A Guide to Implementing the Theory of Constraints (TOC)





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Trying To Do Our Very Best

We now know how some of the mismeasure, frustration, and sometimes despair arises as we try to manage that relatively recent invention; the serial process – the manufacturing process.  We recognize, often intuitively, that we are trying to optimize according to some reductionist/local optima approach but that we are actually bound by the process dependency and variation of our system.  But what does it mean to optimize?  Surely this means to do our very best.  In fact, for everyone to do their very best.

Doing our best is such an important concept in process improvement that we will deal with it in detail in this section.  Therefore, this section is really about people.  Let’s start once again with our simple departmentalize model, this is most likely to reflect the reality of most people and most systems at the start of an improvement process.

Now ask yourself; where are the most likely areas for conflict in this system.  Are they within departments or between departments?  Sure, we seem to understand frustration within our own departments, and between our own actions and our own measures, but conflict seems to be reserved most often for the interface between departments.

Within a department it seems that we have sufficient control to try and achieve the results that we desire, we might call this a span of control or a sphere of influence (1).  At the interface between departments the control passes from one group or manager to another, we lose direct control and another takes it up.  We could call these interfaces transfer points (2).  Let’s add this to our diagram.

Still, just passing control can’t be reason enough for conflict.  So why is there conflict?

The response might be something like; “well we certainly try to do our best, but some of those other people in that other department, well, we’re not so sure about them.”

Oops, I think that it is time for a reality check.

Reality Check

Try one day to ask a diverse group of people; people from more than one department or people from more than one organization, if there is anyone present in that group who leaves home in the morning with the intent of not doing a good job.  Of course no one would admit to such a thing openly.  But watch the look of indignation on peoples’ faces that you should have even have asked such a question.  This is the proof that people do intend to do a good job.  Sure, everyone knows someone else who doesn’t want to do a good job, but no matter how many times you repeat this experiment you won’t find that someone.  You will be left with the inescapable conclusion that indeed everyone does want to do a good job.  In fact, their best.

We need to add, of course, that whether everyone wants to do a good job and whether everyone actually does a good job is another matter.  Whether someone doesn’t do a good job might not be a matter of competence for instance, it might be a matter of alignment, or focus, or one of a number of other things.

So I think we can safely say that everyone wants to do their best, according to their current view of what is best.  And maybe those words; “according to their current view of what is best” are more telling than we suspect.  Nevertheless, it would appear that the conflict that occurs at transfer points is not due to one group or manager doing well and another group or manager doing less well; it is because both groups are doing their very best according to their map of reality.

Conflict arises not because people are failing to do their best, but because everyone is doing their best.

It is the map of reality that we need to look at in order to understand why there is conflict.  But, first, let’s have a look at some pre-suppositions that are useful to know.

Some Pre-Suppositions

It is useful to keep in mind some pre-suppositions about human behavior when considering improvement initiatives (3, 4).  In any improvement initiative we are going to come up against situations where it appears that the initiative is not being supported.  When that happens we need to run these pre-suppositions past our minds as a test against the situation.

(1)  All behavior has positive intent.

(2)  People make the best decision they can at the time.

(3)  People respond to their map of reality and not reality itself.

(4)  There is no failure, only feedback.

This will help us to reframe the problem so as to see it from the viewpoint of the people who appear not to support the initiative.  Their behavior will be positive from their viewpoint, even if it doesn’t’ appear positive from our viewpoint or the viewpoint of the system.  If we can develop an understanding of their viewpoint and thus their map of reality then we are in a much better position to do something about it.  Always ensure that there is adequate feedback.  Management who perceive a problem but fail to provide the necessary feedback to staff rob the staff of the opportunity for self-improvement.


Let’s expand on the concept of feedback for a moment.  Margaret Wheatley has characterized feedback in the following terms (5).  Feedback is self-generated, an individual or system notices whatever they determine is important for them and they ignore everything else.  Feedback depends upon the context, the critical information is being generated right now, failing to notice the "now," or staying stuck in past assumptions, is very dangerous.  Feedback changes; what an individual or system chooses to notice will change depending on the past, the present, and the future.  New and surprising information can get in, the boundaries are permeable.  Finally, feedback is life-sustaining, it provides essential information about how to maintain one's existence, it also indicates when adaptation and growth are necessary.

So now we can see, for instance, why measurements cause frustration.  They provide a formal but usually localized feedback.  Let’s show what we mean.

Measurements provide a formal but localized feedback loop that may directly contradict our informal feedback loop – what we see and what we know is happening but which is not measured.  However, there is a strong risk of a “closed circuit” here.  If our map of reality is strongly reductionist/local optima, and so too are our measurements, and thus also our formal feedback; then it is quite possible that we won’t notice any disjoint between the formal and informal measures until it is quite explicit.  We won’t notice until it is blindingly obvious and even then, maybe not.  But people outside of the system will notice the disjoint however because they are not bound to the same assumptions.  To break this closed circuit we need to reframe the map of reality first, and then the measurements.

Maps Of Reality

People make the best decision they can at the time according to their map of reality.  For most people their map of reality in their work environment is a reductionist/local optima one.

How do we know this?  Think back to your response to the first diagram of our simple system when it was presented in the introduction.  It looked like this.

That this diagram didn’t produce howls of concern indicates that for most people it is a pretty fair representation of reality.  This is a model of the reductionist/local optima approach.  In fact we are quite used to seeing our world subdivided like this.

If our own map of reality was different, then many people would have been searching initially for something maybe more like the following view.

This is a systemic/global optimum view.  This is not to say that such a view or map isn’t possible, it’s just that for the majority of us, given our experience and dare I say it – our training, this isn’t the first thing that enters our mind.

If we can be sure that people strive to do their very best within their department, within their group, if we can be sure that workers concentrate equally on everything everywhere within their area, and that managers concentrate on everything in all of the departments under their control, then perhaps there is a very real danger that we only know how to locally optimize?  Perhaps there is a very real danger that we can’t see or think in systemic/global optimum terms?  Let’s investigate this thought a little further.

Maybe Global Optimization Is Contrary To Human Nature?

Is global optimization contrary to human nature?  Well, let’s test it.  Let’s return to our departmentalized version of our simple system, and let’s add some responsibility or spans of control to it.  Our basic level is that of a foreman, as we might expect in a traditionally structured manufacturing organization.  However, we could call them team leaders, charge nurses, or whatever else is relevant.  As shown earlier there is a transfer point between each span of control.

Now consider, for example, someone whose span of control, or sphere of influence, extends beyond one department or section or company.  It’s more likely that person will see “a bigger picture” than other people.  That person’s local optimization across their span of control is far more likely to approach the global optimization of the system.  The larger the span the closer the potential for the local optimization to approach the global optimization.

Let’s draw this concept using our simple model of a system.  Let’s draw in two supervisors where we previously had 4 foremen.  The 4 foremen report to two supervisors.  The number of transfer points drops as the span of responsibility grows.

Cynics would point out that “most bottlenecks are at the top”.  However, this is unfair.  People at the top usually can’t help but see the global issues of the system.  So let’s modify our diagram to reflect this reality.  Now we have one manager whose span of control replaces the two supervisors who report to him.

Actually we need to modify this view the system as it is in reality – a system with one weakest link.  A system that looks more like this.

So, let’s repeat.  The people at the top usually can’t help but to see the systemic/global optimum view.

So we need to ask where, then, are they being let down?

Are they let down by their subordinates?  I don’t think so.  Well then, are they being let down by their performance measurement system?  In part, the answer to that must be yes.  In fact, we have seen already that this is the case.  We are trying to understand the global issues while relying upon using local performance measures – legacy performance measures from our reductionist/local optima approach of the last several centuries past.  We can see the whole system and then we insist on breaking it apart into sub-units again.  Let’s draw what we mean.

Imagine the subordinates’ point of view then; there should be no reason why they too, cannot form a systemic view except for the imposition of a legacy measurement system from the top down.  After all;” Tell me how you will measure me, and I will tell you how I will behave.  If you measure me in an illogical way… do not complain about illogical behavior (6).”  So if you measure me locally then that is how I will behave.

So global optimization isn’t contrary to human nature, we naturally form a systemic/global optimum view when our span of control allows us, but we are hampered by the trap of reductionist/local optima performance measures.  We need to apply our new measurement process to the whole system.  Let’s draw this.

We need to feed back into the system the global outputs of the system in order to know what actions to take locally.  However, local feedback into local actions was only part of the problem and so global feedback into local actions can only be a part of the solution.  Replacing the legacy reductionist/local optima performance measures with our new systemic/global optimum measurements – our fundamental measurements – is necessary but it is not sufficient.  After all we have already deduced a consistent and logical measurement system, so why then haven’t we applied it?  Let’s have a look.  Let’s look for the solution to the remainder of this problem.

If Global Optimization Is So Natural – Why Aren’t We All Doing It?

In the absence of a measurement system to support a systemic/global optimum view, most people in a process will locally optimize – its human nature – the belief that if everyone does his best, the net result will be the sum of all of those efforts.  In fact; “Companies who believe they have avoided the pitfalls of performance measurement systems because they do not have a formal system are in the worst case situation.  Everyone in the organization is defining what a good job is from their local viewpoint of what good performance is locally (7).”

Previously we learnt to define; the system, the goal, the necessary conditions, the fundamental operational measures, and the role of the constraint.  But what we haven’t done yet is learn how to focus on the constraints – and we need to do that in order to determine what a good job is locally – this is the other part of the solution to the problem.  It is insufficient to evaluate local actions in term of global feedback unless we know what it means to do our best locally for the system as a whole.  And as we have already learnt, “The key to know what to do locally is the realization of the role the system constraints are playing (8).”  It is an absence of knowledge of a focusing system that hampers us at present from implementing a systemic/global optimum approach.  We will examine how to focus on the constraints in the next page on the process of change.

In fact, once we know the role of the constraints, and we can operate under a systemic/global optimum view, then we will be able to remove the conflict that occurs at the transfer points between spans of control.  People being people will still do their best, but now they will know for every area what that “best” is for the system as a whole, rather than for their area under the former assumption of an isolated and independent part.  Again we will deal with this in detail in the next page on process of change.

But did you note something more important?

In our previous example, although the people at the top formed a systemic/global optimum view, nothing really changed – they really just applied their local view to a broader canvas.  That brings us to a very important point, “all change – both individual and organizational – requires a change in the meaning that the system is enacting (9).”  So, in effect, it is only a change in meaning, a change in world view, a change in our map of reality.  The people at the top didn’t abandon local optimization.  It’s just that their span of control or sphere of influence grew sufficiently their “local” was everyone else’s “global.”

Now, if the people at the top can do that; why can’t anyone and everyone else.  We have to replace the current map of reality that says “I am my department,” to something like “I am a significant part of the whole process.”  Where everyone has been let down in the past from making this transition was firstly the absence of a systemic approach to measurements.  We have that now.  All that remains then is just to know where the constraint is in order to evaluate our local actions according to these measures.

If There Is Conflict – There Is An Erroneous Assumption!

There can be no conflict in nature.  "There must be an erroneous assumption that we make about reality that causes a conflict to exist (10)."  If we have conflict at transfer points then there is an erroneous assumption somewhere (a common but erroneous map of reality).

What is the erroneous assumption?  If we cast our minds back to our simple model as it was first presented in the measurements section we highlighted that the workflow wasn’t at all independent as we might have first assumed.  In fact, we know that the workflow contains multiple dependencies and also variability.  To some extent we might try to decouple the dependencies by buffers of work-in-process – buffers everywhere.  But we already know the cost of that.  Lead times become too long and there always seems to be some more urgent work that finds its way around those carefully built buffers – and sitting in those buffers takes so long that lot’s of work becomes urgent in any case.  However, the dependency is just as great within individual departments as it is between different departments, so this can’t be the cause of conflict at transfer points.  Dependency doesn’t seem to be the source of our erroneous assumption.

Maybe it is variability then.  We only need to look at the success of total quality management (TQM) and total productive maintenance (TPM) to see that reducing variability – both quality and process variability – makes plants run much smoother, and produce much better products too.  However I have worked in world-class precision manufacturing plants with TPM, ISO 9000, and ISO 14000, and the conflict is still there and it starts right about where one foreman’s area finishes and another’s starts.  So, enticing though the thought is; variability does not seem to be the source of our erroneous assumption either.

In fact, to understand the source of our erroneous assumption, and therefore conflict, we must wait for the next section on process of change.  But it was necessary here to clarify that even though serial processes are characterized by dependency and variation, these are not the cause of our conflict.

So, if leaders naturally see the broader system-wide picture, why then do most of them, still resort to using local measures?  The answer is that there hasn’t been until recently a coherent methodology that would allow people to use global measures.  We saw that coherent methodology as a summary to the last section.  Let’s repeat it here.

(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 constraint(s).

If you like, we have seen how most of these pieces fall into place.  Sure, just-in-time is a system-wide approach and has been around for quite a while.  But its applicability has been largely limited to large scale repetitive processing (autos and consumer electronics).  It certainly didn’t address the measurements issue.  Contribution margin analysis did address the measurements issue and has been around for quite a while too, but it doesn’t seek to identify the role of the constraints.  So we seem to have always had bits and pieces, but not all the right bits and pieces in the same place at the same time.

In fact, we have yet to address here the last step of the methodology – the role of the constraints.  We will do that in the next section – process of change.  If leaders have a system-wide view and have sufficient systemic support from the fundamental measurements and awareness of the role of the constraints, then what is there to stop us from reframing the role of managers – and everyone else – from a reductionist/local optima approach to a systemic/global optimum approach?  I think that the answer is there is nothing to stop this whatsoever.