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Essay: Managing efficiency of production

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  • Published: 25 October 2015*
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  • Words: 1,027 (approx)
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It’s important for companies to manage the efficiency of their production. Making a product as fast and as cheap as possible without negatively affecting the quality of the products, is the objective of every company. But focusing too narrowly on it can prevent the company from adapting effectively to change. Take for example, General Motors’ big loss of $38.7 billion in 2007. Experts ascribe this loss to the fact that the managers were focusing too much on the efficiency of the production, thereby failing to detect the customers’ preferences for fuel-efficient cars. For this reason Edmondson recommends that companies implement the execution-as-learning strategy. Companies that use this approach do not only focus on carrying out key processes more efficiently than their rivals, but also on learning faster. Through execution-as-learning, General Electric continually reinvents itself in multiple fields. They made a profit of $22.5 billion in 2007.

Edmondson provides a couple of ideas to cultivate execution-as-learning in any given firm:
‘ Create a psychologically safe environment.
‘ Provide process guidelines.
‘ Encourage collaborative decision-making.
‘ Collect process data describing how work unfolds.
‘ Use the data to identify process improvement opportunities.
The above mentioned points will be elaborated upon.

Make it safe
In psychologically safe environments employees are able to offer ideas, questions, and concerns. They are not afraid of making mistakes, so when they do they learn from them. In able to create a safe environment, a couple of things need to be taken into consideration. For a learning environment the following values are needed, openness, humility and curiosity. If this three values are incorporated in the organizational culture, then employees will not hesitate to ask questions, provide feedback, or make suggestions. The managers should also explicitly acknowledge the lack of answer to the tough problems facing your group. Without the managers acknowledgement, employees may not feel the need to express their ideas regarding to the problems that the company faces. The leaders should also ask questions. This shows that they genuinely want people’s input. The company should also reward learning, instead of only rewarding efficiency.

Step 1: Provide process guidelines
The best way to run a business today, may not be the best way to run it in the future. It is for this reason that firms need to be able flexible enough to adapt to new situations. Figuring out the best way to accomplish different kinds of work in a rapidly changing environment starts with seeking out best practices. The path to execution-as-learning is thus similar to the path to efficiency, because it starts with establishing standard processes. But the goal of these processes is not so much to produce efficiency as to facilitate learning, because effective knowledge based organizations recognize that today’s best practices won’t be tomorrow’s and won’t work in every situation. For example, in a hospital every patient is unique, but standard protocols make it easier for the medical specialists to help their patients. Because, the steps common to all patients with a particular condition are prescribed in advance, the doctor is able to think about the patients individual features and act accordingly.

Step 2: Provide tools that enable employees to collaborate in real time:
No matter how much thought and time goes into advance planning, knowledge work often requires people to make collaborative decisions in response to unforeseen, novel, or complex problems. That’s why communication between staff members in essential, be it face-to-face communication or virtual communication. In the health care industry, all the medical information about a patient can be accessed by the doctor, wherever and whenever it is needed. When a patient is sees several physicians, as is often the case, caregivers working in different locations at different times can coordinate effectively.

Step 3: Collect process data
Execution-as-efficiency focuses on performance data, which capture what happened. Execution-as-learning pays just as much attention to process data, which describe how work unfolds. IHC, for example, recognized that physicians, as highly educated experts, might resist process guidelines developed by a committee. For that reason and others, IHC does not discourage doctors from deviating from the guidelines. In fact, the organization invites them to, anytime they judge that good patient care requires it. The only condition: They have to help IHC learn by entering into the computer what they did differently and why. This valuable feedback is used by a teams of experts to make updates and refinements in the guidelines. Most of the time, the deviations help identify ways the guidelines could be made more precise, by taking relevant patient differences into account. The fact that protocols are not hard-and-fast rules but are instead flexible made them acceptable to physicians.

Step 4: Institutionalize disciplined reflection
The goal of collecting process data is to understand what goes right and what goes wrong, and to prevent failures from recurring. At IHC, teams of experts periodically analyze data collected during clinical activities. Often, these analyses suggest improvements to the guidelines, which are then integrated into the design of future processes. At the Cleveland Clinic, teams of physicians drawn from hospitals all over the system study process data and identify areas for improvement throughout the organization’s many sites. By 2006, the Clinic had seven such teams, including heart failure, stroke, diabetes, and orthopedic surgery. Process data showed, for instance, that stroke patients treated at various sites at the Clinic had not always received a blood thinner within the three-hour window that research identified as the standard of care. An analysis of patient outcomes helped to make the blood thinner treatment the standard of stroke care for all Cleveland Clinic hospitals. As a result of this disciplined reflection, the hospitals doubled their use of the blood thinner and reduced complications from stroke by 50%.

Although the execution-as-learning strategy obviously has its benefits for the long run. But there are working places like, call centers, fast-food restaurants, and manufacturing plants, where doing things faster and better than the competition is critical. These working places often abide by the execution-as-efficiency strategy and focus on short-term-goals. But even in such organizations, employees must learn if they are to improve. In work environments characterized by fear, the four steps describes above become difficult, if not impossible, to follow.

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