After reading the article below, how would you grade the HR, technology and process improvement on a grading scale: A-F

Deep Change: How Operational Innovation Can Transform Your Company In the April 2004 issue, Michael Hammer's article "Deep Change: How Operational Innovation Can Transform Your Company" highlights an enduring problem: If operational innovation can provide one of the most powerful competitive weapons in existence, why isn't it widespread? About 20 years ago, when I worked for Digital Equipment (which later became Compaq and merged with Hewlett-Packard), I designed the operations for a new plant in Connecticut. We improved dramatically upon anticipated numbers, doubling production, halving the people needed, and reducing the footprint by three-quarters-an amazing result. Did the rest of Digital beat a path to our door? No. Did the company embrace our ideas? No. Seeing this pattern repeated so many times in subsequent years, 1 have wrestled a lot with the question "Why not?" Hammer lays the blame on unpleasant characteristics of corporate leadership: Operations are undervalued, they are out of sight and mind, and no one owns them. To these problems, I would add three more: unaddressed paradigm conflicts, poor systems thinking, and insufficient time for organizational design. First, paradigms-personal sets of rules for thinking, explaining how the world works, and solving problems-are tricky to talk about. Consequently, this crucial topic remains arcane. I believe that a direct assault on personal paradigms is the best way to get them on the table, so people can reevaluate ingrained ideas about what is possible in the workplace. People need to flesh out their own paradigms and then examine the ones they perceive in their organizations. Organizational diagnosis always reveals a hodgepodge of paradigms-some dut-of-date, others wished for but not practiced. It exposes the complicated roots of disinterest and hostility, and it points to the educational effort needed to promote change. Second, systems thinking undermines the cult of the individual. Taken to an extreme, it leads to W. Edwards Deming's conclusion that personal performance reviews are nonsense because performance is largely driven by work systems and hardly at all by individuals. No wonder systems thinking is resistedit sends leaders into very unfamiliar (and perhaps frightening) territory. It's hard to strike the right balance. Individual brilliance is vastly overrated, yet people do need to take pride in their work. Powerful simulations are the best way I have found to overcome negative perceptions and demonstrate systems thinking that works. Third, many leaders believe that an organization's operational designs can be completed on a breakfast napkin, but they will allow several months to draw up building plans for, say, a factory. Educating leaders is tough, since few want to hear about the organizational design effort needed for operational innovation. Folding organizational design into other areas of work-particularly infor 182 HARVARD BUSINESS REVIEW mation technology projects-affords an indirect but effective way to make it happen. When results show, interest may follow-but don't count on it. Laurence Megson Principal Cognitis Croup Geneva Michael Hammer responds: Laurence Megson's experience is illuminating and, unfortunately, far from uncommon; his diagnoses ofthe barriers to operational innovation also ring true. In a similar vein, a divisional manager of an electric power company once explained why he had been unable to redesign operations to improve his unit's dismal on-time performance: "I am so busy fighting fires that I don't have time to think." One way to promote operational innovation would be to put greater emphasis on systems thinking and design in managerial education, both in business schools and in companies' management development programs. A recent article in the Economist usefully observed that the intellectual roots of management derive from four fields: strategy, economics, psychology, and engineering. Managers typically get much less exposure in their education to engineering than they do to the other three areas, so they are not often inclined to approach operations from a systems perspective. As Megson notes, it will not be easy to change how managers think, but I am less pessimistic than he is about the prospects for getting more managers engaged in operational innovation. To put it plainly, those who continue to avoid it will have trouble surviving against those who embrace it-witness the continuing relentless growth of Wal-Mart, Dell, and Progressive Insurance. Erratum: A biographical note that accompanied two advertorials in the May 2004 issue said that the advertorials' author has "written extensively" for HBR. In point of fact, he has written many advertorials for HBR, but no editorial features. We apologize for any confusion. - Cathryn Cronin Cranston, Publisher