Page 383 - Operations Strategy

358 The proCess oF operaTIons sTraTegy – monITorIng and ConTrol
Table 10.1 Type I and type II errors for the control of an operations strategy implementation

Was the intervention really necessary?
Decision Yes No
Intervene to ‘correct’ the implementation Type 1 error Correct decision
Do not intervene to ‘correct’ the implementation Correct decision Type 2 error

necessary. Type II errors may occur when the managers are too inert, failing to recognise
the need for intervention where it actually exists. It has been argued that in uncertain
and dynamic business environments, type II errors are more likely to occur.

how does learning contribute to strategic control?

Both type I and type II errors will be reduced as an organisation and its managers
increase their situational knowledge through learning. Over time, the smooth imple-
mentation of operations strategy changes needs to address four important issues:
1 How can an operations strategy encourage the learning necessary to make sure that
operations knowledge is carried forward over time?
2 How can an operations strategy ensure that the organisation appropriates (captures
the value of) the competitive benefits that are derived from the build-up of opera-
tions knowledge?
3 How can an operations strategy take into account the fact that the innovations that
derive from the build-up of operations knowledge have a momentum of their own
and are strongly path dependent (they are influenced by what has happened before)?
4 How can an operation take into account the interaction between the extent of
resource and process change?

organisational learning

In uncertain environments, any organisation’s ability to pre-plan or make decisions
in advance is limited. So, rather than adhering dogmatically to a predetermined plan,
it may be better to adapt as circumstances change. And, the more uncertain the envi-
ronment, the more an operation needs to emphasise this form of strategic flexibility
and develop its ability to learn from events. Generally, this strategic flexibility depends
on a learning process that concerns the development of insights and knowledge, and
establishes the connections between past actions, the results of those actions and
future intentions. The crucial issue here is an essentially pragmatic and practical one –
‘How does an operations strategy encourage, facilitate and exploit learning, in order
to develop strategic sustainability?’ Initially this requires recognition that there is a
distinction between single- and double-loop learning. 9
Single- and double-loop learning
Single-loop learning is a phenomenon that is widely understood in operations manage-
ment. It occurs when there is repetitive association between input and output factors.
Statistical process control, for instance, measures output characteristics from a process,

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