Focused Operations Management

Chapter 19. Value Creation

One of the major problems managers face is how to initiate the process of enhancing value or improving performance, and what priorities to set on the various possible improvements. For example, should they first perform improvements in marketing and sales, production, or perhaps change the organizational structure? Should management focus on improvements in research and development or should they focus on logistics and purchasing?

A manager cannot afford to spend more than 10 percent of his time on pursuing improvements because most of his time is spent managing current and emergency situations. There is no doubt that managers of every department in every organization can and should perform significant improvements in their specialty. However, the major problems of the organization are interdepartmental. Thus, only joint proactive efforts by management can lead to improvements. For example, improvements in marketing and sales cannot be made by the vice president of that department acting alone because the work process also involves finance, research and development, production, customer service and other departments.

Value Creation from Managerial Activities

This chapter presents a holistic and global approach to management's focus based on the importance of the improvement and the ease of implementing it.

The goal of the organization is to increase shareholders' value. The goal of management, therefore, is to bring about a constant creation of value for the ...