When we teach the core operations management class at Kellogg, we begin with a module on Operations Strategy. This in many ways is a logical place to start the course; we make a pitch that operations as a function plays an important role in the prospects of the firm which in turn provides motivation for many of the subsequent topics we cover. It also is one of the most immediately accessible topics for students even if they have had little exposure to operations before coming to school. One of the BIG IDEAS we pitch in that module is Focus – in a perfect world operations should be focused in the sense that each set of resources should have a limited set of objectives in terms of the customer needs they must satisfy. This allows resources and processes to be optimized to those objectives. Wedding gowns and tube socks are both broadly speaking apparel but resources set up to produce the former are unlikely to also be competitive in the market for the latter.
So how should a firm organize its operations if it needs to serve diverse markets but doesn’t have super deep pockets to afford multiple completely separate facilities? The traditional answer has been a “plant within a plant,” having resources with distinct charges that share some common resources (say, the roof over their heads). This is easy to say, but potentially hard to do. Robert Huckman has an article in the current issue of Harvard Business Review (Are You Having Trouble Keeping Your Operations Focused?, Sept 2009) that discusses why the plant within the plant idea often fails and what can be done to make it work. Much of what he points to are failures to give clear objectives to various units and ambiguity of what should be shared and how it should be shared. This is an interesting article. Straightening out objectives – and pairing them with appropriate measures – seems a sensible and achievable goal. One suspects, however, that setting up appropriate criteria for sharing is much more challenging.