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THE PERILS OF EXCELLENCE: BARRIERS TO EFFECTIVE PROCESS IMPROVEMENT IN PRODUCT‐DRIVEN FIRMS
Author(s) -
HENDERSON REBECCA,
ALAMO JESUS,
BECKER TODD,
LAWTON JAMES,
MORAN PETER,
SHAPIRO SAUL
Publication year - 1998
Publication title -
production and operations management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 3.279
H-Index - 110
eISSN - 1937-5956
pISSN - 1059-1478
DOI - 10.1111/j.1937-5956.1998.tb00435.x
Subject(s) - competitive advantage , excellence , incentive , process (computing) , product (mathematics) , industrial organization , new product development , business , operational excellence , marketing , process management , service (business) , economics , computer science , geometry , mathematics , political science , law , microeconomics , operating system
Several authors have suggested that a focus on manufacturing capability and on continued process improvement may be a powerful source of competitive advantage, yet many firms appear to have encountered great difficulties in taking advantage of this insight. This paper reports on the results of five these conducted under the auspices of the MIT Leaders for Manufacturing program at the Microwave Technology Division of the Hewlett‐Packard Company. We found considerable evidence that the marginal returns to process development within the division were probably considerably higher than the division's cost of capital, suggesting that process improvement probably was underfunded despite the fact that improving manufacturing capability had been identified as a key strategic priority. We found no evidence that this “underfunding” reflected either a failure to recognize the problem or an overly hierarchical or rigid organization. Rather it appeared to flow from the historical strengths of the division. A devotion to leading‐edge technical solutions and to immediate customer service at almost any price had created barriers to the effective funding of process improvement that were deeply rooted in the organizational structures, information systems, and formal and informal incentive structures that had evolved to support the division's historical emphasis on excellence on product design. Our results highlight the problems that very successful product‐driven companies may encounter in attempting to make continual process improvement central to their strategic mission.