A Guide to Implementing the Theory of
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;
We could call this the reductionist/local optima view. Indeed this is very likely to be the managers’ view rather than the president’s view. Actually it is also a pretty “tame” view. It reflects a linear process reality.
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.
Does this look, or feel, as though it might represent the reality that most of us are most used to?
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.
We could call this the systemic/global optimum view. This is less likely to be the manager’s view and much more likely to be the presidents view.
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);
“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.
Legacy measurement systems that are reductionist/local optima based such as variance reports, efficiency reports, and labor utilization reports and their associated measurement and collection will counteract any new measurements and ultimately over-ride them.
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.
This is replaced by a more modern view; bottom – up.
In the second case the leadership sets the expectation for the improvement with the line management, and the line management seeks support from the specialist staff. The important work for the leader is of course is to generate the conditions for the specialist staff and to support them.
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.
Here are some assumptions.
We all know the result. Managers can never get enough detail to describe a problem, no matter how much time and money is spent collecting data.
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.
This is not an abdication of planning and control. Far from it. Indeed it is the replacement of previously unworkable system with workable systems. In a process environment drum-buffer-rope is the planning system, and buffer management is the control system. In a distribution environment, replenishment is the planning system and buffer management is the control system. In a project management environment critical chain is the planning system and once again buffer management is the control system. The unique feature of this family of logistical solutions is that they allow for the reality of an imperfect world.
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.
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