Work reported here was supported by the MIT Center for Innovation in Product

Development under NSF Cooperative Agreement Number EEC-9529140.

For more information on the research program that generated this paper, visit http://web.mit.edu/nelsonr/www/.

1. MIT Sloan School of Management, E53-339, Cambridge, MA USA 02142. Phone 617-258-6889; Fax: 617-258-7579; nelsonr@mit.edu.

2. MIT Sloan School of Management, E53-353 Cambridge, MA USA 02142. Phone 617-253-1951; Fax: 617-258-7579; jsterman@mit.edu

Abstract

Today's managers face a paradox. On the one hand, the number of tools, techniques, and technologies available to improve operational performance is growing rapidly. On the other hand, despite the rapid proliferation of such innovations and the fact that they produce dramatic success in a few companies, most efforts to use them fail to produce significant results. To understand and resolve this paradox, in this paper we study the difficulties organizations face in implementing tools, processes, and techniques like TQM, lean production methods, computer-aided design and development tools, stage-gate product development processes, and improved customer service systems. Our research suggests that the inability of most organizations to reap the full benefit of these innovations has little to do with the specific technique. Instead, the problem has its roots in how the introduction of a new improvement effort interacts with the physical, economic, social and psychological structures in which implementation takes place. We present a simple framework to understand how these failures arise and then offer some strategies for overcoming the pathological behaviors that we identify.

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