By process capabilities we mean to include broadly the management, manufacturing, procurement, delivery, service, marketing, sales and other necessary functions and activities associated with the creation, production, and distribution of an organization's products or services.
2.
We are not the first to make this argument. Others eloquently discuss the rise of new, fundamental requirements for today's organizations attempting to combine low cost advantages with rapid and customized market response. See DavisStanley M., “Mass Customizing,” in Future Perfect (Reading, MA: Addison-Wesley, 1987); PioreMichael J.SabelCharles F., The Second Industrial Divide (New York, NY: Basic Books, 1984);.
3.
Michael L. Dertouzos, Richard K. Lester, Robert M. Solow, and the MIT Commission on Industrial Productivity, Made in America: Regaining the Productive Edge (Cambridge, MA: The MIT Press, 1989).
4.
This article is based on a two-year old and ongoing research project conducted by the authors and generously sponsored by the Darden Graduate School of Business, Digital Equipment Corporation, and the International Business Machine Corporation's Advanced Business Institute. The original research project was titled “Organizing for the 21st Century.” The ideas presented in this paper are based on a combination of factors including our understanding of current literature, our exposure to cases and teaching material, and most importantly, the conduct of this field research project which resulted in personal contact with managers in a number of organizations. We have met with over 120 managers from 18 firms based in 6 countries and on 5 continents. The firms are from several industries, including health care, consumer products, industrial products, telecommunications, financial services, and industrial manufacturing.
5.
Our argument is not without precedent. Other research on environmental and organizational change has provided guidance in our thinking. ClarkKim, “Investment in New Technology and Competitive Advantage,” Chapter 3 in TeeceDavid J., ed., The Competitive Challenge: Strategies for Industrial Innovation and Renewal (Cambridge, MA: Ballinger Publishing Company, 1987); TushmanMichael J.AndersonPhilip, “Technological Discontinuities and Organizational Environments,”Administrative Science Quarterly, 31 (1986): 439–465; TushmanMichaelNadlerDavid, “Organizing for Innovation,”California Management Review, 28/3 (Spring 1986): 74–92.
6.
See Davis, op. cit.; PioreSabel, op. cit.
7.
The concept of core process capabilities and their relationship with strategic advantage has been discussed by a number of authors and plays a central role in this article and in emerging strategic thinking. See TeeceDavid J., “Economies of Scope and the Scope of the Enterprise,”Journal of Economic Behavior and Organization (1980); TeeceDavid J.PisanoGaryShuenAmy, “Firm Capabilities, Resources, and the Concept of Strategy,” CCC Working Paper No. 90-8, University of California at Berkeley, Center for Research in Management; PrahaladC. K.HamelGary, “The Core Competence of the Corporation,”Harvard Business Review (May/June 1990); QuinnJames BrianPaquettePenny C., “Technology in Services: Creating Organizational Revolutions,”Sloan Management Review, (Winter 1990).
8.
For further information on Coming's technological and strategic efforts to develop dynamically stable capabilities within their Telecommunications Sector see the Corning Telecommunications Division: The Flexible Manufacturing System case series by BoyntonAndrew C., Darden Graduate School of Business, University of Virginia, case numbers UVA-IT-005, 006, 007.
