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A Guide to Implementing the Theory of
Constraints (TOC) |
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After all the necessary technical
reservations have been overcome, an implementation still won't start without
sufficient leadership. Leadership
comes from a knowledge of, and an understanding of, the changes required and
from the measurement and the communication of the improvement required. The knowledge itself comes from both
education and experience. Don’t worry
too much; you already have the experience – that is why your intuition tells
you things should be different from the way that they currently are. You also have the product expertise for
whatever it is that you make, or sell, or process, or distribute. Really all that you need now is to improve
your process expertise and to reframe the situation. The process expertise for the production solution is
the subject of the next main section, so let’s deal here with reframing the
argument so that we can proceed directly to the production solution after
that. In reframing the situation
leading up to an implementation there are both specific and general issues to
consider. Let’s examine these two
divisions in turn. In order to be successful in our
business, and in our implementation of a different way of doing things in
that business, we need to move from a reductionist/local optima approach to a
systemic/global optimum approach.
Margaret Wheatley, author of Leadership and the New
Science, pretty much said the same thing at an APICS conference
some years ago (1); “We currently manage people and
organizations as though they are machines using the following improvement
process; (a) assign a manager, (b) set a high goal, (c) define direct
outcomes, (d) decide on measures, (e) decompose the problem, (f) redesign the
machine, (g) implement the adaption, (h) test the result, (i) assess the
blame.” She argues that we must replace
this approach with something different, something better, here is her
suggestion; The new beliefs that we need to
embrace are; (a) no one gets it right the first time, (b) sponsorship always
fails, (c) people only support what they create, (d) the solutions are
already in the system, (e) change is always a change in meaning, (f)
responsibility is a result of caring, (g) once people have information, they
can't help but take responsibility, (h) compassion and generosity are
essential.” If we take the first case; the way
we currently manage people and organizations, and we view it from the
perspective of the leader, let’s say the president of a company, then it might
look something like this;
There was, however, a clue in the first case which
suggests that these diagrams are not sufficient for expressing the problem at
stake. That clue is in the words
“assess the blame.” This diagram is
expressing a linear process; blame is far more cross-functional. As we mentioned in the section on people, when
people attempt to do the very best that they can, and that best does not meet
their own expectation, they are very likely consider that they were let down
by someone else. They rationalize that
someone else didn’t try as equally hard as they had. We need to put an end to such ideas, but
first let’s try and incorporate the additional linkages. So now instead of “taking a hit” at each transfer
point, we take a hit whenever we deal with another department. There are 3 “other” departments in our
simple system so every department makes, and takes, 3 hits. It takes a lot of energy and a lot of
effort to keep all those balls up in the air at the same time. It’s no wonder that the leaders of
companies are often quite grey-haired. Design gets it for being too late to manufacturing,
design gets it for not providing what sales asked for, and design gets it for
specifying single packs rather than bulk packs for distribution. Manufacturing gets it for…. Well you’ve got the idea. This is the reality of Wheatley’s first
case. This is the reality for the
reductionist/local optima view with finger pointing. What is the chance of ever focusing on the
constraint and its relationship to the rest of the system in this sort of
situation? Let’s draw this reality.
Why do we accept this? Well we know some of the answers to that question
now. We accept this because we have
been using the wrong measures, cost or efficiency measures. We accept this because we have been making
the erroneous assumption that we could sum our local optima forgetting that
everything is tied together by process dependencies. We accept this because we have been making
the erroneous assumption that we could ignore variation and therefore
variation would ignore us. We accept
this because we have been failing to recognize the role of constraints in the
process of evaluating the system. Tell
me, is it any wonder that the situation looks like the diagram above? Let’s now look at the second case; the new beliefs that we need to embrace, and if we view it once again
from the perspective of the leader, the president of a company, then it might
look something like this.
This is the view that most leadership would like to
see; systemic, blame free, and an awareness of what constrains the forward
movement towards the goal. So now we
have two quite simple models interspersed by a complex blame-ridden model. It is the job of the leadership to move or reframe the view from one
of reductionist/local optima to one of systemic/global optimum. Now it looks like it could be a Catch-22. In order to get past the finger pointing
and blame so that we can move towards a systemic and global optimum view we
must past through a stage of finger pointing and blame. Oh heck!
We will never get past the finger pointing. Let’s see if that is true. Two significant methods to emerge out of the Theory
of Constraints Thinking Process that allow us to avoid the catch-22 here are;
the 3 cloud method, and the communication current reality tree. These methods are described in more detail
in the section called Tool Box; however let’s say here that the two,
combined, provides a methodology that allows you to present the current
problem in a form of “us against the problem,” rather than “us against each
other against the problem.” This is a
very significant mechanism and one that is pivotal to employing Goldratt’s
holistic approach to improvement. We
can, therefore, avoid the finger pointing if we structure the approach
correctly. It’s important to realize that it is not accident
that Theory of Constraints has a method that manages around the finger
pointing issue – it is a direct consequence of the fact that it has been
developed and refined in the real world with all the challenges that brings
with it. In moving from a reductionist/local optima world to
a systemic/global optimum we must remember not to stray from the sequence of; (1) Define the system. (2) Define the goal
of the system. (3) Define the necessary
conditions. (4) Define the fundamental
measurements. (5) Define the role of the constraints. We know how to focus on constraints; (1) Identify the system’s constraints. (2) Decide how to Exploit the system’s constraints. (3) Subordinate everything else
to the above decision. (4) Elevate the system’s constraints. (5) If in the previous steps a
constraint has been broken Go back to step 1, but do not allow
inertia to cause a system constraint.
In other words; Don’t
Stop. As we reframe the situation, the logic of the
logistical solutions will become apparent.
These, too, are no accidental occurrence, but rather a result of a
process of systematic development and refinement around a set of closely held
principles. In the section on the process of change we discussed
a 3 step progression that went; (a) what to change, (b) what to change to,
and (c) how to cause the change. That
last step is considered to be psychological, and embedded in that are the
following assumptions (2); (1) Any improvement
is a change. (2) Any change
is a perceived threat to security. (3) Any threat
to security gives rise to emotional resistance. (4) Emotional resistance
can only be overcome by a stronger emotion. Essentially the emotion to go with the change must
be greater than the emotion to stay with the current status. It seems that Goldratt overcomes emotional
resistance by allowing people to invent the solution for themselves. That, after all, is part of the Socratic
Method, and it follows on into the philosophy behind the novels and the
various logistical simulators. If we
consider the emotional resistance by analogy as a hurdle, then we are trying
to lower the height of the hurdle as much as possible. What if we took the hurdle away in the first
place? To do this we start with the
first assumption; that any improvement in a change. What if we adopt Wheatley’s argument and
consider that any improvement is a change in meaning only? Or rather that “all change results from a
change in meaning (3).” Haven’t we
just removed the hurdle? Maybe we
should spend more time on reframing the environment first before providing
the logistical or non-logistical solution that is required for the particular
situation. Perhaps the most important part of the reframing
exercise is defining the goal of the system and ensuring alignment with that
goal. Wheatley calls this “clarity of
purpose (4).” Caspari and Caspari call
it “goal congruence (5).” In fact Wheatley considers that this is but one of 3
interconnected dimensions to organizational improvement (4). They are; (1) Clarity of Purpose. (2) Quality of Relationships. (3) Flow of information. “As people together enhance the clarity of their
common purpose, their relationships improve.
As their relationships improve, they open more and more channels
through which information can flow, which helps them continue to enhance
their relationships and get clearer and clearer on purpose (4).” As we reframe our position from a reductionist/local
optima view towards a systemic/global optimum view we are faced with
something of a conundrum, what to do about our current command and control
mentality. Air Force Colonel John R.
Boyd, inventor of the OODA loop and the concept of maneuver warfare, wanted
to replace the concept of command and control with the following (6); (1) Trust. (2) Appreciation. (3) Leadership. “Trust, appreciation, and leadership are keys to
success for any family, church, school, business, political system, or
military. They are the real family
values, the basic core values, and cultural bedrock that undergird truly
successful societies and organizations.
The urge to command and control is part of the problem, not part of
the solution. It is an impediment to
creative adaption, to true insight, imagination, and innovation.” It seems therefore that command and control is a
consequence of our reductionist/local optima approach, the need to measure
and manage everything everywhere because we don’t understand in that map of reality what is truly important and what is not. In the U.S.
Army in its implementation of Boyd’s maneuver warfare developed the concept
of “commander’s intent.” Knowing so
well what the overall objective is that should communication be impossible,
tactical decisions can still be made with some certainty (6). In our own
situations the act of defining; the system, the goal, the necessary
conditions, the fundamental operational measurements, and the role of the
constraint(s) allows managers in all sections to know their organizations
intent and thus make tactical decisions with some certainty without recourse
to the commander all of the time. The
synergy of maneuver warfare and Theory of Constraints has been recognized in
general terms (7) as well as specifically in the case of strategy development
(8). If you are attracted to the concept of OODA and
working inside the decision cycle of your opponent, then Theory of
Constraints, and the Thinking Process in particular, gives you a dynamic edge
on your opponent. Commonality of purpose or goal congruence,
supporting necessary conditions, and fundamental measures are absolutely
essential. However, this of itself is
not sufficient. Sufficiency is only
obtained when we make sure that not only are the new measures put in place to
assure local actions are congruent with the goal, but also that any old
measurement systems that are no longer required are not left in place.
Having the same meetings, and requesting the same reports,
because this is what we used to do “and it couldn’t possibly cause any harm,”
will cause the new way of doing things to slowly unwind until we are all back
where we started from. It happens, I
know only too well. We need to constantly remind ourselves that in order
to subordinate properly we must not
only make sure that all the necessary things
are done, but we must also make sure that all the
unnecessary things are not done!
Ensuring all measurements are subordinate to the goal is a very
important concept. Taiichi Ohno, inventor of Toyota's just-in-time
system, frequently used to say; “management
should be done not by arithmetic but by ninjutsu, the art of invisibility
(9).” “Management
by ninjutsu means acquiring management skills by training. In this age, I am painfully aware of the
fact that people tend to forget the need for training. Of course, if skills to be learned are not
creative or stimulating and if they do not require the best people, training
may not seem worthwhile. But let's
take a hard look at the world. No
goal, regardless of how small, can be achieved without adequate training.” Let’s repeat
that last sentence – it’s so important; No goal, regardless of how small, can
be achieved without adequate training. But who trains the management? Well the leadership must train the management. Then, who trains the leaders? The leaders must train themselves. Moreover, expecting others to learn while not making
time to learn for yourself is tantamount to failing to lead. This doesn’t mean that the leader must
understand the detail better than anyone else. But it does mean that the leader must truly
understand the fundamental concepts as well as everyone else. It is only by understanding the fundamental
concepts that the leader will be able to provide sufficient guidance when the
leadership sees others veering away from the proper direction. Leaders must educate themselves. Leaders must educate their subordinates. Create some subject matter specialists within
corporate and line management, but more importantly create subject matter
generalists up and down your line workers. Takeshi Kawase sums this thought up nicely in two
diagrams (10). Although they concern
Kaizen and Industrial Engineering (IE), they are directly applicable to the
case of Theory of Constraints. Just
replace the wording in your mind and you will see. The first diagram is the old way; top – down.
Mintzberg et al., in Strategy Safari, draw attention to the work of Nonaka and
Takeuchi on the knowledge-creating company (11). They summarize Nonaka and Takeuchi’s work
thus; “managers in the west… need to get out of the old mode of thinking that
knowledge can be acquired, taught, and trained through manuals, books, or
lectures. Instead, they need to pay
more attention to the less formal and systematic side of knowledge and start
focusing on highly subjective insights, intuitions, and hunches that are
gained through the use of metaphors, pictures, or experiences.” To do this Nonaka and Takeuchi
believe that managers must recognize the importance of tacit knowledge ‑ what
we know implicitly, inside, and how it differs from explicit knowledge ‑ what
we know formally. The former suggests
that ‘we can know more than we can tell.’
..."Tacit knowledge is personal, context‑specific, and therefore
hard to formalize and communicate.
Explicit or 'codified' knowledge, on the other hand, refers to
knowledge that is transmittable in formal, systematic language (11)." Based upon this differentiation of
knowledge into tacit and explicit, Nonaka and Takeuchi offer four different
modes of knowledge conversion (12). They are presented in the
following table
There is, they argue, a knowledge
spiral; tacit to tacit, then tacit to explicit, then explicit to explicit,
and finally explicit to tacit. Each
time around the circuit new organizational knowledge is created. “This process
of converting tacit knowledge into explicit knowledge is facilitated by the
use of multiple reasoning methods such as deduction, induction, and
abduction. Particularly useful for
this phase is abduction, which employs figurative language such as metaphors
and analogies (12).” You will find
metaphor quite commonly used in Theory of Constraints to explain underlying
concepts. The contents of the knowledge
created by the four modes are;
Of course it is not just in the
East that tacit to tacit knowledge transfer occurs, it happens on any shop
floor – wherever older experienced trades people
induct younger people into their trade.
In the West however we have forgotten to a large extent how important
this is. We try to jump this step. For example we train nurses nowadays not on
the job – but as far removed as possible and then wonder why they don’t have
all the requisite knowledge. The
knowledge that they are yet missing comes from the socialization with older
experienced nurses. How do you teach
compassion or professional detachment out of an ISO manual? Well, you don’t. And we are the poorer for it. Nonaka and Takeuchi consider that
there are 5 enabling conditions for organizational knowledge creation via the
knowledge spiral; intention, autonomy, fluctuation and creative chaos,
redundancy, and requisite variety. Of
these we will revisit the concept of redundancy in the under the heading of
flexibility in strategy. Redundancy is
an under-recognized attribute in successful organizations. Robert Coram in his biography of
Colonel John Boyd provides a superb example of the difference between, and
conversion from, tacit to explicit knowledge.
Two proto-types for the U.S. Air force F16 were designed and built. The single engined YF-16 and the twin
engined YF-17. The “YF-16 was the
unanimous choice of pilots who flew both aircraft (13).” “The results confused Boyd: E-M
[energy-maneuverability] data and computer modeling predicted a much closer
contest. Boyd met with the pilots and
they got down to basics. They used
their hands to demonstrate combat maneuvers and they used highly technical
fighter-pilot terminology such as ‘shit hot’ to describe the YF-16, and it
did not take long for a consensus to emerge.
They preferred the YF-16 because if could perform what they called a
‘buttonhook turn.’ It could flick from
one maneuver to another faster than any other aircraft they ever flew. It was born to turn and burn – the most
nimble little banking and yanking aircraft the world had ever seen.” We know more than we can
tell. But we can describe what we know
by using analogy and metaphor. It
eventually becomes verbalized. Why go to the extent of showing
this framework for individual tacit to group explicit knowledge conversion,
albeit elegant? Because it has
critical relevance to understand the role of the Thinking Process tools in
business. The Thinking Process tools
allow us to verbalize our intuition, to express our tacit knowledge, to externalize
it and to convert it from sympathized knowledge to conceptual knowledge. It is during the process of
externalization, combination, and internalization, that organizational
knowledge is created. Zaleznik (14)
in a 1992 paper asked the question whether leaders and managers are
different. His answer was, yes, they
are. This raises an interesting
problem for the leaders of an organization.
Let’s look at it. Remember we asked why is it that leaders who have an
overview of the whole systems and develop a systemic/global optimum view
still depend on local optimization and the answer was that they are unaware
of the focusing process – even though their intuition tells them to do things
that are not supported by the current measurements. Then once the leadership is aware of the
focusing process, they must be careful not to let their intuition over-run
that of their managers. They must help their managers to see that they can
migrate from their local optima detail complexity systems to global optima
dynamic complexity systems. Here is the problem.
We can break this cloud. We know from our discussions in
measurements that detail complexity systems, especially absorption costing,
cause us to often make the wrong decisions for the wrong reasons. Moreover the information is often late. We can invalidate the assumption “I have
much data therefore I am in control,” with something like “Information is
tardy and equivocal.” Let’s do that.
Let’s examine a specific example timesheets. Many process organizations employ
timesheets to measure the amount of time taken by each person on each
job. Where there is an explicit or
even implicit policy that everyone shall be busy all the time, then these
time sheets usually simply record that everyone is indeed busy all of the
time. The data they record is suspect
at best, but moreover it cements in management’s mind that there is no spare
capacity in the process – otherwise they would see it as idle time in the
timesheets – forgetting that no one feels free to record idle time. What do we really want to measure? We really want to measure that the
constraint is busy (in fact that is productively utilized) a much as
possible. And we want to know that the
non-constraints are doing their job of getting material to the constraint on
time – but we aren’t interested in the time spent by the non-constraints. And consider, we collect all this information, collate
it, and present it, but does it help us to improve? Organization leaders can send mixed messages very
easily and without intention. Managers
are very sensitive to mixed messages and will always err to the conservative
interpretation of the message. Let’s
examine the type of instances that occur when the book The Goal is introduced
into an organization. In one example the company leadership asked the
senior managers to read The Goal over a short and up-coming national
holiday. Clearly it must have been
very important if the senior managers had to use their own time to read the
book. The countervailing message
however was; everything that you are currently doing at work now is also so
important that there is no time to learn about something new. In the same organization a little later many line
managers where also asked to read The Goal, again no time was made during
work hours. Again the countervailing
message was that everything that you are currently doing at work is also so
important that there is no time to learn about something new. What do you think happened? I saw a progression like this; (1) New book prominently on the
managers desk (2) New book moved to managers top drawer (3) New book moved to managers bottom
drawer (4) New book forgotten The intent – to expose management to new ideas, was
first-class, but the countervailing message “there is no time because
everything else is equally important,” was too strong. If you were a manager in that situation
what would you have done, the same surely? During and after the implementation of any of the
Theory of Constraint logistical solutions managers especially must be careful
not to intentionally punish positive action.
I am thinking especially of the road runner ethic, where people have
made a conscious effort to work at their normal pace and then stop when the
work that should be done has in fact been done. Too often managers wanting to do the very
best in the area under their control will move some of these people to other
parts of that area that have “fallen behind” or “can’t keep up.” This sends a very powerful message that if
I work conscientiously as required and I finish my work as requested; then I
will be “punished” by having to work in another area to help them finish
up. This unintentional action can undo
any goodwill that has been recently generated and then it is a very slow job
to build it up again. The converse argument also applies. Some areas, especially those with some
historic grievance can find any one of a multitude of reasons to slow down –
putting a key setup man on paper work springs to mind; “the paper work is
essential and we are understaffed.”
The poor manager faced with this may well bring extra people into the
area. Now we have unintentionally
rewarded the action that caused the slow down. We can expect it to be repeated as long as
it delivers the required result, temporary help. These are powerful and interrelated reinforcing
actions. The unintentional punishment
causes a positive action to cease and is very difficult to restart; the
unintentional reward causes a negative action to carry on and is very
difficult to stop. Leaders know all of this already. Nevertheless it is worthwhile to make it
explicit. (1) Button, S.
D., (1999) Notes taken from an address by Dr Margaret J. Wheatley during the
APICS Constraints Management Symposium, Phoenix, Arizona. See also;
Wheatley, M. J., and Kellner-Rogers, M., (1998) Bringing Life to Organizational Change. Journal for Strategic Performance
Measurement, April/May 1998 (links and resources). (2) Goldratt, E. M., (1990) What is this thing called Theory of
Constraints and how should it be implemented?
North River Press, pp 3-21. (3)
Wheatley, M. J., (1999)
Leadership and the new science: discovering order in a chaotic world. 2nd
Edition. Berrett-Koehler Publishers,
pg 147. (4)
Scheinkopf, L., (1999) Thinking for a change: putting the TOC thinking
processes to use. St Lucie Press/APICS series on constraint management, pp
24-25. (5) Caspari, J.
A., and Caspari, P., (2004) Management Dynamics: merging constraints
accounting to drive improvement. John Wiley
& Sons Inc., pg 66. (6) Hammond,
G. T., (2001) The mind of war: John Boyd and American security. Smithsonian Institution Press, pp 152-153,
167. (7)
Spitaletta, J., (2003) The transformation battlefield: achieving
organizational change with corporate physics.
Industrial Engineer – January, pp 38-43. (8)) Dettmer,
H. W., (2003) Strategic navigation: a systems approach to business
strategy. ASQ Quality Press, 302 pp. (9) Ohno, T.,
(1978) The Toyota production system: beyond large-scale production. English Translation 1988, Productivity
Press, pg
68. (10) Kawase,
T., (2001) Human-centered problem-solving: the management of
improvements. Asian Productivity
Organization, 305 pp (11)
Mintzberg, H., Ahlastrand, B., and Lampel, J., (1998) Strategy safari: a
guided tour through the wilds of strategic management. The Free Press, pg 210. (12) Nonaka,
I., and Takeuchi, H., (1995) The knowledge-creating company: how Japanese
companies create the dynamics of innovation.
Oxford University Press, pp 56-94. (13) Coram,
R., (2002) Boyd: the fighter pilot who changed the art of war. Little, Brown and Company, pp 305-306. (14) Zaleznik,
A., (1992) Managers and Leaders: are they different? Harvard Business Review, May-Jun, pp
99-109. This Webpage Copyright © 2003-2009 by Dr K. J.
Youngman |
