Productivity Improvement
and Competitiveness
Why is Productivity Improvement
Important to An Organization?
Why is Productivity Improvement
Important to An Organization?

Cost reduction and increased profits

Global competition

Pricing and financial pressures

Rising customer expectations

More effective use of resources

Market share increase /market expansion
Does Productivity Improvement
Guarantee Financial Success?
Competitive Strategies

Specific performance criteria associated
with the competitive priorities are used to
evaluate an organization’s performance:
• Cost (initial, life cycle) and availability
• Quality (performance, features, reliability, etc.)
• Flexibility (product, process, & volume)
• Delivery (speed, dependability)
• Service (types)
Competitive Strategies (Continued)

Competitive priorities are usually ranked
according to their importance to the overall
organizational strategy.

Different organizational strategies place
different demands on the operations of the
organization.
Competitive Strategies
(Porter’s Model)
Competitive Scope
Competitive Advantage
Broad
Target
Narrow
Target
Lower Cost
Differentiation
Cost
Leadership
Differentiation
Cost
Focus
Focused
Differentiation
Competitive Strategies
Examples
Competitive Advantage
Competitive Scope
Lower Cost
Broad
Target
Narrow
Target
Differentiation
Strategic Directions (Value
Disciplines) – Treacy & Wiersema

Operational Excellence – Wal-Mart,
Southwest Airlines, Toyota, Dell, USAA

Customer Intimacy – Home Depot,
Nordstrom, Ritz-Carlton, Kraft

Product Leadership – Johnson & Johnson,
Merk, Nike, Apple Computer, Toyota
Customer Requirements for the
Strategic Directions
Operational
Excellence
Customer
Intimacy
Product
Leadership
Price
Convenience
Accessibility
Consistency
Timeliness
Accuracy
Flexibility
Responsiveness
Empathy
Innovation
Performance
Features
Which of the Strategic
Directions is Most Effective?
What Are the Major Strategies
to Improve Productivity?
Productivity Improvement
Strategies








Downsizing/
Outsourcing
Technology (hardware & software)
Re-organization
Product and process innovation
Merger & acquisition
Motivational & incentive programs
Training & development
How Effective Are Each of
Those Strategies?
How To Achieve Long-Term Success
in Productivity Improvement?
Productivity Improvement
Portfolios

Investments in leadership development

Investments in facilities and equipment

Investments in programs and systems

Investments in people
(Note: These alternatives are not mutually
exclusive. All are important.)
Productivity Improvement
Strategic Approaches

Are not limited solely to operations

Do not focus solely on direct labor

Do not only seek out quick cost reductions

Do not throw together unconnected projects

Are linked explicitly to business needs
through the strategic planning process

People are the real key to success
What Could be the Barriers to
Effective PI?
Barriers to Effective
Productivity Improvement

Poor Leadership

Flawed measurements

Flawed HR management systems

Bureaucracy

Lack of a long-term business strategy

Short-term focus

Ineffective execution