12 Oct 1999  Research & Ideas

Building Competitive Advantage Through Operations

Editor's Note— At the HBS Executive Education program Building Competitive Advantage Through Operations (BCAO), executives charged with leading and building operations and manufacturing strategies enhance their understanding of operations performance and develop long-term sources of competitive advantage. Professor David M. Upton is the faculty chair of BCAO. He spoke with an Executive Education staff member about the course.

EE: How do you define the term "operations"?

Upton: "Operations" constitutes all of the activities that a firm conducts in order to deliver value to its customers. It's the set of processes that transforms either materials or information into a product or service.

EE: How has this definition evolved over the past decade?

Upton: There have been some exciting changes in recent years. First, operations is no longer merely something that has to "get done" in order to proceed with business as usual; today, firms with superior and novel operations can generate huge competitive advantage because of them. Second, where operations was once viewed primarily as a manufacturing function, service firms are now recognizing what tremendous competitive potential is offered my outstanding operations. Federal Express and L. L. Bean are superb examples of this. Finally, the operations landscape, like everything else, is being revolutionized by information technology (IT) and the Internet.

EE: When was the BCAO course first introduced?

Upton: The course was introduced in its current form in 1994, superseding Manufacturing and Corporate Strategy.

EE: Has it changed much recently?

Upton: The course is perpetually renewed through new cases and teaching material. The next session, for example, contains considerably more material than last year relating to running operations across the Internet as well as having a heavier IT component that examines subjects such as Enterprise Resources Planning (ERP) and Internet Commerce

EE: What are the main objectives of the program?

Upton: BCAO's primary objective is to enable managers to make dramatic changes in the effectives of their own operations when they return. Furthermore, we want them to understand what the future holds for operations, in particular in terms of the new technologies..

EE: Are there "typical" operations challenges that managers bring with them to this course?

Upton: Yes. Our participants are generally concerned with questions such as: How do I improve quality in my service operation? How do I make my organization become more innovative? What should we do about the Internet? How do we deal with globalization? and, What can I do to transfer best practices from one operation to another?

EE: How does the course address these areas of concern?

Upton: BCAO includes cases and lectures about each of these issues. In the next session, for instance, we'll discuss a case on the Toyota Production System (TPS), an exceptional manufacturing system that happens to be extraordinarily difficult to transfer to other operations. We'll look at why that is so and extract some of the ideas that may be adapted for use in other operations. We will also look at AT&T's Universal credit card business, which had an impressive improvement program that simply ran out of steam. We'll examine what causes these processes to occasionally lose momentum.

EE: What are some other highlights of the next session of BCAO?

Upton: Participants will learn which decisions have to be made when developing an improvement strategy and how to make these decisions. For example, what is going to motivate a change? What are the goals and objectives of the change, and how will it be organized? How will performance be measured against those objectives? What technology will be used?

EE: How have popular operations strategies such as TQM, JIT, and others fallen short of expectation in some organizations?

Upton: Popular strategies fall short partly because they are fads that happen to work well in one company but do not transfer well into others, or because they are misunderstood, misapplied, or not well-implemented. Rather than promote a particular strategy, BCAO takes a pragmatic approach, prompting mangers to ask: How can I choose which of these tools is right for my organization?

EE: What topics are explored in BCAO's Managers as Teachers module, and why is the module "optional"?

Upton: In BCAO, participants learn that good operations are those that spread knowledge throughout the ranks; everybody in the organization must understand what they're doing and why they're doing it. In Managers as Teachers, we use a couple of examples — Alcoa and Toyota — to show how to disseminate the lessons of the course throughout one's company. The module is optional because some people take the course solely for their own edification. For others, spreading learning throughout their organization is critical, and they need to know how to do it.

EE: In summary, what are the overriding benefits of BCAO, both for the individual and for the firm?

Upton: The individual participant will gain an understanding of the latest developments in operations, why operations can provide a competitive advantage, and how to develop an implementation strategy that takes the learning from the course back into their companies to make a difference. The company will benefit from having a highly motivated manager who will become a perpetual engine for change.

For more information about Building Competitive Advantage Through Operations, please click here.