The twenty first century managers, around the world experienced mixed emotions: a sense of real accomplishment accompanied by frustration and uncertainty. The famous which two hundred years earlier had been sent by President Thomas Jefferson to explore the Missouri River to its headwaters and then continue on to the Pacific ocean, provided an appropriate historical example. After months of backbreaking labour, during which their very survival was often in question, the expedition finally reached the source of the Missouri. On the other side of the ridge ahead of them they expected to discover the beginning of the Columbia River, down which they could float in relative ease to the Pacific. Instead, when they reached the top they looked out upon the lofty peaks of the Bitterroot Mountains – the most formidable they had yet encountered stretching into the distance as far as they could be.
Not only were these mountains unexpected, they were largely uncharted – like many of the challenges facing operations managers today. At the same time they were attempting to deal with a sudden and unexpected transition from economic plenty to deflationary decline and from cold war stability to global insecurity and uncertainty they were losing confidence in many of the highly touted new approaches to operations that had promised to improve their ability to deal with instability and intensified competition. They found these new approaches not only more difficult and time consuming to implement on a sustained basis than they expected, but they were often inappropriate in certain situations.
Nor had their previous experience prepared them to deal effectively with the challenges posed by a dizzying series of advances in information technology, including the advent and growing power of the Internet. But most included a combination of these factors:
*Advanced technology (generally information related).
*Network partnerships, where key outputs and productive assets are primarily intellectual
Although most popular has focused on the Internet related dot-coms the information intensive New World Economy is actually much broader. It includes software development, telecommunications and much of the media / entertainment industries, as well as Internet services.
During the 1990s, these new information intensive industries rapidly became a major force in the world economy. Efforts to ascertain their growing impact suggested that about a third of the US GDP growth between 1995 and 2000 was attributable to information technology (IT) alone as well as half the growth in its Total Factor Productivity. Sophisticated observers believe that the forces driving these industries are fundamentally reshaping the way the world’s economy operates, permitting higher sustained rates of growth, productivity and employment than ever before possible. Corporate success in this new world economy demanded a fresh look at strategy and particularly strategies for managing operations. Complicating the picture further, these new technologies were challenging many of the operations management’s traditional practices. They also offered enormous potential for improving operating effectiveness and enabling the operations function to play an even more prominent role in corporate success.
During the closing years of the twentieth century, companies around the world experienced a roller coaster of emotions. First they enjoyed a long period of growth and prosperity, fostering expectations of an almost limitless future.
Corporate scandals further rocked investor confidence and wiped out billions of dollars in paper wealth. Business became much more difficult than it had been in the 1990s, and quick fixes, strategies breakthroughs and charismatic leaders no longer seemed to be as effective in dealing with these new challenges. The key to enduring success was increasingly recognized to be operational excellence, and such excellence required a firm’s foundation in a coherent and consistent strategy for operations and technology.
This article seeks to provide insight into the building blocks of such a foundation. We discuss how to construct an operations strategy the issues that need to be addressed is giving its form and substances why many of the traditional approaches for dealing with those issues are no longer appropriate and how new approaches and technologies can be marshalled to the task. We end by providing guidance into how an operations organization can be set on a path of continual improvements, and how to avoid the frequent pressures to deviate from that path. The business environment and competitive priorities changed over the past two decades, and why many managers have lost confidence in some of the new approaches to operation that had appeared to be so effective earlier, in that period. There is also an impact of advances in information technology are having on business and particularly on operations today.