THEME #2: BUILDING CAPABILITIES THROUGH VARIATION
Description
Prior work has yet to establish definitively the role that variation (e.g. in individuals' activities or organizational processes) plays in the development of capabilities. Variation is usually either not considered (e.g., the learning curve examines cumulative experience in the same task) or simply stamped out (e.g., as with quality management techniques). The empirical work that has attempted to link variation in experience and performance has found positive, negative, and most commonly no statistically significant effect. The second paper of my dissertation suggests that the differences in prior findings may be due to the failure to separate the processes of knowledge acquisition and knowledge application. While variation in experience may permit the acquisition of valuable knowledge, additional mechanisms may be necessary to enable the application of that knowledge in a team setting. We hypothesize that team familiarity may be such a mechanism and using the Wipro data we find support for the moderating effect of team familiarity on the relationship between variation in experience and performance.
Variation in the processes within an organization also plays an important role in managing the tradeoff between efficiency and innovation. If organizations eliminate all variation in processes then current performance is more efficient, but flexibility to respond to changing external conditions is compromised. Since long-term survival depends on balancing the exploitation of existing knowledge and the exploration for new knowledge a central question of organization theory is how this balance can be maintained? To investigate this question we study the implementation of a lean operating system at Wipro Technologies. Combining a detailed case study and empirical analysis we examine how capabilities are changed through the lean implementation to improve both operational performance and exploration of new activities. In another paper, we seek to identify the theoretical mechanism that permits organizations to cycle between exploitation to exploration. This examination helps to explain the microfoundations of dynamic capabilities. We propose that perturbations - novel stimuli that disrupt organizational routines - are the key link. Drawing on the Carnegie School we build a theoretical model of perturbation, and then illustrate its use at Toyota.