Are You Having Trouble Keeping Your Operations Focused?

As a business broadens over time, it can lose the operational edge that led to its original success. Core strengths atrophy, efficiency or quality suffers, and sharper rivals close in to take advantage of the loss of focus. In his classic article "The Focused Factory" (HBR May-June 1974), Wickham Skinner proposed that manufacturers whose product lines had proliferated create specialized units, each dedicated to a distinct task. To make this economically feasible, he suggested the plant within a plant, or PWP, model, whereby an existing facility is physically and organizationally divided into autonomous operations. Many organizations—from airlines to hospitals to department stores—have since adopted the model, in the form of focused units that share people, equipment, and other assets to some extent. But they've found it difficult to implement. That's because, the author writes, they don't give every unit narrowly defined objectives; they underestimate the challenges related to sharing resources; they don't fully consider to what degree best practices, knowledge, and talent should be shared; and they don't anticipate the political tensions that can arise. Huckman provides guidelines for setting clear objectives, getting the boundaries between units right, establishing rules for sharing, and customizing performance criteria. And, he says, leaders must continually remind units of their individual and collective goals and purposes whenever decisions about resources, performance measurement, and compensation are made.