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summARy AnswERs To KEy quEsTIons 269
performance targets? These are the aspects of performance that reflect the particular
market strategy adopted by an organisation. Often these are contained in a small num-
ber of key performance indicators (KPIs). The third question is, how to measure the
performance targets? Usually, a number of measures are needed to describe broader
or more aggregated performance measures adequately. The final question concerns
the basis on which to compare actual against target performance. Different bases of
performance can affect how we judge performance. Typically, bases for comparison
are against historical standards, against improvement goals, against competitors or
against some idea of absolute perfection. Benchmarking is also used to direct improve-
ment within operations. There are several different types of benchmarking, including
strategic benchmarking, performance (or competitive) benchmarking, process bench-
marking, functional benchmarking, internal benchmarking, external benchmarking
and international benchmarking. One particular type of benchmarking is importance–
performance mapping. This involves formally assessing the relative importance and
performance of different aspects of the operation and plotting them on a matrix.

how can the ongoing management and control of operations be harnessed to
develop their capabilities?
As operations gain experience they improve. In some ways this improvement is predict-
able and can be plotted over time using learning or experience curves. Of more immedi-
ate concern in operations strategy, however, is how operations can improve by building
their capabilities over time. An important mechanism of capability building is the way
in which operations increase their knowledge of their processes through attempting
to control them. And although such control may be very operational in nature, the
results of the improvement it brings can result in important strategic benefits. Central
to improvement is the idea of knowledge acquisition. The process of acquiring knowl-
edge distinguishes between ‘tacit’ and ‘explicit’ knowledge. Tacit knowledge is knowl-
edge that is in people’s heads rather than written or formally articulated or described.
Explicit knowledge is that which is set out in definite form. The activity of managing
how knowledge is formalised is called ‘knowledge management’ (KM) and means, ‘the
process of capturing, distributing, and effectively using knowledge’. It has two distinct
functions: it collects knowledge together, often codifying tacit into explicit knowledge,
and it connects individual staff with formal codified knowledge and to each other. KM
systems often use the idea of a ‘community of practice’ (CoP), which is a collection
of people who engage on an ongoing basis in some common endeavour. An influen-
tial theory about how knowledge is accumulated through learning is the Nonaka and
Takeuchi knowledge model that builds on the idea of the distinction between tacit
and explicit knowledge. The model sees knowledge transfer as a spiral process, moving
between tacit and explicit knowledge, and back again – both formally and informally.

What can operations do to deploy their capabilities into the market?
Most improvement models focus on improvement ideas that originated within the
organisation, but many ideas can originate externally from competitors, suppliers, cus-
tomers or other firms with similar challenges. Some commentators argue that copying
ideas from outsiders is an underused approach to improvement. The extent to which
an operation deploys its capabilities to create the potential for the organisation to oper-
ate in profitable parts of the market is shaped partly by the expectations placed on the
operations function. The greater the expectations on the operations function, the more

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