Abstract for: The Efficiency Trap in Process Improvement and the Critical Role of Learning by Doing

This paper considers the problem of sustaining process improvement activities. We focus on the challenges arising when resources are constrained. We develop a system dynamics model of process improvement when the same people must do both production and process improvement. The model incorporates learning by doing so that the productivity of doing improvement activities grows as workers accumulate experience. Simulation analysis highlights the tradeoff between production and improvement and demonstrates a tipping point that demarcates enduring high production levels. Results show that policy orientations that emphasize efficiency of first-order improvement are likely to fail to yield lasting benefits while policies that favor learning lead to sustained superior performance.