Professional Documents
Culture Documents
Organizational structure.
Faced with this paradox-efforts to im-
prove productivity driving competitive success further
out of reach-a numher of companies have broken out
of the hind with extraordinary success. Their experi- Accepting the fact that its manufactur-
ence suggests, however, that breaking loose from so ing was in trouble and needed to be run differently.
long-established a mind-set is not easy. It requires a In the mid-1970s officers of the Cope-
change in culture, habits, instincts, and ways of think- land Corporation, a large producer of refrigeration com-
ing and reasoning. And it means modifying a set of val- pressors, decided that their industry was fast hecoming
ues that current reward systems and day-to-day opera- mature. An analysis of their nearly obsolete production
tional demands reinforce. This is a tall order. facilities and equipment made it clear that manufactur-
Every company I know that has freed it- ing had become a corporate millstone. Without a major
self from the paradox has done so, in part, by: change in the number, size, location, and focus of these
facilities, long-term survival would be impossible.
Recognizing that its approach to pro- Copeland made these changes. The results (descrihed
ductivity was not working well enough to make the later) were remarkable.
company cost competitive. This recognition allowed Developing and implementing a manu-
managers to seek strategic objectives for manufactur- facturing strategy (see the insert).
ing other than those determined primarily by cost. When production managers actively
Ahout 12 years ago, a key division of seek to understand (and, in some cases, to help develop]
American Standard adopted a "become the low-cost the competitive strategy of relevant business units,
producer" strategy. Its productivity-driven focus did lit- they are better able to work out the ohjectives for their
tle to reduce costs hut had an immediate negative ef- own function that will tum it into a competitive weap-
fect on quality, delivery, and market share. What Stan- on. The requirements of such a manufacturing strategy
dard needed was a totally new manufacturing strategy will then determine needed changes in the manufac-
-one that allowed different areas of the factory to spe- turing system's structure and infrastructure.
cialize in different markets and quaUty levels. When At Copeland, this approach led to order-
this approach replaced the low-cost strategy, the divi- of-magnitude improvements in quality, shortened de-
sion regained its strong competitive position within livery cycles, lower inventory investments, and much
three years. greater flexibility in product and volume changes.
Productivity paradox 59