Informative Writing

Why Operational Effectiveness is Necessary but Not Sufficient When Assessing Organizational Performance.

        Operational effectiveness refers to being more effective, or advantageous, compared to competitors. As significant as operational effectiveness can be, it is not sufficient when assessing organizational performance as it focuses on differentiation, instead of internal analysis and improvement. Due to the extensive manners of decision-making within each organization, organizational performance cannot accurately be assessed compared to the credibility of benchmarking tools such as the productivity frontier.

        Understanding organizational performance is key to any organization that seeks success and sustainability. Where operational effectiveness can cut costs and create new products or services in different ways, organizational performance is more than such inputs. Operational effectiveness is just one factor of long-term success for an organization, but it does not appropriately determine the performance of the organization over time. A productivity frontier is a tool capable of assessing organizational performance periodically, as these methods are concerned with the overall condition of an organization rather than focusing on its competitive advantage. The productivity frontier assesses internal activities during changing periods of innovation and competition. Acknowledging technological advancements, management ability, and manufacturing efficiency are just some aspects of business that this model takes into consideration. As seen in the illustration provided by Porter (1996), the productivity frontier will continue to shift to adjust to periods of transformations in the market, representing the progression in terms of the relationship between cost and value. Although operational effectiveness impacts this model, it does not identify how the organization will operate as a whole entity. “Hoping to keep up with the shifts in the productivity frontier, managers have embraced continuous improvement…” (Porter, 1996, pg. 63). The productivity frontier is sufficient in encouraging organizational performance as it gauges how the organization is adapting and improving business practices, where operational effectiveness is just one aspect of the end goal.

        In conclusion, operational effectiveness and organizational performance correlate, operational effectiveness does not properly signal how the organization is performing. Such tools, like the productivity frontier model, assist in the understanding of transformative times in the market that calls for change and improvement, where operational effectiveness impacts organizational performance.

References

Porter, M. E. (1996). What Is Strategy? Harvard Business Review, 61-78.