Aconsensus is emerging that the hallmark of tomorrow’s most effective organizations will be their capacity to learn. To survive in the competitive turbulence that is engulfing a growing number of industries, firms will need to pinpoint innovative practices rapidly, to communicate them to their employees and suppliers, and to stimulate further innovation.
However, there are two very different views on the organizational design most effective to support learning, particularly in labor-intensive production of relatively standardized products.1 Proponents of the Japanese-inspired “lean production” model, such as the MIT researchers who contributed to The Machine That Changed the World, argue that organizational learning will be maximized in a system based on specialized work tasks supplemented by modest doses of job rotation and great discipline in the definition and implementation of detailed work procedures.2 By contrast, European managers, union officials, and academics are engaged in a lively discussion on the possibility of a German-Scandinavian alternative.3 Proponents of this “human-centered” model argue that organizational adaptability and learning is best served by greatly lengthened work cycles and a return to craftlike work forms that give teams substantial latitude in how they perform their tasks and authority over what have traditionally been higher-level management decisions.
Toyota is often credited with pioneering the key elements of the lean production model. In the United States, the best documented of Toyota’s plants is the Toyota-General Motors (GM) joint venture, the New United Motor Manufacturing, Inc. (NUMMI) plant in California. Volvo’s Uddevalla plant exemplifies the human-centered alternative. It is one of Volvo’s most innovative plants, radically extending the long-cycle and team autonomy concepts that shaped the famous Kalmar plant.4
In November 1992, Volvo announced that it would close the Uddevalla and Kalmar plants, but these plant closings should not close the debate over the significance of their innovations. The two plants are not being shut down due to poor performance. In fact, Kalmar operated at productivity and quality levels higher than those at Volvo’s main Torslanda plant, and Uddevalla was already matching Torslanda in productivity. However, Volvo was operating at very low capacity utilization levels, and managers believed that shutting down the two smaller plants was an effective way to reduce total overhead.