Page 260 - Operations Strategy

oPERATIons ImPRovEmEnT 235
Continuous improvement adopts an approach to improving performance that
assumes more and smaller incremental improvement steps – for example, simplify-
ing the question sequence when taking a hotel reservation. While there is no guar-
antee that other steps will follow such a small step towards better performance, the
whole philosophy of continuous improvement attempts to ensure that there will be.
Continuous improvement is not concerned with promoting small improvements
per se, but it does see small improvements as having one significant advantage over
large ones – they can be followed relatively painlessly by other small improvements.
Thus, continuous improvement becomes embedded as the ‘natural’ way of working
within the operation. So, in continuous improvement it is not the rate of improve-
ment that is important, it is the momentum of improvement. It does not matter if
successive improvements are small; what does matter is that every month (or week,
or quarter or whatever period is appropriate) some kind of improvement has actu-
ally taken place.
Breakthrough, or ‘innovation’-based, improvement assumes that the main vehicle
of improvement is a major and dramatic change in the way the operation works,
such as the total redesign of a computer-based hotel reservation system, for exam-
ple. The impact of these improvements is relatively sudden, abrupt and represents
a step-change in practice (and hopefully performance). Such improvements are
rarely inexpensive (usually calling for high investment), often disrupting the ongo-
ing workings of the operation and frequently involving changes in the product/
service or process technology. Moreover, a frequent criticism of the breakthrough
approach to improvement is that such major improvements are, in practice, difficult
to realise quickly.

‘exploitation’ or ‘exploration’ improvement

A closely related distinction to that between continuous and breakthrough improve-
ment is the one that management theorists draw between what they call ‘exploita-
tion’ versus ‘exploration’. Exploitation is the activity of enhancing processes (and
products) that already exist within a firm. The focus of exploitation is on creating
efficiencies rather than radically changing resources or processes. Its emphasis is on
tight control of the improvement process, standardising processes, clear organisa-
tional structures and organisational stability. The benefits from exploitation tend to
be relatively immediate, incremental and predictable. They also are likely to be better
understood by the firm and fit into its existing strategic framework. Exploration, by
contrast, is concerned with the exploration of new possibilities. It is associated with
searching for and recognising new mind-sets and ways of doing things. It involves
experimentation, taking risks, simulation of possible consequences, flexibility and
innovation. The benefits from exploration are principally long term but can be rela-
tively difficult to predict. Moreover, any benefits or discoveries that might come may
be so different from what the firm is familiar with that it may not find it easy to take
advantage of them.

Organisational ‘ambidexterity’
It is clear that the organisational skills and capabilities required to be successful at
exploitation are likely to be very different from those that are needed for the radi-
cal exploration of new ideas. Indeed, the two views of improvement may actively
conflict. A focus on thoroughly exploring for totally novel choices may consume

M07 Operations Strategy 62492.indd 235 02/03/2017 13:06