Page 293 - Operations Strategy

268 CHAPTER 7 • ImPRovEmEnT sTRATEgy
Stage 4 requires operations progressively to adapt the roles of the operations function
discussed in Chapter 6 – implementer, supporter and driver, as shown in Figure 7.14.
Two points are important in understanding the power of the four-stage, 1 to 4 model.
First, it is linked to the company’s aspirations (at least its operations management
aspirations). In other words, there is an active desire (some might say even an evan-
gelical desire) to improve the operation. Second, it is the endpoint of progression that
emphasises the increasing importance and centrality of operations strategy to overall
competitive advantage. The idea of a proactive and inventive ‘Stage 4’ operations func-
tion, described by Hayes and Wheelwright, foreshadows the somewhat later concept of
‘world-class operations’. That is, the idea that companies should aspire not only to have
performance levels equal to, or better than, any other similar business in the world, but
should achieve this superiority because of their operations ability.

summARy AnswERs To KEy quEsTIons

What are the differences between managing large ‘breakthrough’ improvements
and managing continuous improvement?
Although it is common to distinguish between major ‘leaps forward’ in terms of oper-
ations improvement on the one hand, and more continuous incremental improve-
ment on the other, these are really two points on a spectrum describing the degree
of operations change. Major improvement initiatives (such as most business process
re-engineering) are dramatic and radical changes in the way operations resources and
processes are organised. Continuous improvement, on the other hand, is less dramatic
and longer term, involving small incremental steps. Change is gradual and constant
and involves most or all staff. Continuous improvement is often described as a ‘never-
ending cycle’. A closely related distinction is that between ‘exploitation’ and ‘explo-
ration’. Exploitation is the activity of enhancing existing processes (and products).
Exploration is concerned with the exploration of new possibilities, recognising new
mind-sets, experimentation, taking risks, flexibility and innovation. The organisa-
tional skills and capabilities needed for exploitation will be different from those for
exploration. So-called ‘organisational ambidexterity’ is the ability to both exploit and
explore, which is recognised as a particularly difficult ‘mental balancing act faced by
managers’. The concept of the cycle, commonly used to describe continuous/exploita-
tion improvement, can also be used to put in place the routines and procedures that
help to embed continuous improvement at a more strategic level. One such cycle uses
the stages ‘direct’, ‘develop’ and ‘deploy’ to link market position to market potential.

how do the needs of the market direct the ongoing development of operations
processes?
Usually, market needs make their impact on how operations improve themselves
through formal mechanisms such as performance measurement systems and bench-
marking efforts, although these formal mechanisms are themselves cycles, in so much
as they involve continually seeking gaps between the formal targets for the operation
set by what the market requires and the actual performance of the operation. Designing
performance measurement systems includes four generic issues. First, what factors to
include as performance targets? It is likely that performance measures at different levels
of aggregation will be needed. The second question is, what are the most important

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