Showing papers in "California Management Review in 1993"

Trade-offs? What Trade-offs? Competence and Competitiveness in Manufacturing Strategy:

Abstract: Manufacturing strategy is increasingly recognized by academics as essential to achieving sustainable competitive advantage. It is important to distinguish clearly between internal competences and external measures of competitiveness; ensuring a proper link between the two is a critical factor for success. This article suggests that: competences don't have to hurt each other; performance relative to the competition is what counts; each product has to meet some minimum requirements to have a chance of selling; and these requirements are continually becoming tougher. The article sketches a scenario where even superior manufacturing may no longer be a source of competitive advantage, but simply a ticket to the ball game.

Why Improving Quality Doesn't Improve Quality (or Whatever Happened to Marketing?):

Abstract: Too often, quality programs fail to improve quality because they concentrate on internal processes which do not affect the customer. This is at least partially due to the alienation of marketing from the quality movement, a situation for which both sides are partially at fault. Ideally, marketing should serve as the eyes and ears of the organization, linking the external customer to managerial processes. One way to do this is to organize the collection of customer satisfaction measures around the managerial processes themselves. This forms a natural bridge from the customer to management and allows management to track the impact of quality improvements all the way from internal process measures to overall customer satisfaction and market share.

Manufacturing Strategic Planning

Abstract: This article reviews the existing literature on manufacturing strategy, explores its strengths and weaknesses, and proposes a new, more dynamic, planning framework. The new approach is based on the concept of strategic manufacturing initiatives (SMIs). SMIs are major manufacturing efforts that seek improvement over a specified time period; they include both quantitative goals and specific milestones. The article describes a planning process that managers can use to develop an effective mix of SMIs for their organizations. It begins with the overall business strategy and progresses through four stages of distillation or filtering. The article concludes with recommendations on how best to link SMIs with long-term planning.

How Sustainable is Your Competitive Advantage

Abstract: Through strategy, a company seeks to sustain its competitive advantage. Yet only recently has the study of strategy begun to examine how long a specific advantage can be sustained. Based on a study of sustainability patterns in a number of industries, this article shows how the competitive pressures associated with product imitation can be predicted by identifying the core capabilities, or isolating mechanisms, that lie at the heart of a company's advantage. A number of these dynamic core capabilities are classified according to how fast they are duplicated. The imitation of capabilities shapes many strategic decisions in companies, indeed the distinctive character of companies, and that by thinking in these terms managers enhance their company's cohesiveness and responsiveness as they pursue their strategic mission in global markets.

The Pitfalls of Strategic Planning

Abstract: Strategic planning is based on a number of mistaken assumptions. One of these assumptions is that the external environment can be made predictable. But, in point of fact, the external environment is always unpredictable: turbulence is a constant. Accordingly, the popularity of planning rests in part on the illusion of control.

A Pyramid of Decision Approaches

Abstract: Under increasing pressure to make better decisions in less time, managers often use the quickest and easiest decision-making method: going on ” gut feel.” But recent decision research shows that intuition is much less reliable than most people believe. Managers need to use more sophisticated methods. We describe a series of increasingly accurate (and demanding) decision-making approaches. We start with purely intuitive choices, which are quickest and least accurate, and then examine heuristic short-cuts and rules-of-thumb. Thereafter, we discuss more demanding and reliable methods, such as bootstrapping and value analysis. We examine the strengths and weaknesses of each approach in terms of speed, accuracy and justifiability. Each approach is described in step-by-step detail, with illustrative applications to managerial practice. Finally, we offer pragmatic advice on incorporating the more sophisticated techniques into your organization.

Building Competitive Advantage through a Global Network of Capabilities

Abstract: Facility location decisions made by many US manufacturers during the past decade yielded disappointing results These decisions were typically tactical, stop-gap actions which have resulted, at best, in short-lived benefits Many firms moved manufacturing overseas to obtain a factor cost advantage, only to find that the cost advantage was fleeting, and that the distances the move introduced between manufacturing and other key groups (eg, customers, suppliers, development, and sales) had constrained their ability to compete This article explores the impact that facility location has on the critical capabilities that define a company9s ability to compete It discusses the shortcomings of the "traditional" approach to facility location, which ignores the internal workings of the company, and outlines a new capability-centered approach that creates sustainable benefits by fostering the development and growth of the unique set of critical capabilities required by a company9s strategy, customers, and competitive environment

Quality, Strategy, and Competitiveness

Abstract: Increased competition has been the impetus for many of the modifications taking place within American companies. The quality initiative is a major competitive challenge that requires many companies to reevaluate not only their basic operations, but their overall corporate strategies as well. Based upon information developed by Motorola, this article discusses how total quality enables a company to successfully compete with a variety of competitors even though the competitors may be employing quite different strategies. While quality is often perceived in terms of statistical methods, the importance of the total quality perspective lies far beyond just changing the operations of a firm. Perhaps more significantly, the total quality perspective transforms how companies think about their customers, competition, and the business environment itself.

Get Closer to Your Customers by Understanding How They Make Choices

Abstract: The development of customer-driven strategies requires companies first to identify what their customers want. This approach is most effective when consumers know what they want and have stable preferences that can be used to predict their future purchase decisions. However, evidence from several recent studies suggests that consumers' wants are often fuzzy, unstable, and susceptible to influence by a variety of seemingly irrelevant factors. Specifically, the choices that consumers make can be systematically affected by manipulating the set of alternatives under consideration, the manner in which alternatives are evaluated, the description of alternatives, and other factors. Accordingly, being close to the customer must involve an understanding of how consumers' preferences are shaped and influenced, rather than merely revealing and serving existing preferences. This article concludes with a discussion of ways in which companies can use current knowledge about the psychology of customer choice in the development of product, positioning, pricing, communications, and selling strategies.

A Perspective on Quality Activities in American Firms

Abstract: Dr. Kano reviews the progress of the American quality movement as seen through his experiences with American companies over the last fifteen years. He identifies the movement9s strengths and weaknesses and compares its development to that of the Japanese quality movement. In particular, he elaborates the appeal of management by policy (hoshin kanri) to Americans and describes the specific characteristics of its development in American firms. Overall, although progress may be described as slow and uneven, he finds considerable cause for optimism about the progress of selected American firms and industries.

The 1993 State of U.S. Total Quality Management: A Baldrige Examiner's Perspective

Abstract: This article assesses the current state of U.S. total quality management based on the author's experience evaluating 22 companies as an Examiner for the Malcolm Baldrige National Quality Award during the last four years. The companies that apply for the award have many important strengths and these are yielding substantial improvement in customer satisfaction, employee involvement, and operational results. They also, however, have many identifiable areas which need improvement. A number of factors are limiting the development of truly comprehensive and fully integrated quality management systems.

Quality, Participation, and Competitiveness

Abstract: American managers have been slow to embrace employee involvement, because the American tradition of employee involvement has not convincingly linked participation with business results. In contrast, the Japanese have incorporated extensive participation into the modern quality paradigm. Their approach, which focuses participation on the improvement of production processes, can attract managerial support for participation by framing it as an avenue to increased competitiveness. The modern quality paradigm's principle of "market-in" de-emphasizes buffering in favor of exposing organization members to market information and pressures. Market-in builds widespread support for participation by highlighting important connections with organizational performance. Combining participation with quality can thus overcome major weaknesses of the participation tradition by linking participation to business results.

The Green Fee: Internalizing and Operationalizing Environmental Issues:

Abstract: Two of the major challenges facing business with respect to environmental issues are internalization and operationalization. Appropriate internalization is needed to ensure that the company's responses to environmental issues are consistent with its responses to other issues and with its long-term goals. For each environmental issue, different levels of response are possible. This article suggests a framework that can assist managers in structuring these responses. To be effective, environmental intentions need to be operationalized—i. e., integrated into a firm's daily operations. The operationalization of environmental programs can be facilitated by exploring and exploiting analogies with existing and proven programs already in place in many firms.

Total Quality Management in a Small, High-Technology Company

Abstract: The adoption of Total Quality Management has produced many success stories, but discussions of how to adopt TQM often overlook the special needs of small, hightechnology companies. This oversight has led many managers of these companies to conclude that TQM is too cumbersome, bureaucratic, expensive, and complex for them to use. TQM is essential to the long-term viability of small companies but must be adopted in a manner consistent with their special needs. This article discusses these needs and presents specific suggestions about how to successfully adopt TQM in small, high-technology companies.

Achieving Dynamic Stability through Information Technology

Abstract: The dynamically stable organization serves the widest range of customers and changing product demands while building on long-term process capabilities and collective firm-wide knowledge. Critical to achieving a dynamic stability is the strategic management of information. This article discusses three primary challenges for information systems. The first challenge involves providing managers with the capability to rapidly identify and use information about product and process know-how resident throughout the firm. The second challenge involves providing information to managers about the appropriate allocation of capabilities and know-how given rapid, unpredictable product or process change. The third challenge is associated with the needs to link functions and organizations "horizontally" to increase speed and flexibility of response.

Training, Continuous Improvement, and Human Relations: The U.S. TWI Programs and the Japanese Management Style

Abstract: W. Edwards Deming, Joseph Juran, and other American experts have rightfully earned a place in history for their significant contributions to the industrial development of Japan. However, the U.S. Training Within Industries (TWI) programs, installed in Japan by the Occupation authorities after World War II, may well have been even more influential. At least ten million Japanese managers, supervisors, and workers are graduates of the TWI programs or one of their many derivative courses, which still remain in wide use in Japan. Indeed, a number of management practices thought of as "Japanese" trace their roots to TWI. Japan's TWI experience offers important lessons to countries seeking to boost industrial productivity and quality on a national scale.

Integrating Manufacturing into the Strategic Phases of New Product Development

Abstract: Some companies are beginning to integrate the manufacturing function with product planning and R& D during the earliest stages of new product development. Manufacturing has been influencing choices with strategic implications such as new technologies, product strategy, and product concepts; forging direct links with product planning to supplement those previously developed with R& D; and fully participating in decision making rather than merely supplying information. More important, manufacturing is often the catalyst for these developments. It determines which specific front-end activities to target such as feature-cost tradeoffs, competitive analyses and interviews of customers. With assistance from the other functions, it develops a plan for establishing credibility by defining mutual expectations, acquiring a market-oriented knowledge base, creating new liaison roles, and initiating special joint ad hoc projects. While these efforts are currently piecemeal in nature, they are leading to a new threeway partnership in the opening stages of product development.

SEMATECH After Five Years: High-Technology Consortia and U.S. Competitiveness

Abstract: This article reports the initial results of SEMATECH, a joint experiment in semiconductor manufacturing technology between the U. S. semiconductor industry and the federal government. Although it is too soon to make a full evaluation, SEMATECH has already had a positive impact on industry performance. It has strengthened the links between the manufacturers and the equipment industry, which in turn has helped bring U. S. semiconductor manufacturing capability up to world competitive standards. The lessons from this experience may prove useful in forming a model for research consortia in other manufacturing industries and for addressing some of the issues of U. S. competitiveness.

Business Ethics: Four Spheres of Executive Responsibility:

Abstract: Many people believe that there is some single, overarching approach to business ethics: e. g., serve the shareholders, serve the stakeholders, or follow your conscience. In reality, however, the search for a grand, unifying principle of management morality leads to frustration and often cynicism. The moral dilemmas managers face are, in essence, clashes among very different spheres of responsibility. This article describes each of these spheres and presents a framework for resolving conflicts among them.

Profitability and Competitiveness: Lessons from Japanese and American Firms in the 1980s

Abstract: This article has two main objectives: to assess and compare the profitability of Japanese and American firms and industries during the latter half of the 1980s; and to explore the relationship between firm profitability and national competitiveness. The study reveals that: Japanese firms in most industries were less profitable than American firms; after adjusting for differences in tax rates, accounting practices, and debt levels, Japanese firms had lower returns on assets and operating margins than American firms, but similar returns on equity; the returns of Japanese companies exhibited far less volatility than the returns of American companies; and differences in the average returns of Japanese firms in different industries were extremely small. The link between profitability and competitiveness depends on the effect profits have on firm strategy, particularly the firm's investment strategy. In the U.S., the desire for profits may have encouraged firms to pursue strategies which are not consistent with national competitiveness. Conversely, Japanese firms have tended to adopted strategies which promote competitiveness.

Japan's Growing Capabilities in Industrial Technology: Implications for U.S. Managers and Policymakers

Abstract: This article surveys the transformation in Japanese technological capabilities since 1960 and assesses the implications of this transformation for the business strategies of U.S. and foreign firms and for U.S. public policy. Much of the R&D activity by foreign firms in Japan appears to aim at modifying products and processes for the Japanese market, rather than tapping into the science and technology infrastructure to create new products and processes for the global market. Japanese electronic companies, on the other hand, appear to be active investors in R&D in the United States, and active alliance partners as well. In some industries, many U.S. firms are responding to the opportunity to access the Japanese research system. However, important public policy issues remain over questions of structure, access, and contributions of Japanese and American firms to global scientific and technogical resarch.

Comparative Capitalism: The Japanese Difference:

Abstract: The Japanese are becoming much more explicit about how their form of capitalism differs from the Anglo-American model. The key differences are: managerial autonomy from the interests of stockholders and employees; social priorities that favor producers over consumers; industrial policy, meaning the development, guidance, and supervision of industry by the government; and the strong Japanese state, whose legitimacy derives from its accomplishments rather than from public consent. The Japanese version of capitalism is fully viable and likely to prevail over its competitors.

Riding the Russian Roller Coaster: U.S. Firms' Recent Experience and Future Plans in the Former USSR

Abstract: Dramatic changes in the former Soviet Union leave U.S. firms wondering about the risks and returns of conducting business there. This article reports the results of a 1992 survey of forty-two firms located predominantly in New England. The survey and follow-up interviews provide an understanding of the business ventures these firms were conducting or contemplating in the former Soviet Union. In the words of one respondent, doing business there is much like "riding a roller coaster."

Continuous quality improvement as a survival strategy -- the southern pacific experience

Abstract: Can Continuous Quality Improvement (CQI) be used to turn around a company in serious trouble and fighting for survival? Southern Pacific Lines believed the only available strategy for survival was to rapidly implement a CQI program that would produce sufficient results within five years for the company to achieve a successful turnaround. This article reports on the considerable success of the first two years of their program. From 1991 to 1992, a recession year that was particularly severe in the West, Southern Pacific's bottom line improved by $43 million.

Strategic Challenges and Proposed Responses to Competitiveness through Public-Sector Technology

Abstract: An important priority of contemporary public policy is to strengthen U. S. industrial competitiveness through the transfer and commercialization of public-sector technology. However, the evolving collaboration between federal technology sources and private organizations presents critical strategic challenges. To avoid disappointment, it is imperative that all parties (federal agencies, contractors, and laboratories as well as potential private partners) understand the scope and complexity of these challenges, and that each partner know the constraints, resources, methods, and culture of the other.

Vision, Values, Milestones: Paul O'Neill Starts Total Quality at Alcoa:

Abstract: Shortly after becoming the Aluminum Company of America9s first outside Chairman and CEO in a century, Paul O9Neill launched a comprehensive corporation-wide total quality initiative as part of his strategy of refocussing the company on its core businesses and "reinventing" Alcoa. This article describes the process by which O9Neill and the senior executives of the Company educated themselves on quality management, and then designed the Alcoa Vision, Values and Milestones , the constitution of the Alcoa "Excellence Through Quality" initiative. An epilogue deals with the major changes in the organization and quality initiative made by O9Neill two years later when he was frustrated with the slow pace of improvement at Alcoa.

An End to French Economic Exceptionalism? The Transformation of Business under Mitterrand

Abstract: Under Mitterrand9s presidency, despite radical swings in government ideology and policy, French business has been transformed French industry has not only rationalized and internationalized its operations, it has also altered its capital structure, creating a hard-core of investors made up of nationalized and privatized companies, public and private firms, and—for the first time—banks The environment of business has changed dramatically, with the socialist nationalizations having served to rehabilitate business as the "creator of riches" while the neo-liberal privatizations have fostered the notion that, private or public, business is business Although management practice has been modernized, labor-management relations ameliorated, and the centralization of decision making somewhat attenuated, the traditional elite recruitment and promotion system, which privileges state education and service and thereby lowers morale and undervalues achievement in business, has only changed modestly

Health Care Costs: A Moral and Economic Problem

Abstract: Health care costs are rising because of the incentive effects of insurance. These effects were supposed to be corrected by HMOs and Preferred Provider Insurance in which providers of care have incentives to be economical. But employers have not made these health plans compete on price. For example, under the formula used by the University of California for its employee health care, there is no marketplace reward for health plans with premiums below the average to reduce or hold down premiums. In the interests of a high-quality but affordable system of care, the U.C. and all other employers should instead adopt a strategy based on managed competition.

Government-Business Relations in the European Community

Abstract: This article explores the dynamics of business participation in policy making in the European Community. The government-business relationship in Europe differs from the U.S. model in four significant ways. First, the process is less transparent and formal than in the United States. Second, much of the interaction takes place out of public sight. Third, the tone of the relationship is more consensual and less confrontational. And fourth, because of the European parliamentary system there is no equivalent to the strong and direct role played by the U.S. Congress. The private sector's input with the European Parliament is far less extensive and structured than with the U.S. Congress.

Living with the Organizational Sentencing Guidelines

Abstract: This article discusses a new federal law that will subject corporations and organizations convicted of federal criminal offenses to fines as high as $290 million dollars, and perhaps more in some instances. Under that law, however, a convicted company's fine may be dramatically reduced if the company had in place, before the offense, an "effective program to prevent and detect violations of the law." An effective compliance program, as it has been described by the government, includes: the adoption of standards specifically tailored to the company's business; the involvement of high-level personnel; training programs and other procedures to educate employees about compliance; auditing, reporting, and disciplinary mechanisms; and the necessity for ongoing modifications and improvements to the program. Finally, the article also describes recent trends in the expansion of the criminal law that may subject more and more companies to the threat of criminal prosecution and explores the potential benefits of a compliance program outside the criminal context.