European Management Journal, 1999, 17(2), 120-134

Abstract

Despite the demonstrated benefits of improvement programs such as total quality management and reengineering, most improvement programs end in failure. Companies have found it extremely difficult to sustain even initially successful process improvement programs. Even more puzzling, successful improvement programs sometimes worsen business performance, triggering layoffs, low morale, and the collapse of commitment to continuous improvement. We term this phenomenon the "Improvement Paradox." For the last four years, we have worked with a variety of firms to understand the paradox and design policies to overcome it. Our findings suggest that the inability to manage an improvement program as a dynamic process is the main determinant of program failure. Improvement programs are tightly coupled to other functions and processes in the firm, and to the firmÕs customers, suppliers, competitors and capital markets. Failure to account for the feedbacks among these tightly coupled activities leads to unanticipated and often harmful side effects. We describe these dynamics and offer some guidance for managers seeking to design sustainable process improvement programs.

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