Internal Free Markets LO1572

pcapper@actrix.gen.nz
Fri, 9 Jun 1995 11:21:36 +1200

Replying to LO1562 -- (Was: Proper Rate of Learning)

Eric wrote:

"I'm not sure I can endorse this approach without some reservations. The
first problem is that treating functional areas within a company as
separate businesses often ignores the interdepencies between the areas.
This can create situations in which departments can engage in "cost
cutting" that's really cost shifting."

(snip)

"The second problem is that often the internal department is hamstrung in
its ability to compete with outsources because corporate management is
still telling them exactly what to do in every little detail."

I agree with your reservations, Eric. In the case I described the company
had not satisfactorily dealt with your first reservation - but knew that
it was a problem. In the case of your second reservation the company HAD
'set free' the units in the way you describe as necessary.

I guess the point we are both making here is that such radical
restructuring is only possible if also attended by radical 'reculturing'.

--
Phillip Capper
Centre for Research on Work, Education and Business
PO Box 2855
Wellington,
New Zealand

Ph: 64+ 4 4998140 Fx: 64+ 4 4733087

pcapper@actrix.gen.nz