticised for being ineffective. Of course, any
of these operations that lie on the efficient frontier may come to believe that the bal-
ance they have chosen between variety and cost efficiency is inappropriate. In these
circumstances they may choose to reposition themselves at some other point along the

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