Which factors contributed to the learning curve at Ford?
What can you say about the sequence and intensity of innovations at Ford? How are sequence and intensity these innovations related to a competency trap?
Various factors led to learning curve in Ford. These factors comprised of capital equipment and process technlogy, product, scale, task characterictics and process structure, labor and material inputs. In regard to capital equipment and process technolgy,. there was increase in vertical integration and specialization in process equipment, machine tools and facilities increased; the flexibility of investents declined. There was increase in standardization whereby models were changing less frequently with the product line offering less diversity. With the continued strategy implementation, the total contribution was enhanced with the acceptance of lower margins which accompanied larger volumes. In regard to task characteristics and process structure, the throughput time was improved with division of labor extending with the rationalization of the process of production and focused more on a line-flow operation. The labor input decreased which significantly decreased direct supervision. In terms of scale, the process was segmented to take the advantage of economies of scale. Facilities which offer economies of scale like engine plants were centralized with the increase in volume. On the other hand, there were decentralized to reduce cost of transportation. The increase in the process rationalization resulted to greater labor skills specialization which lessened the employee motivation in their work as well as concern for the quality of products. By use of vertical integration or through capturing of supply sources material input came under control. Costs were reduced by compelling suppliers to develop materials that met process needs and by directly reducing the costs of processing. These factors in one way or another resulted to learning curve in Ford.
The evolutionary development sequence in the product and process at the time of cost minimization strategy and the consequent transition of strategy is portrayed in patterns of major innovations of Ford. It was found that the intensity of the activity of innovation is closely linked to major happenings in cost-minimization strategy. Innovations in the process go to the highest level following the period of product innovation, after the process is rationalized by the manufacturer and the cost reduced. As these problems are worked out by the manufacturer, the process technology is transferred following the backward integration thrust and then a third activity peak is experinced. This can be translated to mean that not only does the innovation nature change, but also the innovative intensity decreases. It should be noted that innovation of products is inversely proportional to cost efficiency. For the learning curve to evolve sussessfully, the manufacturer should come up with a product that is standard. When faced with situations of rapid change of product, it would be hard to cut unit output costs. It is evident that a long sequence of cost reduction has effect in an organizaion. Among the consequence of pursuing a strategy of cost minimization is a reduced ability of making innovative changes and responding to those competitors introduce. The problem faced by Ford in choosing a strategy was creating a balance between the anticipated advantages from the varied levels of cost reduction against the resultant lack of flexibiity and ability to innovate. Many companies engaging in innovative strategies are faced with competency trap due to the aforementioned factors.