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TRAdE-Offs – ARE THEy inEviTAblE? 77

Figure 2.11 the efficient frontier

(a) (b)
The new ‘e cient frontier’
Variety A The ‘e cient frontier’ Variety A B1

B B

X C X C

D D

Cost e ciency Cost e ciency

efficient frontier. By contrast, operation X has also chosen to balance variety and cost
efficiency in a particular way but is not doing so effectively. Operation B has the same
ratio between the two performance objectives but is achieving them more effectively.
Operation X will generally have a strategy that emphasises increasing its effectiveness
before considering any repositioning.
However, a strategy that emphasises increasing effectiveness is not confined to
those operations that are dominated, such as operation X. Those with a position on
the efficient frontier will generally also want to improve their operations effective-
ness by overcoming the trade-off that is implicit in the efficient frontier curve. For
example, suppose operation B in Figure 2.11(b) is the metrology systems company
described in Chapter 1. By adopting a modular product design strategy it improved
both its variety and its cost efficiency simultaneously (and moved to position B1).
What has happened is that operation B has adopted a particular operations prac-
tice (modular design) that has pushed out the efficient frontier. This distinction
between positioning on the efficient frontier and increasing operations effective-
ness to reach the frontier is an important one. Any operations strategy must make
clear the extent to which it is expecting the operation to reposition itself in terms of
its performance objectives and the extent to which it is expecting the operation to
improve its effectiveness.

Improving operations effectiveness by using trade-offs
Improving the effectiveness of an operation by pushing out the efficient frontier
requires different approaches depending on the original position of the operation on
the frontier. For example, in Figure 2.12 operation P has an original position that offers
a high level of variety at the expense of low cost efficiency. It has probably reached this
position by adopting a series of operations practices that enable it to offer the variety
even if these practices are intrinsically expensive. For example, it may have invested
in general-purpose technology and recruited employees with a wide range of skills.

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