Theory 101: Five Focusing Steps of TOC

The book “The Goal: A Process of Ongoing Improvement” by Eliyahu M. Goldratt took me by surprise. I had forgotten by the time I got around to listening to the audiobook that it was a novel. I just knew I needed to read Goldratt and was starting with his first book. Despite its initial 90’s HR film feel, it was compelling and walked me through the trials and tribulations, both professional and personal, of an plant manager whose plant was near ruin. I listened as he applied Goldratt’s Theory of Constraints and turned his plant around. Beyond that, it teaches you to drill down to the actual goal. We often forget what our original goal is by the time we get mired down in the minutia. We forget that the metrics aren’t the point. What, your burndown sucks right now? Well, have you strayed from your goal? Are you delivering the most value possible to your company? That’s the goal. The metric may not always give you the true health of your march towards the goal. So enlightening. It is definitely a must read (or listen!)

Why use the Theory of Constraints?

I am going to summarize Goldratt’s Brief Introduction to TOC. Who better than to learn from than the master himself? Goldratt states that in general, the constraint of an organization is that it is “structured, measured, and managed in parts, rather than as a whole.” Because of that constraint, he states,  organizations perform far below their potential. If you remove the conditions enforcing the constraint then you experience significant and sustainable improvement in all of the problem areas for the organization. The reason most organizations don’t recognize and/or address the real constraint is that they are too busy with the demands of the present to begin fixing the future or that they are afraid of the risk of the change.

We all know we need to improve. We are taught that there is always room for improvement. To improve you must change. Goldratt states that we know to improve, we must:

• Provide products and services that solve customers’ problems
• Release products and services consistent with market demand
• Reduce variability in our processes
• Have measurements that indicate success relative to achieving our goal
• Reward people for their contribution to change

At this point, many organizations have recognized a need for continuous improvement. Basic questions to answer include:

• What to change?
• What to change to?
• How to cause the change?

The Theory of Constraints is meant to provide thinking processes to help organizations navigate those questions to find answers.

The three questions

Picture a doctor. The doctor is seeing a patient. She must diagnose the patient, design a plan of treatment and then execute the treatment. The TOC process is extremely similar.

> What to change?

You look for symptoms of dysfunction which make you deviate from your business goals. Apply cause and effect logic to identify the common problem for all of the symptoms. You may quickly find problems. Don’t stop until you are sure you’ve found the core problem. Keep peeling the onion until you can’t anymore. Goldratt states that there are often business tug-of-war situations which introduce conflict: long-term vs short-term, process-vs-result, etc. He calls this the core conflict and states that from this stems many policies, measurements and behaviors aimed at relieving the symptoms of the core conflict. When resolving the core conflict those policies, measurements and behaviors will need to be removed or replaced. Be warned that this can make people very defensive!

> What to change to?

You find the solution to the core conflict by challenging the assumptions that led to the core conflict being instantiated. When you find the solution, its just the beginning of creating the strategy to find the solution for all the other problems you found when you peeled back the onion of issues. The strategy is not complete until all negative side effects of the change you are planning to implement have been identified and you have discovered ways of mitigating them.

> How to cause the change?

Create an action plan for the implementation of the strategy, including who must do what and when. In your action plan, you must consider how to implement it and how to guard against change resistance.  This can waylay the best plans. (More on this later.)

Overcoming resistance to change

There are a lot of people in the world that just plain do not appreciate change. How many of those people work in your company? When you know something needs to change do you confront them head-on without carefully thinking about how to try to head-off their resistance at the pass? Well, it is time to start. In overcoming resistance to change, you must understand the psychology of change — how people naturally react. There are questions people intuitively act when presented with change:

• Is the right problem being addressed – mine?
• Is the general direction that the solution is heading a good one?
• Will the solution really work to solve the problems and what’s in it for me?
• What could go wrong? Who might get hurt?
• How the heck are we going to implement this thing?
• Are we really up to this?
• Do we have the leadership and the commitment to pull this change off successfully?

You must be able to speak to those questions frankly in order to achieve the buy-in needed to implement sustainable change. No matter how good your ideas are, if you can’t implement them, they are not of value.

Read more in Goldratt’s Brief Introduction to TOC.

It contains more explanation on the 3 question and also presents tools to help you answer them.

In my next post, “Theory 101: Theory of Constraints Focusing Steps,” we will complete the 101 class on Theory of Constraints by discussing bottlenecks and dependencies — the good stuff people think of when you say TOC.

Check out this blog dedicated to TOC

Reproduced with kind permission of the author. Original post found at Theory 101: Five Focusing Steps of TOC.