Performance variability frustrates managers everywhere. It takes a variety of forms: vastly different sales figures for similar retail stores in similar neighborhoods; significantly varying productivity rates at factories producing the same products; major differences in insurance payments for similar auto accidents. Companies make strenuous efforts to reduce such differences as the financial benefits that result when laggards imitate leaders are often immense. For example, Ford Motor Co. claims to have saved $886 million after four years of sharing best practices throughout its manufacturing sites.1
In their quest to reduce performance variability, however, managers often go too far. By forcing workers to “copy exactly” or “follow instructions exactly” in every situation, they make it far more difficult for people to use their own judgment and knowledge to solve problems that would benefit from a new approach. Hence the dilemma: How can companies reduce performance variability without stifling their employees’ discretion and ability to innovate?
The answer lies in the distinction between processes and practices. Many efforts to reduce variability focus on refining processes as the primary intervention — the enormous success of Six Sigma at General Electric Co. and Motorola Inc., for example, results from the use of established statistical process controls to eliminate deviations in quality. Despite such process change, however, variability often persists because of differences in practice.2 While... To read the complete article, login or sign-up using the form below.
Become a premium subscriber today to read this and all MIT Sloan Managmeent Review articles.
Buy this article. Purchase one or more copies of this article in PDF form.
Become a premium subscriber today to read this article and the entire archive of MIT SMR articles.
Upgrade your existing subscription to premium
Sign in if you are a premium subscriber.
Do you subscribe the MIT Sloan Management Review in print? Enter the email address and password you used when ordering. Don't remember? Lookup your subscription account information
- Register for free access to recent articles and the current issue of MIT Sloan Management Review.
- Subscribe and read articles from the past three years online.
- Premium subscription give you access to the entire archive of articles.
