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ALFRED
P.
WORKING PAPER
SLOAN SCHOOL OF MANAGEMENT
MANAGING THE INTRODUCTION OF NEW
PROCESS TECHNOLOGY:
AN INTERNATIONAL COMPARISON
Marcie
J.
WP#3004-89-BPS
Tyre
March, 1989
MASSACHUSETTS
INSTITUTE OF TECHNOLOGY
50 MEMORIAL DRIVE
CAMBRIDGE, MASSACHUSETTS 02139
MANAGING THE INTRODUCTION OF NEW
PROCESS TECHNOLOGY:
AN INTERNATIONAL COMPARISON
Marcie
J
WP#3004-89-BPS
.
Tyre
March, 1989
JUL 2 4
1989
ABSTRACT
This paper examines the introduction of new technologies in the
manufacturing environment.
It
presents results of a study of new
equipment introductions in eight manufacturing plants in Italy, West
Germany, and the United States.
Drawing on both quantitative and
qualitative data on 48 introduction projects, the paper examines
variations in performance and identifies managerial factors which may
account for these differences.
In order to understand the requirements of process change, two
relevant dimensions of technological change are identified.
These are
"technical complexity", which relates to the number and novelty of new
technical features, and "systemic change", which relates to the degree
of change in basic concepts or approaches to production.
Further,
three groups of organizational response mechanisms are identified.
These are preparatory (or early) search, joint search with experts
external to the plant, and functional overlap within the project team.
Two indicators of project success are examined.
They are
elapsed time required to complete the project, and operating
improvement attributable to the new technology.
Comparing success
across regions, both startup time and operating improvement are, on
average, statistically indistinguishable in Germany and Italy. However,
performance on both dimensions is significantly worse in the U.S.
This
performance
gap
is
explained
by
differences
in
the
intensity with which the three response mechanisms are used across
regions.
In order to understand the source of these differences, the
paper examines historical and organizational differences among plants
in the three regions.
It is apparent that managerial choices over time
have resulted in distinct sets of organizational capabilities, resources,
and assumptions which may affect the way different plants approach
technological problem solving.
INTRODUCTION: NEW PROCESS TECHNOLOGY
--
PROMISES AND PROBLEMS
Example: The Case of Factory Q
In
line
December
of 1982,
Factory
Q
installed a new,
high-precision machining
which promised to move the factory into the modern age of metal working.
The
would be the
line
first
integrated,
continuous operation
Factory Y;
in
according to management the technology represented the future of the company,
and
of
In
manufacturing
December,
general.
in
the author walked through the line with one of the
1986,
process engineers who had worked on debugging the process.
operation,
but was not yet operating at
Efficiency was
full
below acceptable levels.
still
no one was sure how the new line
because engineers
had
The
line
was
in
capacity on a consistent basis.
Product quality was passable, but
quality performance should be assessed
s
never found
time
to
and
install
learn
to
use
new
measuring equipment as originally planned.
Personnel were quick to note that the line represented
forward for the plant, and the project had been successful
efficiency ratings did not capture.
the
For
plant.
four
years,
significant step
a
in
ways that
its
Nonetheless, the experience had devastated
the
new
line
had
drained
engineering
and
maintenance resources from other parts of the plant.
The best operating and
technical personnel were
new process.
still
demanded continuing inputs
sizable
investment
it
assigned
of
capital,
represented.
In
time to the
full
and had not begun
the interim,
high-performance, automated producer they had hoped
was designated
to be
line
pay back the
corporate management had
determined that Factory Q was probably not ready, after
line
to
The
it
all,
to
could be.
become the
The new
removed, and the reality facing plant personnel was
that the factory was likely to be closed.
The Challenge
This case
many
factories.
not those
of Technological
is
Changes
repeated, often
in
less
extreme form, too frequently
When companies introduce new processes, the
introductions which are quickly
those which create
a
rejected
in
too
real failures are
by the organization,
but
persistent drain on human and capital resources without
yielding competitive benefits.
One major study found
1
that productivity losses
associated with introducing
new process equipment frequently equal or exceed
the original cost of the equipment, and that the disruptive effects can persist
two years or more
for
(Chew,
Hayes and Clark,
1985;
Persistent
1985).
problems can have serious competitive implications as deliveries, reputation, and
market share
Further
slip.
change becomes
process
competitors' process technologies
move
hardware
narrowing
than
automation
poor
--
of flexible automation
the
productivity,
capabilities
quality,
and
the
Manufacturing Studies Board,
--
improvements
--
selecting,
as
of
squarely
on
inferior
According to the
companies need to "reemphasize process
U.S.
and implementing available manufacturing
using,
critical
a
technology
(1987) blames "America's
performance"
trade
Rather
very poorly.
introducing and using process technology.
in
technologies
Thurow
further" (p. 69).
it
it
gap with Japan,
trade
Jaikumar
managers "are buying the
S.
but they are using
competitive
widening
is
the United States.
in
argues that indeed U.
instance,
for
while
steadily ahead.
These concerns are particularly relevant
(1986),
impossible,
competitive
weapon."
(Manufacturing
Studies
Board, 1986; p. 17)
However, despite evidence of problems and their competitive implications,
little
is
utilize
known about how managers can improve their organizations'
Much
new technology.
of the existing
and diffusion has focused on the decision
on the process of learning to use
into
the organization
examined
the
however most
(Kimberly,
"implementation"
of
1981;
illuminate the behaviors
uncertainties involved
The Need
in
Rogers,
needed
new technology, rather than
to
1983).
This
is
it
has been brought
Some studies have
diffusion-innovation
the
focused
has
attitudes and receptivity to change^^J.
to
to adopt
stage of
research
this
research on process Innovation
new technology once
a
ability to
on
a
developing
process,
organizational
useful first step, but
it
fails
identify and address the problems and
technological process change.
for Problem Solving at the Plant Level
The premise
introduction
is
of
the
paper
is
that
the
success
of
not just a function of organizational receptivity.
dependent on managerial
responses
to
technological
a
new process
Success
change which
is
also
facilitate
adaptation of the new technology, the existing manufacturing system, and the
The new technology may
organization
itself.
processes,
may require new operating
it
not
fit
with existing production
procedures, or
skills or
it
may draw on
novel areas of knowledge or new organizational linkages (Abernathy and Clark,
1985;
Leonard-Barton, 1987; Van de Ven, 1976).
Consequently, new process
introductions often require considerable problem solving and even innovation at
the plant level (Kazanjian and Drazin,
At
the
same time,
however,
Rice and Rogers,
1986;
the
organizational
task
ongoing operations involves following standard procedures
predictable, efficient, and accurate manner.
in a
and communication patterns serve
this
to
1980).
associated
with
produce products
Existing production processes
end by routinizing activity programs and
preserving organizational roles and assumptions (Hedberg, Nystrom and Starbuck,
1976;
March and Simon, 1958).
Integrating new technology into ongoing operations, therefore,
requires
the organization to respond to two different and frequently conflicting sets of
demands (Abernathy,
and Hayes, 1984; Van de Ven, 1986).
1978; Maidique
paper examines managerial
responses
this
to
dilemma.
explores
It
This
several
adaptive response mechanisms used by organizations, and analyzes their impact
on the success of new introduction projects.
of the historical
Further, the paper examines some
and organizational factors that may influence
a
project team's
choice of response mechanisms, and that affect the team's ability to use those
response mechanisms effectively for meeting the challenge of change.
The balance
on
existing
mechanisms.
used
in
of the
literature
Part
II
the analysis.
to
paper
is
organized
identify
three
in
six parts.
critical
In
Part
organizational
I,
I
draw
response
describes the research methodology and the variables
Part
III
discusses the research
setting
in
terms of
salient characteristics of operations in the different geographic regions studied.
Part
IV
examines the data on
compares results across regions.
forces which
may explain the
various regions, and
I.
in
project
attributes
Finally,
differential
in
and
Part V,
project
I
success,
and
discuss some of the
success of introduction projects
in
Part VI suggest some conclusions based on that analysis.
ORGANIZATIONAL RESPONSES TO TECHNOLOGICAL CHANGE
An organization's proactive
of
two broad categories.
change can
efforts to deal with
information and making necessary adjustments early, before
change, the organization decreases the uncertainty
undertakes the
it
faces and increases
it
Second, the organization can increase
ability to plan for or control events.
adapt to unexpected events once change has occurred.
ability to
one
By gathering
the organization can prepare.
First,
into
fall
its
its
This involves
developing ways to capture, transmit and use new information through increased
coordination and feedback
argue that
if
in
the organization
lower
level
performance
of
(during task execution).
Theorists
change increases neither preparatory
facing
and feedback,
efforts nor real time coordination
a
time"
"real
(Galbraith,
it
has no choice but to accept
and
March
1973;
Simon,
1958;
Thompson, 1967).
Based on
and
coordination
between
dichotomy
this
feedback,
i
mechanisms" which managers use
in
the ongoing factory.
These
before the new technology
is
preparatory
three
identified
and
planning
real-time
"response
organizational
to deal with the challenge of process
change
undertaken
are: 1) preparatory, or early, search
put into use; 2) joint search during the startup
process with technical experts outside the factory, and 3) functional overlap
between engineering and manufacturing groups
The
at the plant level.
first of
these refers to preparatory efforts to identify potential problems and make
appropriate adjustments before the technology
third
is
put
in
place.
The second and
response categories both involve real-time mechanisms for adapting to
problems and opportunities which develop as the organization gains experience
with the new technology.
1.
Preparatory Search
increasing
the
factory's
personnel
not
only
"reinvent"
the
:
In
ability
investigate
to
the
is
case
of
new
events
preplan
new technology and
organization before the technology
1980;
the
requires
new technology,
relevant
technology,
process
but
aspects
of
that
also
the
installed in the factory (Rice
Rogers, 1983; Van de Ven, 1986)
operating
modify
or
receiving
and Rogers,
This may involve adapting existing
manufacturing systems, routines and procedures (Bright, 1958; Chew, 1985).
While researchers have argued
in
theory that early modification of both
the existing system and the new technology
is
a critical
part of the innovation
(Rogers,
process
empirically adjustments
adjustments made
little
Leonard-Barton,
1980;
made
they have not distinguished
preparation for technological introductions from
response to new technology once
in
known about the
is
in
1987),
it
Therefore,
installed.
is
these early activities on the outcome of
effect of
process change projects, or about the propensity of organizations to undertake
preparatory search activities.
To the extent that the manufacturing organization cannot
address
advance
in
all
potential problems associated with the
identify
and
new technology,
it
need to rely on mechanisms for real-time problem solving during the actual
will
startup
of
the
mechanisms
for
new process.
enabling
by
adaptation
real-time
suggests
research
Existing
two
increasing
important
feedback
and
coordination across organizational boundaries.
2.
change
from
of
Joint Search
is
:
One mechanism
for responding
to increase the level of coordination with
facilities
real
in
knowledgeable individuals
or organizations external to the manufacturing plant.
mutually productive problem solving across organizations
concept
of
time to process
an
"organization
set"
(Evan,
1966;
Thompson,
specifically, a unit's "technological organization set".
The
The
notion
stems from the
1967)
more
or,
latter can be defined
as a coalition of suppliers of technology, equipment, components, or information
from within and outside of the organization (Lynn, 1982).
joint
Lynn proposed that
problem solving among members of the relevant technological organization
major part of the company's problem solving capability
set can account for "a
with respect to the new technology" (page 8).
Studies
in
a
variety
of
technological
contexts
have pointed
to
the
importance of interaction with relevant members of the organization set, such
as
equipment vendors
(Ettlie
component supplier networks
However the importance
of
and Rubenstein, 1980; Leonard-Barton 1987) or
(Imai,
Nonaka and Takeuchi, 1985; Clark, 1988).
outside participation
during the startup process
seldom has been analyzed systematically.
3.
to
Functional Overlap:
adapt
to
technological
Another means
change
is
organization to create "overlapping"
to
of increasing the factory's ability
link
relevant
functions
within
the
subsystems or multifunctional teams for
dealing with change (Gerwin, 1981; Landau, 1969).
introductions,
and
floor,
whereas
the case of new process
information about the actual performance of the new technology
existing operations
with
interaction
its
In
equipment and
process
normally originates on the plant
modifications
in
typically
specified
new
At the same time,
within the plant technical or engineering function.
technological information generally originates
are
the engineering area, whereas
day-to-day decisions involving the use of the technology are made on the plant
Creating linkages between engineering and production moves the locus of
floor.
decision-making closer to the source of relevant information,
and therefore
increases the organization's ability to respond to uncertainty on the plant floor
(Beckman, 1986; Perrow, 1967).
As
discussed
above,
equipment,
fixed
operating
and
procedures,
communication channels tend to increase productive efficiency but to decrease
the
plant's
On the other hand, the three response
adaptive capabilities.
mechanisms discussed here are expected
to
facilitate
technology, the existing manufacturing system, and the organization
face of significant change
in
new
adaptation of the
the
itself in
the production process.
RESEARCH METHODOLOGY
II.
Methodoloqv and Data Gathering
The introduction
into existing plants
related to the project and
identify
patterns
and
systematic
necessary to compress this complexity into
can
be compared
demands,
I
across
collected
multiple
three
variations
a
kinds
data:
of
about
interviews;
specific
information
through
written
questionnaire;
operations and projects undertaken.
among projects,
it
in
is
To meet these competing
descriptive
information
about
open-ended and semi-structured
project
and
However,
few standardized measures which
observations.
projects, their history and contexts through
a
long
a
Understanding these factors
context.
its
typically requires in-depth clinical analysis of individual cases.
order to
is
Progress may be affected by multiple, sometimes subtle
and complex process.
factors
new process technology
of
characteristics
archival
information
and outcomes
about
plant
Early
work was
field
clinical
nature
in
began
and
open-ended
with
interviews of managers and technical staff at the corporate and division levels.
provided
This
on
perspective
company's
the
environment
competitive
manufacturing task, the technologies employed, and the impact
changes
in
Next, exploratory interviews at each plant were used to examine
these areas.
salient
of
and
dimensions of the technological change process,
and
to
identify
new
process introduction projects and principal informants.^
Data on each project were gathered through
interviews
conjunction with
hours.
a
Managers
participants,
project
and division levels were asked
at the plant
from
other
series of semi-structured
project
in
Interviews lasted from one to four
written questionnaire.
gathered
information
and
informants
principal
with
a
participants.
In
to corroborate
project
addition,
documentation was used both directly by the researcher, and by respondents as
an aid to answering factual questions
in
interviews and questionnaires.
This methodology was useful because
it
allowed interaction between the
exploratory aspects of the research and the collection and analysis of the data.
The opportunity
be refined
course of
in
a
to interview each
respondent several times allowed measures to
an iterative fashion.
Because the study was conducted over the
year or more (depending on the project),
new evidence with which
those projects which
to
were
it
was possible
to collect
refresh memories and to observe developments
still
ongoing
(nine of 48 cases).
New
in
insights
derived during the course of the research were used both to guide the analysis
of the data collected,
and
to interpret results.
Site Selection
Research was undertaken
and involved eight plants located
at a single leading
in
the United
manufacturing company,
States,
Limiting the research to one global corporation
Italy.
West Germany,
had several benefits.
In
each case the principal informant (also referred to as the
"project manager") was identified during early field work as the person who
had the "most direct, day-to-day responsibility for bringing the new
technology up to speed in the factory".
Other project participants were
identified both by plant management and by principal informants.
'
and
including controlling for industry- and firm-related variations and facilitating
access
and
detailed
to
confidential
Graham and Rosenthal,
more than
in
50% greater than
product quality
quality
consistent precision
as
in
Competition
well
as
industry.
its
competitor,
closest
its
unequalled.
is
their
p.
in
and
the
sales are
Its
reputation
its
industry
capabilities
and senior managers view the
cost,
tools
and manufacturing processes are developed
Process Development Laboratory and
central
on
tool.
are supported by extensive in-house process development
New machine
activities.
for
focuses
Company's superior manufacturing capabilities as their primary competitive
These
361;
single, well-defined industry (precision metal
a
the world market leader
is
and
projects
1986).
The Company operates
components), and
about
and competitive contexts (see Rogers, 1983;
technological,
historical,
information
in
at the
several divisional technology
centers.
The Company
is
organized geographically,
and operations
countries are run as separate divisions with local management.
carried out
Italy,
This study was
three major divisions within the Company -- West Germany,
in
and the United States
division.
These eight plants
operating
facilities.
manufacturing
individual
in
a
--
and involved two to three plants
represent
They include one
a
cross-section
of
factory
in
large
the
each
in
Company's
each
division
core part of the product line and often located close to the
division offices and technology center.
more remote and specialized
facilities
In
addition, the sites chosen include
such as subcomponent plants which serve
as internal suppliers to other factories.
The
fact that the research
particular,
I
anticipated
that,
spanned multiple countries
is
significant.
even within the same company,
managers
different countries might take different approaches to the introduction of
process technology (Jaikumar, 1986; Lynn, 1982; Clark, 1988).
research
progressed
significant
differences
emerged
different countries; these differences are discussed
Sample Selection
8
in
In fact,
III.
in
new
as the
among operations
Part
In
in
The sample
introductions
projects
of
identified
studied
includes
of
all
where the technology was "new"
new process
the
in
some way
to
a
particular factory and which:
1)
were undertaken during the
four years and completed or nearing
last
completion at the time of the study;
2)
represented
a
investment of greater than
capital
total
$50,000
(in
constant 1986 U.S. dollars); and
3) involved participants
who were
The sample includes
spectrum
incremental
a
available for interview.
improvements over existing equipment
technologies and production
systems.
from
process change,
technological
of
introductions of
to
novel
Production technologies include metal
turning and precision machining equipment, assembly and inspection systems,
thermal treatment and metal forming equipment, and handling systems.
eight projects were studied
in
each plant.
A
Four to
48 introduction projects
total of
comprise the sample.
Variable Definition
In
order to investigate organizational responses to process change and
their impact on project success, quantitative measures were developed for each
of the following:
(1)
Project Attributes:
involved,
relative
to
The
size
existing
and nature
technology
of the technological
and
to
past
practice
change
in
the
specific user environment;
(2)
Response
:
The organization's response
three mechanisms identified
(3)
Outcome
:
The success
in
Part
of the
to the
change,
in
terms of the
I;
introduction project,
disruption experienced and the benefits gained.
in
terms of the
Variables
are
described
below;
details
on
measurement process,
the
including questionnaire and interview items, are available from the author.
Proiect Attributes
Twenty four separate questionnaire and interview
to
rate
the
represented
six
newness
in
of
and the
technology
the
The
the plant environment.
Items asked respondents
nature of
original items
change
the
were then reduced
aggregate scales of technological change, which increased their
reliability
and
reliabilities
interpretability
ranged
from
adequate
(Cronbach's
alpha=.64)
to
to
statistical
measures of technological change.
as
it
Scale
very
high
(Cron bach's alpha=.86). Finally, aggregate scales served as input for exploratory
factor analysis to identify underlying dimensions of process change.
The
factor
procedure employed principal analysis with verimax rotation and orthogonal
factors (Jackson,
1983;
p.
147).
Analysis revealed convergence around two factors, accounting for 53% of
the variance
in
The
the aggregate scales of technological change.
labeled technical complexitv
,
measures the number and novelty of new features
introduced (such as tooling; measurement and control systems).
factor,
first factor,
called systemic change,
The second
the degree to which the new equipment or
is
system introduces basic manufacturing concepts or operating principles which
are new to the plant.
These two aspects
given
project
of process
change are orthogonal by construction;
may be technically complex yet
systemic change, or vice-versa.
When both
change are high, the introduction represents
of
the factory.
The
practical
meaning
of
entail
a
very
low
level
a
of
technical complexity and systemic
a "radical" shift in
this
distinction
is
the technology
illustrated
by
managers' comments about projects which were rated particularly high or low
on these variables, as shown
in
Figure
10
1.
Figure
Two Aspects
1
of Technological
Process Change
SYSTEMIC CHANGE
LOW
HIGH
"The new machine
represented a quantum
HIGH
TECHNICAL
leap in precision and
The
controllability.
result is one of the
most complex grinding
processes there is;
although we chould
change any perameter
by computer control,
we could never
completely predict
the outcome.
"Everything about the
way you produce with
this new technology
is
different;
like
having
project,
a
it's
a
/\
research
not just
production machine."
NUMBER OF
NEW AND UNI
COMPLEXITY
FEATURES
"It was not that the
specific technical
solutions were so
Some adjustment is
always necessary at
the operating level,
but this was not
really 'a happening'.
hard to develop, but
we ahd to learn
a whole new approach
to manufacturing.
that
"
LOW
>
CHANGES
IN
BASIC PRODUCTION PRINCIPLES
11
Although derived from the data, these two aspects of technological change
are grounded
existing theories of technology and innovation.
in
they build on Perrow's (1967) model of variety and analyzability
In
in a
particular,
production
process, and on Abernathy and Clark's (1985) distinction between innovations
which build on existing firm capabilities,
and innovations which disrupt or
obsolete existing competencies.
The
content,
Scale
is
scale
is
the
of
introduction
project,
measured
terms of the
in
The Organization's Response
before
The
the
new
installation
questionnaire
system,
its
of
items
detailing
investment
total
to
(2)
(Chew, 1985).
new equipment,
in
tooling,
constant 1986 U.S. dollars).
intensity of search and adjustment undertaken
process
(1)
was
measured
involvement
the
and developing the technical
and
technological
Change
to
Preparatory search:
proposing
of
also considered an important attribute of the project
and other capitalized items (converted
1.
regardless
features
factory
of
of
the
and
interview
in
personnel
in
new equipment or
development and testing activities carried out by factory
personnel prior to the delivery or installation of the new technology.
Four
items comprised an aggregate scale with adequate reliability (Cronbach's alpha =
.67).
2.
Measures
Joint Search:
of the intensity of joint search are
based on
participants' descriptions of the role of personnel from outside of the factory,
including the rated importance of contributions made by outsiders during the
start-up process.
Four interview and questionnaire items formed the aggregate
scale (Cronbach's alpha
3.
.79).
Functional overlap:
Functional overlap
is
defined as the degree to
which the roles of plant engineering and production personnel were merged
within
the
lateral
linkages used
introduction
were identified.
in
project.
Overlap was measured by the number of
the project.
Eight possible forms of lateral linkages
Since linkages are adopted cumulatively (Galbraith, 1973),
higher score represents
a
greater number of linkages and
integration between functions.
a
greater intensity of
Primary information came from
12
a
(1) participants'
sketches of the "people and project structure" on the written questionnaire and
descriptions of the involvement and contribution of various
participants'
(2)
players
Proiect
in
the problem solving process.
Outcome
measures
Multiple
measures are discussed
use
project
of
in
outcome were investigated;
this paper.
The elapsed time between
1.
Startup Time:
of
new process technologies
has
implications for the firm (Chew, 1985;
to
two principal
and productive
installation
important
economic
and
competitive
Gunn, 1987; Thurow, 1987), and proved
be of overwhelming importance to managers
in
Startup time
study.
this
influences factory efficiency and delivery performance, the ability to carry out
and career growth
other projects,
of
project participants.
Startup time
is
defined as the sum of:
1)
Initial
startup period: the elapsed time
equipment
2)
until
parts are being made
in
Introduction period: the elapsed time
new process operates smoothly
in
months from delivery
of the
production mode; plus
in
months from delivery
until
the
acceptable levels of output, cost, and
at
quality.-^
This
startup
definition
period,
significant,
is
of
startup time
during
which
generally
far
incorporates the
disruption
more
ongoing
to
costly
notion
(in
both
that the
operations
productively but
schedules
and
is
key
not yet fully debugged.
dates
reported
on
the
often
used
resources
opportunities foregone) than the later period, when the technology
is
initial
is
operating
Information came from project
written
questionnaire,
corroboration from project documentation and plant management.
9
It
is
important to note that 'acceptable" performance does not
necessarily correspond to performance at the levels originally targeted for
the new process.
Rather, it is the level of performance at which managers
and project participants agreed that the new process was running as
smoothly as existing operations, and the project was considered complete.
In some cases performance differed significantly from original expectations.
13
and
with
2.
Operating Improvement: Managerial choices are expected to affect the
effectiveness
of
process
introduction
improvements
in
new technology
the
(
Leonard- Barton
operating
as
,
performance
well
as
the
1988;
Rogers,
comes
from
efficiency
1983).
three
of
the
Data
on
interview
items
concerning the usefulness of the technical solutions implemented, the degree to
which technical objectives of the project were met, and the
reliability
The
achieved.
reliability
the
of
aggregate
level of
scale
operating
is
excellent
(Cronbach's alpha=.86).
Variables can be organized into an operational model of process change,
depicted
in
Figure
2.
FIGURE
2
Model of Process Change
PROJECT ATTRIBUTES
Technical Complexity
Systemic Change
Project Scale
-
-
ORGANIZATIONAL
RESPONSEMECHANISMS
-
Preparatory Search
-
Joint Search
Functional Overlap
-
PROJECT OUTCOME
-
Startup Time
Operating improvement
14
.
III.
One
of
the
early
REGIONAL DIFFERENCES
discoveries
research
this
in
was
that
significant
differences existed between the Company's European operations and
These differences are
division.
other
factors
historical
fundamental
strategic
within
choices
its
U.S.
part the result of managerial decisions and
in
Company studied.
the
meant that
regional
As discussed below,
operations
evolved
along
acquired different capabilities and, over time, faced different
different lines,
opportunities
In addition,
particular
managerial
is
it
and
social
decisions,
important to note that these differences developed within
political
contexts
the national
at
I
shall focus
Both
and the impact they had on operating units,
However for the purpose
examined within that larger environment.
paper
level.
specific
can
be
of this
on specific intrafirm comparisons rather than examine their
relationship with national or cultural variables.
European Operations
Local
managers
in
the Company's European divisions have
a
high degree of
However strategic decisions
autonomy over operating decisions.
relating to
manufacturing and technology are made by management committees composed of
senior managers from division and central staffs.
as well as process
Product
line rationalization,
and product development, have been aggressively pursued and
centrally coordinated through this vehicle
in
ail
European operations since the
mid 1960's.
As
a result,
there has been
a
coherent strategy for process development
the European divisions for almost 20 years.
central
Process
Development
Laboratory
In
in
the early 1970's the Company's
introduced
the
first
generation
of
proprietary "ABC" machine tools, which incorporated new concepts for precision
metal
finishing.
hundreds
of
European
introduction
soon
plants
Describing
projects.
manufacturing manager observed,
"It
machines and we had many problems.
adopted the technology,
took
a
the
process,
long time to
But we learned
a
completing
one
debug those early
huge amount about the
equipment, and about how to bring new technology into the plants."
15
senior
the late 1970's the Development Lab introduced the second generation
In
of
"ABC" machine
The new
tools.
concepts but incorporated
line
was
based on
existing
machining
proprietary microprocessor control system.
a
This
development enabled European plants to introduce one standardized control
As
technology from the start.
not
machine was
one
a
plant manager explained, "We
introduced
did
that
not
have the
made sure that
possibility
to
communicate with other machines on the floor."
the early 1980's the Company's development thrust turned to linking
In
separate machines on
German and
Italian
the
shop
plants of
the objective
1980's
latter
result
was the introduction
in
centrally-controlled, fully integrated machining
a
and assembly system capable
The
floor.
24-hour low-manned operation.
of
Finally,
in
where
been to develop flexible integration,
has
appropriate, for greater market responsiveness
in
the
low-volume product types.
United States Operation
Recent history
above.
Until
the
the Company's U.S.
in
mid-1980's
the
U.S.
division differs sharply from the
was operated as
division
separate entity from the parent Company, and pursued
The
policies.
a
a
legally
very different set of
result has been the development of a different environment for
technological change.
Until 1985
U.S. plants were managed as decentralized, independent profit
There was very
centers.
recently,
product
line
rationalization or coordination of
According to the engineering manager
process development.
"Until
little
there
was
no
long-term
real
planning
at
on
one U.S. plant,
the
subject
Every capital request was reviewed
manufacturing processes and equipment.
of
in
.
isolation
While
tools
a
number
of early
were introduced
When
years.
introduce
instead
on
in
factories
the early 1970's,
did
second-generation
external
examples of internally-developed "ABC" machine
buy new
process investment slowed
capital
vendors
16
and
later
equipment they were slow to
microprocessor-based
equipment
in
"ABC" machines,
traditional
manual
relying
technology.
were
there
While
often
plants
some efforts
ended
development efforts
integrate
up with multiple,
while the German
Further,
to
to
and
separate
incompatible machine control
Italian
complement work
U.S.
factory
operations
systems.
divisions maintained active equipment
at the
U.S. equipment development center was closed
of the functions of the division-level
machining operations,
central
in
1972.
Development Lab, the
With that move,
many
technology group were discontinued.
during
the
1970's
and
early
1980's
were
characterized by fragmented product assortments and low quality levels relative
to the
Company's standards
division
a
manager described
short-term mode.
in
it,
its
other divisions.
They were
is
shown
this period,
as one
"The U.S. division had been making money, but
not investing
Comparative data on Company divisions
on individual plants
During
in
Figure
17
4.
is
in
in
technology or productivity."
provided
in
Figure
3, while data
Figure 3
Comparative Data on Company Divisions
GERMANY
ITALY
U.S.
SIZE
Employees
6,128
7,784
3,377
$550
$400
$150
7%
7%
1.5%
1967
1967
1985
TECHNOLOGY POLICY
Company and
Company with
pre-1986:
DETERMINED BY
division
some division
plant
management
input
engineering
Sales
(U.S.$MM)1
AVERAGE YEARLY GROWTH
IN
PRODUCTIVITY,
1970-1985^
YEAR IN WHICH
COMPANY HEADQUARTERS
INTRODUCED CENTRALIZED
POLICY MAKING
managers
PRODUCT ASSORTMENT
PRODUCTION MODE
relatively
specialized;
range varies
by plant
lines,
some
relatively
specialized;
range varies
by plant
line
and batch
batch process
fragmented;
relatively
wide range
per plant
batch; some
grouped
production
DIVISION
yes;
yes;
TECHNOLOGY
CENTER
-new
equipment
-design and
build
new
equipment,
design;
-plant
technical
-plant
technical
support
support
18
not before
1986; later
division
tech. unit
directs
operations
improvement
program
Figure
3,
continued
GERMANY
ITALY
HISTORY OF
PROCESS
DEVELOPMENT
similar
in
Italy
and Germany;
continuous development based
on ABC machines and controls
since the early 1970's
U.S.
discontinuous;
major effort
in
1980's
has been the
creation of
islands of
automation
INTRODUCE ABC
CONTROLS SYSTEM
late 1970's
late 1970's
mid 1980's;
1-2 in some
locations
CURRENT
TECHNOLOGY
THRUST
develop
continue
product
flexible
integrated
rationaliztion;
lines
integrated
line
introductions
continue to
clean up
operations;
reorganize
production
into groups,
some
Approximate figures
19
lines
c
o
o
Q.
3
o
NOTES TO FIGURE FOUR
'
2
From senior managers
For the years 1982-1987
Coverage of Statistical Process Control
as a percent of target;
targets are stated in terms of the
number of machines for which control
charts are generated (Europe) or
percent of employees trained in
SPC techniques (U.S.)
IV.
Project-Level
Proiect
Differences:
Project
RESULTS
Attributes,
Response,
and
Outcome
Bivariate correlations, shown
Table
in
the validity of the measures used here.
the
Organizational
shift
represented
1,
provide some
initial
support for
These results suggest that the larger
by the new technology,
in
terms of either technical
complexity or systemic change, the longer the time required to fully
introduce the new technology.
On the other hand operating improvement
only weakly with technical complexity and
is
varies
unrelated to the level of systemic
change.
In
the absence of other variables, project scale (in terms of dollars
invested)
is
unrelated to the startup time or operating improvement.
Table
1
Relationship Between Characteristics of Technological
and Proiect Performance
(n=48)
Change
*
PROJECT OUTCOME
STARTUP TIME
OPERATING IMPROVEMENT
PROJECT ATTRIBUTES
TECHNiCALCOMPLEXITY
.52**
SYSTEMIC CHANGE
.35**
PROJECT SCALE
.07
Pearson correlations:
-.21**
.10
-.01
* = significant at P= .10
** = significant at P= .05
Note that improved performance in terms of startup time is indicated by
in the negative direction (i.e., shorter startup time) whereas superior
operating improvement is indicated by a positive change (i.e., attainment of a
higher level of technical performance).
a
change
21
These relationships can
be
Equations
regression analysis (Table 2).
above,
level of
and
[3]
show
of
multivariate
that,
as indicated
significant
a
amount (33%)
but do not explain observed variations
startup times,
in
in
of
the
operating improvement achieved.
Considerable insight
gained by introducing measures of organizational
is
Once response mechanisms are included
response mechanisms into the analysis.
in
[1]
project attributes by themselves explain
the variation
by means
further explored
the regression for startup time (Table 2, equation [2]), the importance of
both systemic change and project scale increases considerably.
More important,
the coefficients of preparatory search, joint search, and functional overlap are
all
negative; that
startup times.
is,
All
Results of the
greater use of these mechanisms
full
regression for operating improvement (equation [4]) also
Higher
responses
of
level
play
an
important
role
in
successful
preparatory search and joint search are both
associated with higher ratings of operating performance.
is
associated with shorter
coefficients are significant (at p=.05).
suggest that organizational
introductions.
is
that the coefficient of functional overlap, while
in
The major difference
the expected direction,
is
not statistically significant.
These results suggest that preparatory search,
joint search,
and functional
overlap are important mechanisms for coping with technological process change.
They appear
to contribute both to the
speed with which manufacturing
facilities
introduce new process technology, and (with the possible exception of functional
overlap)
l-^J
to the
degree
of
operating improvement achieved.
noted that fast startups are,
improvement (r=-.63; p<.05).
mechanisms identified appear
It
should also be
general, associated with high levels of operating
in
Therefore,
to
it
is
not surprising that the response
enhance performance on both measures.
22
Table
2
Effects of Project Attributes and Response Mechanisms
on Proiect Performance
A.
Effect on
STARTUP TIME
Independent Variables:
SYSTEMIC
TECHNICAL
COMPLEXITY CHANGE
1]
2]
.49**
(.12)
.54**
(.09)
B.
Effect on
.32**
(.12)
.74**
(.13)
SIZE
PREPARATORY
SEARCH
--
.05
(.12)
JOINT
SEARCH
--
FUNCTIONAL
OVERLAP
--
r2=.33
df= 44
.32**
(.11)
-.41**
-.35**
-.33**
r2=.64
(.09)
(.10)
(.14)
df= 41
OPERATING IMPROVEMENT
TECHNICAL
SYSTEMIC
COMPLEXITY CHANGE
3]
PROJECT
PROJECT
SIZE
PREPARATORY
SEARCH
JOINT
SEARCH
FUNCTIONAL
OVERLAP
-.22
(.15)
r2=.00
df= 44
.47**
.30**
(.14)
(.13)
Regression coefficients are standardized
comparison of effect sizes.
in
order to
.28
(.20)
facilitate
Estimated standard errors of standardized regression coefficients are
in parentheses:
** = Coefficient significant at .05 confidence level
* = Coefficient significant at .10 confidence level
shown
23
r2=.30
df= 41
Regional Differences:
U.S. versus Europe
The U.S. plants
in
this sample took longer, on average, to introduce
new process technology than did European
of
operating
regions.
in
improvement.
Table 3
factories and reported lower levels
shows
summary
statistics
the two
for
As noted, no consistent differences were discovered between divisions
Europe.
In
order to examine the significance of these differences,
variable indicating the country
in
dummy
are
dummy
which the project took place was included
the regressions for startup time and operating improvement.
U.S.
a
shown on Table
4;
within
Europe,
The
effects of the
performance effects
individual countries were not statisitically significant.
Table 3
Regional Differences
MEAN
Europe
(n=31)
in
in
Means: Europe and the U.S.
STANDARD DEVIATION
of
Regional Differences
A.
Effect on
in
Table 4
Startup Time and Operating Improvement
STARTUP TIME
Independent Variables:
PREP-
TECHNICAL
SYSTEMIC
COMPLEXITY CHANGE
1]
.50**
(.11)
.30**
(.11)
PROJECT ARATORY
SIZE
SEARCH
JOINT
SEARCH
FUNCTIONAL
U.S.
OVERLAP
DUMMY
.30**
.16
(.12)
(.12)
r2=.40
df= 43
2]
.54**
(.09)
.69**
(.14)
.33**
(.07)
-.39**
-.33**
-.28*
.11
(.09)
(.10)
(.15)
(.10)
r2=.64
df= 40
B.
Effect on
OPERATING IMPROVEMENT
PREP-
TECHNICAL
SYSTEMIC
COMPLEXITY CHANGE
3]
-.23
(.14)
.13
(.14)
PROJECT
ARATORY
SIZE
SEARCH
JOINT
SEARCH
U.S.
FUNCTIONAL
DUMMY
OVERLAP
-.10
-.33**
(.15)
(.15)
r2=.10
df= 43
4]
-.25*
(.13)
-.20
-.25
(.19)
(.15)
.45**
(.13)
.27**
(^14)
-.16
.20
(.20)
(.10)
r2=.31
df= 40
Regression coefficients are standardized.
Estimated standard errors of standardized regression coefficients are shown
parentheses:
** = Coefficient significant at .05 confidence level
* = Coefficient significant at .10 confidence level
25
In
Equations
and
[1]
show
[3]
regional
differences
after
controlling
measured project attributes but not controlling for variations
On
response to change.
significant decrements
dummy
this basis, the U.S.
project outcome.
in
took longer to complete than did projects
in
variable
introduced
in
is
associated with
undertaken
Projects
the U.S.
in
European plants by an average of
The "U.S.
8.8 plant months, or an increment of almost 45 percent.
operating improvement
organizations'
in
is
effect" on
comparable; at the mean, new equipment and systems
the U.S. were rated 48 percent below those introduced
in
for
in
Europe
terms of operating improvements achieved.
Once organizational
are
taken
account,
into
however,
the
where projects were undertaken and the outcomes achieved
association between
becomes
responses
insignificant.
statistically
The addition
preparatory search,
of
dummy
search, and functional overlap reduces the effect of the U.S.
joint
variable on
startup time by approximately two thirds (Equation [2]), and decreases
its
effect
on operating improvement by approximately one half (Equation [4]).
Sources of Regional Differences: Organizational Responses to Change
in
Europe
and the U.S.
This analysis suggests that while the U.S. plants studied do tend to perform
poorly on process introductions relative to their European counterparts,
part of the gap
to
is
accounted for by the tendency of project teams
respond somewhat
supported
comparing
by
the
This argument
new equipment.
relationship
between
project
respond
or
joint
teams appear to be less
preparatory
search
introductions.
projects
is
In
I-
"^j
fact,
in
the
there
face
is
large-scale
projects
in
the U.S.
rated either five or six on
possible high score of 8), while no U.S.
26
to
projects
strongly associated with the degree of syst
six
and
U.S. -based
preparatory search
marked tendency
Further, while the use of functional
absolute levels of functional overlap
Europe,
a
of
further
than their European counterparts to
likely
to particularly challenging projects with intensified
search.
is
attributes
organizational response variables across the two regions (Table 5).
project
the U.S.
in
vigorously to technological change, both before and
less
installation of the
after the actual
a large
ar
fi
o"
c
still
undertake
than
3rlap
in
in
less
smaller
U.S. -based
change undertaken,
relatively
ictional overlap
low.
In
(out of a
project rdted higher than four.
Conversely, five projects
in
the U.S.
had an overlap rating of
possible score), as opposed to one such project
(the lowest
Europe.
in
Table 5
Organizational Responses to Technological Change
[1]
Projects Undertaken
in
EUROPEAN PLANTS
(n=31)
Organizational Response
PREPARATORY
SEARCH
JOINT
SEARCH
FUNCTIONAL
OVERLAP
Proiect Attributes
TECHNICAL COMPLEXITY
SYSTEMIC CHANGE
PROJECT SCALE
[2]
Projects Undertaken
in
-.08
.51**
.01
.27*
.29*
.39**
.05
.03
.26*
U.S.
PLANTS
(n=17)
Organizational Response
PREPARATORY
Project Attributes
TECHNICAL COMPLEXITY
SYSTEMIC CHANGE
PROJECT SCALE
The
and
following analysis seeks an answer
technology
process
within
each
in
the evolution of manufacturing
division.
suggests
It
that
evolutionary patterns created very different attitudes and capabilities
different
Europe
in
Further, these attitudes and capabilities, once created, proved to
and the U.S.
be long-lived and resistant to change.
Starting
in
1985,
management
at the
corporate and division levels began taking vigorous action to address historical
weaknesses
in
However the evidence suggests that embedded
U.S. operations.
constraints continued to affect efforts to introduce new process technology.
Evolution of Technical Capabilities
As noted
Section
in
II
above,
both
the German
and
divisions
Italian
boasted strong installed bases of process technology, excellent manufacturing
capabilities,
and technically capable personnel which were largely lacking
Company's United States division.
Productivity growth
1
.5% (Figure 4)
.
plants were judged by
their
European counterparts
Company management
in
of operating efficiency
in
1985,
differences
performance indicators began
to
behind
to be considerably
terms of defect and quality
and
levels,
in
such as cycle time and machine set-up time.
Following the introduction of coordinated
operations
the U.S.
in
Similarly, while local variations prevent exact comparisons,
U.S.
measures
the
Europe had averaged
in
7% per year between 1970 and 1985, whereas the comparable figure
was
in
between
Company management
regions
in
of
U.S.
manufacturing
specific
However, patterns and assumptions
narrow.
developed during the earlier period continued strongly to influence the way
in
which new process technology was introduced into plants.
Most
important
appears
to
be
a
relatively
weak organizational
infrastructure for continuous process development and refinement.
such activities were not tracked consistently before 1986.
senior manager
in
28
The
result,
the U.S.,
According
the region, "There were other ways to show
worrying about operating efficiencies."
In
a profit
according to
a
to
one
besides
manufacturing engineer who had worked
in
both European and North American
plants, was that;
In America, it's easy to get plant engineers to work on large projects,
with formal project management structures, but it's extremely difficult to get
People tend to drift away to other
attention focused on small projects.
problems when the work is only half done, leaving all the little details that
actually mean the difference between success and failure in a new piece of
equipment.
both
In
Italy
and Germany, plant-level engineers spent
a
great deal of
time developing and achieving annual improvement plans, specified
productivity,
ongoing
in
at
terms of
and other measures of operating effectiveness.
quality,
improvement was managed differently
personnel
in
in
While
the two European divisions, plant-level
both countries generally had several process improvement projects
any time.
These
frequently
"miniprojects"
development and testing of new tooling or devices
division's local technical center or (especially
in
in
involved
iterative
conjunction with
the
Italy) with outside suppliers.
According to one senior technical manager;
When we say
that European
that they concentrate not
responsible for both product and
development center for a specific
mean
plants are specialized
just on making those
by product
parts
we
line,
but are also
process development.
Each division is a
technology.
Underlying this is a strong
While we
requirement -- and will -- to improve on what now exists.
rationalize product lines, we integrate technical ideas across plants and across
divisions.
A
closely related difference between the two regions concerns the
way
in
which project teams used external sources of expertise, both inside the company
and outside
it,
to
explore technical problems and potential solutions.
While
counterexamples exist, U.S. project teams tended to expect to purchase solutions
from equipment vendors or component suppliers,
Europe were more apt
of a
given item.
to use outsiders as a resource for continued
This contrast
is
apparent
different regions viewed the development of
technology.
In
whereas project teams
in
new
development
the way project teams
tooling to support
in
in
the
new process
Europe, tooling development typically was viewed as
a
critical
task requiring the combined knowledge of both plant-level engineers and tooling
experts from internal and external suppliers.
in
an Italian plant explained that;
29
For instance, one project leader
We identified very early what would be the most critical problem to solve:
developing tooling of sufficient precision to allow us to take advantage of the
And we devoted a great deal of effort to a thorough
new CNC technology.
An important part of this process was working with the tooling
tooling study.
experts at the equipment developer -- the real workers who use those
machines -- to understand how to utilize this new technology.
Developing
tooling
systems
which
were
not
just
but
usable
considered one of the factory's regular responsibilities,
and was
attention before, during, and after the introduction itself.
In
this
focus of
a
several instances,
emphasis blurred the exact boundaries of the introduction "project"
As one German project leader told me, "You really can't
effort
at
tool
always doing, on
all
the equipment vendor,
development.
the
project
--
that's
all
the continued
something we are
project managers expressed the view that the most
approach was simply
efficient
of
call
itself.
our equipment."
many U.S.
contrast,
In
part
optimization
was
optimal
to
purchase
a
satisfactory tooling package from
thereby avoiding the need
to
invest time
One manager attributed the problems which plagued
a
tooling
in
particular
introduction to the fact that the machine had not been purchased along with
full
complement of tooling from the vendor.
that the external supplier had delivered
bat.
It
never presented
ask for changes.
The
"
a
Another project manager explained
a tool
set "which
worked right
problem, so we never had to run any more
off the
trials or
He was extremely satisfied with the arrangement.
notion that technology can be purchased "off the shelf" extended to
new manufacturing equipment from the Company's Process Development Lab.
a
a
senior U.S.
As
manufacturing engineer explained;
The new machines from Central Lab require a shift in skills and operating
-- but that is all provided.
You don't need to have all the
procedures
knowledge
hardware and
in place because the machines come complete with
software, reference manuals, and service engineers from Central to do the
training and initial set-up.
Once you learn how to push the buttons, these
machines are quite simple to use.
This expectation, however, was not borne out
instance where equipment from the central
plant,
in
practice.
almost every
Lab was introduced into
project participants complained that the machine did not
30
In
in
a
U.S.
fact operate
according to specifications, and that the service engineers who performed
set
up did not complete the task
operators.
U.S.
debugging the equipment or training
of
Engineers from the Process Development Lab,
While there were notable instances
participants invested heavily
in joint
local
turn, argued that
in
managers and technical personnel expected Lab engineers
equipment for them.
initial
run their
to
which U.S. project
in
search with equipment vendors,
all
but one
such case involved vendors external to the company and technical features
which were relatively well-developed (low to medium technical complexity).
While
European
participants
project
also
about technical
complained
support from the central Lab, they simultaneously stressed that part of the
development responsibility must rest with the factory.
As
a divisional
manager
explained;
Engineers in the Labs are experts in the machine technology, but we are
ones
the
who really understand the manufacturing process. Therefore, to take
machine which meets the basic specs and make it respond to all our
a
requirements --that's the job of the factory.
Engineering Infrastructure:
The
different attitudes and capabilities displayed
States appeared to be rooted
two
regions
--
that
is,
in
in
Germany and
Italy differed in
in
many
approaches
to
Italv
:
In
Italy,
according
to
in
the organization
the manufacturing environment.
the
and
Although
details of their engineering infrastructures,
both divisions shared common themes which were absent
1.
Europe and the United
different engineering "infrastructures"
contrasting
development of technical talent
in
the
division's
in
director
the U.S.
of
manufacturing
technology;
The word "engineer" is hard for us to define. There are at least two
First and foremost, the
possibilities this can refer to within the plant.
backbone of this organization is the "shop floor engineer". He is in the line:
a foreman or assistant foreman.
He is responsible for production and
He also has hands-on
quality, as well as for cost and quality improvements.
responsibility for new projects.
Second, there are factory technical offices.
generally
These are the future-oriented engineers; they support production people in
But they
ongoing operations but they also develop new kinds of solutions.
It's
introductions.
never have direct project responsibility for new process
31
important that line managers have responsibility for new technology from the
start.
Indeed,
many instances
in
functional overlap
in
was
it
difficult
measure the degree
to
because respondents sometimes had trouble
Italian projects
distinguishing engineering and production as separate functions.
an
cases,
individual
was
described
manufacturing, but also maintaining
development
Personnel
in
of
a
the
having
as
seat
several
responsibility
direct
for
the plant technical office.
in
division
Italian
In
considerable job
includes
rotation between direct manufacturing supervision and the plant technical office.
All
levels
manufacturing management and technical experts go through
of
"spiral of rotation" which begins with
experience
a
in
individuals also
While the Italian technical center
with
plants
In
to realize
addition,
career, creating
the division.
a
The
Promising
division technical center and the factories.
itself
understand their needs,
to
component suppliers
plants.
machine attendance and generally includes
variety of manufacturing and project situations.
move between the
very small,
is
its
staff
works closely
and with outside machine shops or
new ideas for machines or devices for use
people move between
plants
was noted for
its
in
the
over the course of their
basis for sharing knowledge and experience
Italian division
a
among plants
ability to utilize
in
and build
on existing knowledge through extensive in-house training, team structures for
almost
activities,
all
and cross-fertilization among areas and plants.
Many observers within the Company pointed
developed
by
this
system
at
the
mechanics and maintenance people.
described
level
of
to
production
the
deep capabilities
setters,
As the Company's director
of
supervisors,
manufacturing
it;
Our Italian plants put less emphasis on the pure engineering excellence of
their people than do, say, the Germans; but their strength is in the very
careful, conscious management of their technology.
They have created a very
high level of interest and ability among all their people.
The outcome,
The
and
it's
as one U.S.
engineering manager remarked, was that;
Italians are wonderful at making
because of the management there,
32
all
kinds of process refinements--
not the product line or anything
They love to "fiddle" with their equipment. But it's not a game --they
are very conscientious about applying their knowledge to their operations. You
take a machine which we consider great, but they make lots of little
innovations and end up running twice as much product on it.
else.
2.
Germany
the German division, the plant-level engineer
In
:
Engineering
differently.
and generally
reports
is
is
conceived quite
organizationally distinct from production management
directly
Many
plant management.
the
to
plant-level
engineers have formal engineering degrees, as distinct from the apprenticeship
undertaken by operating personnel.
Indeed, there are important distinctions
within the engineering office based on individuals
theory,
In
responsibilities
least,
at
formal technical training.
the plant are clearly bifurcated.
in
The
Engineers are directly responsible for cost and quality improvements.
engineer
chief
the formal project leader for planning and administration of new
is
process introductions, and implementation
engineer
of a process
in his
is
Production managers, meanwhile, are
or her group.
responsible for meeting output targets
generally the direct responsibility
in
terms of quality and quantity.
They
are also expected to support the engineers' improvement efforts, principally by
allocating
and
people
development time
improvement and
to
introduction
projects.
However, these clear distinctions often break down
--
broken down
practice.
in
Two
of
--
studied
the three plants
presented exceptions to the standard organization structure.
composed
to
In
fact,
in
at least
production manager was also the chief engineer.
also
(degreed) engineers working
'real'
engineers
who
in
Germany
One plant was
shops or subfactories; within them, engineers reported
of several small
manufacturing shop managers.
to the
or are actively
sat
on
the
in
production
In
one
of these
another plant,
shops, the
in
addition
the technical office, there were
floor"
in
each
department and
reported to manufacturing managers.
Further,
personnel at
all
there was
levels.
considerable
technical
expertise
among production
Production managers typically were shown considerable
respect by degreed engineers on the basis of their technical know-how.
As one
degreed engineer explained, "The manufacturing supervisor and the department
manager are
really
engineers too
--
they are the floor engineers."
33
While their
technical capabilities varied, manufacturing managers at this level
some formal technical training,
technical
problems
on
the
and they were the
Indeed
line.
engineers
charge
in
introduction
of
department managers
production
projects
ones to respond to
first
frequently came from the plants engineering office.
received
all
many cases, junior
In
reported
in
a
sort of
informal
matrix arrangement to the production department manager.
Relative to Italy, technical personnel
Germany were
in
among plants or between plants and the division technical
less likely to rotate
office.
On the other
hand, considerable efforts were made to link technical development activities
at
the division were located
in
a
seven plants
First, five of the
various facilities.
in
geographically centralized "complex" along with the division headquarters and
The
technical center.
of the
group
in Italy,
to implement
division technical staff, which was several times the size
was responsible for designing, building, and helping plants
new equipment and systems.
Especially
plants located
in
in
the
central complex, there was considerable interplay between plant engineers and
engineers at the technical center.
Further, factory personnel with particular
areas of expertise or experience were often consulted or even borrowed for
projects undertaken
Whereas
other plants
in
known within the Company
was
Italy
the complex.
in
"fiddling" with production equipment once
famous
for
doing
equipment and
a
the
great
deal
existing
of
factory
it
technical
before
for
was on the
floor,
preparation
attempting
its
a
of
penchant for
Germany was
both
the
new
new introduction.
While this did not always occur (as measured by levels of preparatory search
the
studied)
projects
importance.
it
consistently
was
recognized
as
being
of
in
utmost
One project leader explained;
This was one of our most successful introductions because we worked
all the most important unknowns, and to develop solutions,
before the equipment was shipped or, in many items, even before it was
ordered, if you really think about it, you can identify and address 95 percent
of the hard issues beforehand.
explicitly to identify
3.
United States
:
The formal organization structures
of
U.S. factories resembled
the German pattern, with separate engineering departments reporting to the
plant manager.
However, with the exception of the small subcomponent plant
34
studied, informal integration of technical priorities and production requirements
was often more
blamed delays
difficult to attain.
in
several instances, plant-level engineers
In
introducing new equipment on the difficulty of getting the
production manager to set aside time for operator and supervisor training or for
Manufacturing managers,
on-line testing of tooling or devices.
meanwhile,
frequently attributed disruption and startup delays to the absence of engineering
support during startup and later debugging of the new equipment.
many individuals
Further,
capabilities
company argued that engineering
the
plants were too thin.
U.S.
in
in
In
the U.S., formal and in-house
technical training or personnel development through job rotation received
less attention
than was true
in
Plant-level engineering capabilities, and
Europe.
the relationship between engineers and production people
widely.
Unlike
engineers was
a
the
situation
in
They do
In
in
in
the plants, varied
high
turnover among
As one senior manager said with
these plants are not even from our industry.
not really understand the products and processes involved."
addition,
necessary technical
in
European divisions,
frequently-cited problem.
dismay, "Many of the engineers
much
managers and technicians on the plant floor often lacked
skills.
According to one European engineer who had worked
various U.S. operations;
The production supervisor is the place where there is very often a big
In too many cases, the supervisor does not have sufficient understanding
modern production technologies, so he ends up relying of operating people
gap.
of
Sometimes the operators have long experience and
for process expertise.
So it can be hard to
special aptitudes, but sometimes that is not the case.
carry out big projects successfully.
Another engineer, who had worked
forty
years,
pointed
"engineering backup"
to
in
serious
local
in
erosion
factories.
the Company's U.S. division for some
of
In
process
capabilities
among the
his view.
The operator level is not, or should not be, what is critical. Productivity
and new machines comes from the engineering backup in the plants
of both old
the engineers, maintenance people, and supervisors. That small group has
got to be the organizational intelligence between management and operators.
They have to be able to teach operating people, to guide them to focus on key
problems, not just rely on operators' expertise. The competence of that group
and how it is cultivated is the key to the ability to bring in new machine
technology.
--
35
CONCLUSIONS
VI.
paper has analyzed the performance
This
new process introduction
of
efforts undertaken within a single technology-based
The analysis has suggested that
Europe and the United States.
differences
identified --
shown
performance can be traced to underlying differences
in
respond
teams
project
to
regional
the way
in
preparatory search, joint search, and functional overlap
improvement.
operating
Europe and the U.S.
in
--
were
terms of startup time and
in
was also shown that project teams
in
their propensity to use these mechanisms
in
However,
differ
both
in
The response mechanisms
change.
technological
support improved project performance
to
company operating
it
dealing with challenging introductions.
have suggested that these response patterns may be linked to historical
I
choices concerning the development of technology
This
study
identified
and
three critical
related
governing the development of technical capabilities
the existence of
a
in
the operations studied.
areas
of
managerial
manufacturing.
in
choice
First
was
multi-faceted, strategy-level management body charged with
the guidance of process development activities.
In
Europe, this body served to
coordinate development efforts over time, among plants, and between plants and
internal
R&D
facilities.
Second was
consistent,
a
top-to-bottom emphasis on
the continuous improvement of existing manufacturing processes.
showed
up
performance
plainly
in
in
high
levels
productivity
of
European divisions, and
project participants brought to
in
This effort
improvement and quality
the attitudes and assumptions which
new process introductions.
Finally,
the third
area of managerial choice which differed across regions was the creation of
system for building technical competence
Italy in particular,
the manufacturing organization.
In
continuous managerial emphasis on training, cross-training,
and cross-fertilization appeared
unusual
in
a
capabilities
to
both
to
have resulted
ongoing
process
introductions.
36
in a
workforce which brought
improvement and new process
This paper leaves many questions unanswered, and perhaps suggests some
new ones.
First,
No attempt has been made
single company.
in
must be remembered that this study was confined to
it
a
explicitly to link managerial choices
the company's different operating units to broader political, economic, and
cultural forces
Europe and the U.S.
in
these findings to other organizations
hand,
the
reviewed
findings
Therefore
(1985),
different
this
national
study suggests that
manufacturing technology, and
people
paper are broadly consistent with
of
including Jaikumar
contexts,
Hayes and Wheelwright (1984), and Piore and Sabel (1984).
More important
its
in
On the other
who have compared the development
conclusions reached by other authors
manufacturing technology
impossible to generalize
the countries involved.
in
this
in
is
it
and
processes,
are
manufacturing technologies.
company's strategic guidance of
attention to the long-term development of
its
linked
intimately
This
a
to
its
ability
interdependence has
to
utilize
new
suggested by
been
analysts and industry observers (e.g. Schonberger, 1986; Manufacturing Studies
Board, 1986; Thurow, 1987), however there has been
support
managerial choices
historical choices
but
also
and
assertions"^
its
little
clinical
these areas.
in
I
on
detail
have tried
the
in
about technology influence not only
ability
to
redefine
itself
through
empirical evidence to
little
effects
this
paper
a firm's
the
different
of
to
show how
current standing
introduction
of
new
technologies.
More research
global corporation.
is
merited which
explores
these connections within
The questions involved are important
change
for increasing our
manufacturing
understanding
of
organizations.
Further, these issues are of vital practical concern
the
process
of
technological
the
in
in
light of
the serious questions which now surround the global competitiveness of the U.S.
manufacturing sector.
An important exception to this is work by Hayes and Clark (1985) and
their colleagues, who showed that plants which were "better managed" in terms
of quality performance and inventory levels were also able consistently to
introduce new equipment with less disruption than more "poorly managed" plants.
•^
37
research tradition is represented by two streams of research.
of the "implementation" research published during the 1970's
examined the different requirements of various stages in the innovation
process.
Many authors concluded that implementation, as distinct from
development, calls for relatively tight forms of managerial control (Duncan,
1976; Sapolsky, 1967; Zaitman, 1973). Another research stream focuses on
creating organizational or worker receptivity to the new technology (Coch
and French, 1948; Majchrzak, 1988; Nutt, 1986).
1.
This
First,
much
worth noting that the ambiguity surrounding the role of functional
explained by examining its effect given different kinds of
is
technological process change. As discussed in Tyre (1988), functional overlap
appears to be an important mechanism for responding to high levels of
systemic change.
However, evidence suggests that functional overlap is not
important for dealing with technical complexity in new process introductions.
2.
It
is
overlap
One reason for this surprising finding is that, in many cases, large-dollar
projects involved the introduction of new equipment from the Company's
central Process Development Lab.
U.S. project managers frequently expressed
the belief that it was "their responsibility" to fully test their equipment and to
deliver working production machines. This issue is discussed later in the paper.
3.
38
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4^
Innovation
of
in
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