Ohmae's Key success factors LO11731

8 Jan 97 09:54:28 +0100

Replying to LO11715 --

Scott's reply to Kent addresses a key issue for all of us working in
performance improvement. Many of us can come up with the success stories
of having improved x by y00%, but the point for me is that the x is fairly
closely defined in most cases, and we don't know (can't know) the
implications for the whole system.

We work in industrial engineering, and have many examples of huge
increases in productivity measured at plant or department level, many of
which have shown dubious overall benefit in the company accounts at the
end of the day.

One explanation would be John Sterman's Improvement Paradox -
manufacturing improvement is faster (has shorter half-lives) than product
development or marketing, so manufacturing improvement usually leads to
overcapacity, lay-offs etc., because product development and sales can't
keep up with the pace of our efficiency improvements in developing new
markets for our capacity (apologies to John for the gross over-
simplification of his work).

Why do we keep doing this then? This makes me very uncomfortable, but my
rationalisation is that without the manufacturing improvements our
industries would suffer even more; the organisations want to do it; it
contains a large element of empowerment in the workplace; and we can try
and make people aware of the improvement paradox and ask them to consider
what they will do with the spare capacity.

A further sting in the tail of the Improvement Paradox is that as
manufacturing improvement is seen to be successful in its own limited
terms and therefore in a Success to the Successful archetype generates
more manufacturing improvement, it takes resources away from areas where
improvement cycles are longer and less visible, but where they are needed
to absorb the capacity generated by the improvements in manufacturing.

This can be taken even further from a micro economic to a macro economic
level to provide explanations of, for example, why the Japanese
manufacturing success story has not provided consistent macro economic

At the end of the day, if the global system or even the micro economic
system is too complex for us to model and make decisions in anything like
a sensible timeframe, maybe all we can do is make improvements at a low
level in the system and then adapt our approach as the system responds to
our efforts. So maybe the consultants continually changing their approach
aren't doing such a bad job, but rather just responding to the effect of
their efforts on a system which they cannot understand and predict from
the outset.

Malcolm Jones
Productivity Europe Ltd
Lurker and Occasional Contributor



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