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Category Archives: Operations Strategy

No substitutions allowed

One famous scene from the movie Five Easy Pieces shows Jack Nicholson ordering a side of whole-wheat toast with his omelet at a diner. He’s then informed that the system doesn’t allow sides of toast. So he orders a chicken salad sandwich on whole-wheat toast—without butter, lettuce, mayonnaise, and chicken.

Nearly everyone recognizes what’s wrong with the “system” in this scenario—the customer doesn’t easily get what he wants. But the traditional approach to “fixing” this might be to simply add more options for what the customer might want. That change would impact the diner’s ordering system, the inventory needed in the kitchen, and even how the kitchen staff cooks. So sometimes it’s easier to simply say, “the system doesn’t work that way,” or, in other words, “no substitutions allowed.”

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What we’re learning from the Target data breach

Data breaches in the news over the past two months have affected millions of people; 110 million Target shoppers and 1.1 million Neiman Marcus customers. Retailer Michaels Stores is investigating a possible data breach. In addition, some Marriott Hotels, Holiday Inns, Sheratons, and other sites managed by White Lodging Hotels were also the target of cybercriminals. As these retailers, businesses, and industry experts brief Congress on the situation, consumers are learning more about the implications of cybercrime. The overall takeaway is that data breaches are common and will continue. In fact, as The Washington Post reported in Experts warn of coming wave of serious cybercrime,” “Only 11% of businesses have adopted industry-standard security measures … and that even these ‘best practices’ fall short of what’s needed to defeat aggressive hackers.”

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How the digital marketplace is redefining customer relationships

Many people today buy their household telecommunications services—house landlines, Internet access, and digital TV—in bundles. Yet go to the average telecommunications services provider’s website and you have to select which product you are inquiring about or need fixed.

From an organization’s perspective, this makes complete sense. There’s a division for phone service, a division for Internet service, and a division for television. Specialists and technicians exist in each department to help you with whatever you need. But you get one bill each month, so why can’t the company recognize you as one customer with multiple products, instead of three separate customers?

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The “Good Jobs Strategy”

Consumers can help the economy not by just choosing to buy goods, but also by being selective in where they buy goods. Zeynep Ton, Adjunct Associate Professor of Operations Management at MIT’s Sloan School of Management, urged the more than 650 attendees of TedxCambridge, to shop, dine, and patronize businesses that employ what Ton calls the “good jobs strategy.”

Ton argued that bad jobs—such as many low-paying positions in retail—contribute to a bad economy. “The problem is not that there aren’t enough jobs; the problem is that too many jobs are simply bad jobs,” said Ton.

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The design structure matrix: helping to see complexity in systems

Many global business organizations develop and manage complex systems with multiple interacting parts. In an effort to become more effective, efficient, and profitable in the face of growing complexity, businesses seek process innovations that help them streamline their systems. Perhaps that’s why the design structure matrix (DSM), originally developed in the 1970s to model design problems and used at MIT since the 1990s to research system complexity, has become a powerful tool for developing products and systems.

In their recent book, Design Structure Matrix Methods and ApplicationsSteven Eppinger, Professor of Management Science and Engineering Systems at MIT Sloan School of Management, and co-author Tyson Browning, show how DSM analysis helps companies streamline the process of product and system design.

“Engineering work can be procedural and systematic,” says Eppinger. “People think of engineering as a matter of always developing something new, unlike business operations, where you do something over and over again. But we’ve learned that while you may repeat engineering work five or 20 times in your career instead of 100 times a day, there’s a process there. And if you can capture that process, you can improve it.”

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