Page 291 - Operations Strategy

266 CHAPTER 7 • ImPRovEmEnT sTRATEgy

refrigeration etc.). Learning from Formula One will help Sainsbury’s to improve further in the
field of energy efficiency. Roger Burnley, Sainsbury’s retail and logistics director, said:
‘We are committed to reducing our environmental impact and, as a result, we are often at the very
forefront of technological innovation. By partnering with Williams F1, we can take advantage of some
of the world’s most advanced automotive technology, making our operations even more efficient and
taking us a step closer to meeting our CO -reduction targets.’
2

The four-stage model
The ability of any operation to contribute to opening up market potential for the organ-
isation and the organisational aims, expectations and aspirations of the operations
function has been captured in a model developed by Professors Hayes and Wheelwright
21
of Harvard University. With later contributions from Professor Chase of the University
22
of Southern California, they developed what they call the ‘Four-Stage Model’, which is
ideal for evaluating the effectiveness of the contribution/expectation cycle. The model
traces the progression of the operations function from what is the largely negative role
of Stage 1 operations to it becoming the central element of competitive strategy in
excellent Stage 4 operations.

Stage 1 – internal neutrality
This is the very poorest level of contribution by the operations function. In a Stage 1
organisation, the operation is considered a ‘necessary evil’. The other functions in the
organisation regard it as holding them back from competing effectively. The operations
function, they would say, is inward-looking and, at best, reactive. It certainly has very
little that is positive to contribute towards competitive success. The best that can be
expected from the operations function is to cure the most obvious problems. Certainly,
the rest of the organisation would not look to operations as the source of any originality,
flair or competitive drive. The expectations on it are to be ‘internally neutral’ – a position
it attempts to achieve not by anything positive but by avoiding the bigger mistakes.

Stage 2 – external neutrality
The first step of breaking out of Stage 1 is for the operations function to begin compar-
ing itself with similar companies or organisations in the outside market. A Stage 2 oper-
ation has achieved a sufficient level of capability to cease holding the company back,
even if it may not yet be particularly creative in its contribution to competitiveness. It is
expected, at least, to adopt ‘best practice’ and the best ideas and norms of performance
from the rest of its industry. It is expected to be ‘externally neutral’, with operations
capabilities similar to its competitors. This may not give the organisation any competi-
tive advantage but nor is operations the source of competitive disadvantage.

Stage 3 – internally supportive
Stage 3 operations may not be better than their competitors on every aspect of opera-
tions performance but they are broadly up with the best. Nevertheless, good as they
may be, Stage 3 operations aspire to be clearly and unambiguously the very best in
the market. They try to achieve this level of contribution by a clear understanding of
the company’s competitive or strategic goals. Then they organise and develop their

M07 Operations Strategy 62492.indd 266 02/03/2017 13:06