What is the next production frontier? The author argues that it is operating factories as learning “laboratories.” These are complex organizational ecosystems that integrate problem solving, internal knowledge, innovation and experimentation, and external information. Chaparral Steel is the model example, and the experiences of its managers and employees are used throughout the article to show how the learning laboratory works.
The author is grateful to the employees of Chaparral Steel for their patience, to Gil Preuss for help infield work, and to colleagues Chris Argyris, David Garvin, and Steven Wheelwright and two anonymous reviewers for comments on earlier drafts. The study was supported by the Division of Research, Harvard Business School.