A Guide to Implementing the Theory of Constraints (TOC)





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The Process Of Change

We have seen over the last few sections that we seem to be caught between a rock and a hard place.  We do have the intuition to know that local optimization doesn’t work well for the overall system good.  And although this looks as though it is the result of both our own psychology and the fact that large scale serial process operations are very recent human inventions; it is also apparent that we do know how to develop a system-wide perspective even within these systems.  We know this because the people at the top (and some others too) can see the overall system – and we know that these people are no different from you or me.  We also know that, currently, these people are being served by a “legacy” system; a system of local cost accounting and local efficiency.

What we need is a process by which to facilitate the change.  A process of get us from where we are now to where we want to be in the near future.  Senge described the “where we are now” as the current reality, and the “where we want to be in the future” as the vision (1).  He noted that if there was no gap between the current reality and the vision, then there would be no need to move toward the vision.  The gap between the two becomes a source of creative energy which he termed “creative tension.”

Well there is no shortage of creative tension I am sure.  But that doesn’t actually help to move forward.  In fact Senge notes that “creative tension often leads to feelings or emotions associated with anxiety, such as sadness, discouragement, hopelessness, or worry.”  Senge described this as “emotional tension.”  The key point is not to confuse creative tension with emotional tension, otherwise we predispose ourselves to lowering our vision (1).  We need a process of change to ensure that we move from where we are now to where we want to be in the near future.

Goldratt briefly outlined a process of change in 1990 (2).  He characterized it as follows;

(1)  What to change.

(2)  What to change to.

(3)  How to cause the change.

The first two questions Goldratt considered to be technical and the last one to be psychological.  Why is it that how to cause the change is considered to be psychological?  Well it almost seems like a mantra, it goes like this (2);

§  Any improvement is a change.

§  Any change is a perceived threat to security.

§  Any threat on security gives rise to emotional resistance.

§  Emotional resistance can only be overcome by a stronger emotion.

Note that not all change is necessarily an improvement; this might help explain the reason for our healthy skepticism towards the changes that actually do lead to improvements.

The critical supposition is that the emotional resistance that improvements induce can not be overcome by logic; it can only be overcome by the stronger emotion, the emotion of allowing the people involved to deduce the solution for themselves.  But let’s not go there just yet, that is really the subject of the next page – the agreement to change.  Let’s confine ourselves here to the first two steps; (a) what to change and (b) what to change to.

In a way we have already intuitively done all of the first step and part of the second step.  We did this when we formulated our rules of engagement.  Let’s repeat the rules 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).

By working through these steps we have partitioned our problem into what exists now – our current reality, and what doesn’t exist now but we envision for the near future – our future reality.  What we are missing then from our discussion so far is a method that allows us to address the 5th step; defining the role of the constraints.  We still need to develop a method to focus on the constraints of the system.  So let’s do that right now.  Why do we want to focus on the constraints?  Because these are the most fundamental leverage points to move from our current reality to our future reality.  The constraints are the most fundamental points to enable our process of change.  To extend the military metaphor slightly, to go with our rules of engagement we need a plan of attack.

Developing A Focus – Our Plan Of Attack

Goldratt furnished a focusing process in the earliest versions of The Goal, however, it was implicit.  In later editions it was made explicit as the five focusing steps.  In The Race published in 1986, we can see the one of the logistical applications – drum-buffer-rope – essentially fully developed, and another – project management – at an incipient stage; and yet there is no mention of the five focusing steps.  In addition to the explicit inclusion in later editions of The Goal, the five focusing steps were also presented in two other sources dating from 1990 (2, 3).

The five focusing steps, exactly as in the original verbalization, are as follows (2);

(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.

With the verbalization of this process we now have an iterative means of addressing the fundamental points that will allow us to move from where we are now, to where we want to be in the future.  Even though our rules of engagement may remain essentially static – the ultimate anchor point in our reality; the five focusing steps allow us to “loop” and adapt as the constraints in our environment change in response to our own actions, and in response to the actions of others that are imposed from outside of the system.  The five focusing steps are without doubt the singular most important aspect of the Theory of Constraints.

How Many Weakest Links In A Chain?

A common analogy for the focusing process is the strength of a chain.  Everyone knows that a chain is only is strong as its weakest link.  The weakest link is the limitation upon the strength of the whole chain (and while a number of people have argued passionately to me that there is more than one weakest link in a chain, I remain unconvinced).  The chain will always break at the weakest link, and if we were to rejoin the chain, it will next break at the next weakest link – and so on.

Notice, however, that the 5 focusing steps are worded for a system and not for a single chain as used in the analogy.  This is a not-so-subtle aspect that seems to be often missed in moving out from the chain analogy to a whole system perspective.  We need to look at this in a little more detail.

Notice also that in the verbalization above, “constraints” is plural, not singular.  It is saying that from a system perspective, in any one system, we should expect more than one constraint.  Initially this too appears to be in direct contradiction with out simple chain analogy.  In fact, I will suggest that it has been further complicated by a subsequent change in the verbalization.

Goldratt subsequently “put the S in the word constraints in parentheses, because there might be a system that had only one constraint (3).”  The new verbalization is thus;

(1)  Identify the system’s constraint(s).

(2)  Decide how to Exploit the system’s constraint(s).

(3)  Subordinate everything else to the above decision.

(4)  Elevate the system’s constraint(s).

(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’s constraint.

Is the difference in wording important?  I think so.  Maybe by putting the “s” in a bracket Goldratt was in fact trying to draw attention to the non-singularity of constraints in a system by suggesting that such an occurrence would be exceptional (and as yet undiscovered).  However, it may also have inadvertently reinforced the chain analogy with a singular constraint.  In any case, let’s adopt the earlier verbalization, the one that was first presented above, the one where plural constraints are explicit.  Except we need to make one change; subordination decisions must also be plural, as others have also clearly indicated (4).  Thus we have;

(1)  Identify the system’s constraints.

(2)  Decide how to Exploit the system’s constraints.

(3)  Subordinate everything else to the above decisions.

(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.

The rationale for this plurality comes from Goldratt’s own comments which we saw earlier in the page on the bottom line.

"We very rarely find a company with a real market constraint, but rather, with devastating marketing policy constraints.  We very rarely find a true bottleneck on the shop floor, we usually find production policy constraints.  We almost never find a vendor constraint, but we do find purchasing policy constraints.  And in all cases the policies were very logical at the time they were instituted.  Their original reasons have since long gone, but the old policies still remain with us (5)."

Although the word “policy constraint” has been more recently disowned, maybe “policy issue” is more apt; there are still many more than one constraint per system.  We know, however, that there can only be one weakest link in a chain, so if there is more than one weakest link in a system we are in effect asking how many chains there are in a system.  Let’s examine this.

How Many Weakest Links In A System?

In order to answer this question.  Let’s take our simple systemic model as an example.  And let’s draw it with a physical constraint as we did on the measurements page, and let’s add two products to our process.

Here we have; one system, one process, two products, and one constraint.

Let’s make this a little more explicit.  Let’s put a boundary around our system and label the constraint.

Both product A and product B share the same set of physical resources or the same process layout, however we could consider that we have in effect a chain for process A and that we have a chain for process B, and that both of these chains share a common weakest link.

Let’s now add a third product – product C.  Product C does not go through the process constraint – after all, to do so would mean reducing the capacity to produce products A & B.  Therefore, the demand for product C must be limited so as to not cause a capacity constraint on any of the other common resources that it shares with products A or B.  If the demand is limited then product C must be market constrained.

Let’s draw this.

So we now have; one system, one process, three products, and two constraints.  Another way of looking at this is that we now have 3 chains in our system and 2 constraints.

Let’s step this argument out one more level – an important level conceptually.  What if we have two processes in our system?

Let’s have a look.

Now we have, one system, two processes, six products, and four constraints.  Or to put it another way; we now have 6 chains in our system and 4 constraints.

In industry, having two discrete processes is not so uncommon.  Consider for example a drill bit manufacturer making the same range of products in both high-speed steel and also in tungsten carbide.  There will be two similar but quite separate lines – maybe even totally separate personnel.

Too often we tend to think that the five focusing steps – our plan of attack – applies to an individual chain, and in a very simple system it might, but most often it applies to a system of chains.  Moreover, even if the physical constraints are limited, the policy constraints that underlie them will be numerous.  We need the plural “s” in constraints.

One last point.  All of the constraints in our diagrams above exist simultaneously in time.  And if we overcome each of these constraints then the next set of weakest links will present themselves – also simultaneously in time.  The plural “s” in constraints doesn’t apply to this series of sequentially uncovered constraints in one chain; it applies to the co-existing constraints in several chains.

Let’s now look at each of these five steps in detail and then we will examine some of the broader ramifications.  In the process we will also draw some distinctions between logistical constraints (physical constraints) and non-logistical constraints (policy constraints) and how we approach them.


Identify seems straight forward, especially if it is a physical constraint in a logistical solution – a true bottleneck.  If you ask people who don’t have direct responsibility for the constraint but who do have responsibility for making sure that orders or work are delivered on time, they will have a fair idea of where the constraint is.  The planners will have a fair idea also of where the constraint is.  If the situation is in sales or marketing or some other non-logistical area, then the constraint will be a policy and the best way to identify it is by using the Thinking Process to derive a core problem or a core conflict.

In the previous section we noted the cynics response that “bottlenecks are at the top” in reference to the leadership.  We decided this was unfair and indeed totally untrue.  Let’s invert the analogy.  Instead of a bottle, let’s use a funnel analogy (6).  We are looking for a choke point, the neck, the narrowest point in the funnel through which everything must flow.


Exploit means that once a constraint has been identified, all efforts must be made to properly utilize the capacity of the constraint – to make the very best of the existing situation using the resources that are at hand.  If our constraint was a funnel for instance, we would make sure that there are no blockages lodged in the narrowest point.  We would also make sure that the material flows smoothly and continuously through the constraint.  In fact, a funnel does this automatically to some extent by having a reserve in the mouth above the neck – if you like a sort of buffer to ensure constant supply to the neck.  For a physical constraint however, writing a plan or a schedule for best utilizing the available capacity is a good way to exploit the existing capacity.  A plan is really just a set of instructions that provides for a timely and appropriate output.

Taiichi Ohno had a very effective way of describing how to exploit the existing capacity of a work center (7);

Present Capacity = Work + Waste

Stated in this way, exploitation of a constraint can also be seen as eliminating waste and this is central to the way just-in-time exploits capacity everywhere.  The particular wastes that apply in instance of a constraint are; the waste of waiting, the waste of over-processing, the waste of over-production, and waste of making defective products.  As the waste component is reduced at the constraints the work component can and should be increased.  We should also make sure that there are not existing policy constraints or just plain old bad habits that unreasonably limit the available working time either.  Removing these will increase the work component even further.

How do we over-produce on a constraint?  Easy, instead of making just what is required for the “foreseeable” future, we make a bit more because it is more efficient.  A knowledge of the earning capacity of different products as described in the measurements section is also a good way to ensure full exploitation of an internal constraint.

Non-logistical implementations may not have physical constraints but they will have policy constraints.  It is unlikely that we will try to exploit or subordinate to these because the simplest way to overcome an erroneous policy is to replace it.  It doesn’t cost money, it just takes thought, so most people will go from identify to elevate automatically.  However there could be a situation where a policy is externally imposed – Government for instance, in which case we probably won’t be able to change it any time soon and we may indeed have to make the best of the existing situation that we can – exploit the externally imposed policy.

Focusing on the constraints will provide unbelievable leverage.  This leverage occurs because for once we know exactly where to look and exactly what to concentrate on.  We have a very limited number of places where concentrating on the detail complexity gives us a unique handle on the dynamic complexity of the whole system.


If “exploit” is the instruction for the constraint, then “subordinate” is the instruction for all of the non-constraints – everything else, both physical and policy.  Proper subordination is the key to effective implementation of Theory of Constraints.  Proper subordination means that the non-constraints only do what is required to ensure maximum exploitation of the constraint.  We need to ensure that the parts are subordinated to the whole, or more correctly in larger-scale enterprises, that the subsystems are subordinated to the system.

Once an exploitation plan has been decided upon, then, take care to remember that there are two ways that we can deviate from this plan (8).  Deviating from the plan absolutely means improper subordination and consequently less than fully effective exploitation.

Deviation from the plan here results from;

(1)  Not doing what was supposed to be done.

(2)  Doing what was not supposed to be done.

Often the most important part of subordination isn’t just ensuring that we do what is supposed to be done; it is ensuring that we don’t do what is not supposed to be done.  We could think of this as active restraint.  Making sure that we don’t find work for non-constraints just to keep them busy is a particularly important example of active restraint.  It avoids another of Ohno’s wastes; the waste of stock-on-hand.

To use our funnel analogy, this means pouring material into the funnel at the same rate as it flows out, leaving just enough in the mouth of the funnel to ensure the neck is always at full capacity.  Pouring the material in faster will fill up the mouth of the funnel to overflowing, but won’t cause any more material to flow through the neck.  We all know this from personal experience; we all blame the stupid funnel, when actually it is always the stupid pourer!

To put this in another way, pouring the material in faster than the rate of the constraint is a waste.  It is the localized waste of over-production.  We could look at non-constraint capacity then as follows;

Present Capacity = Work + Localized Waste of Over-production + Other Wastes

The point in stressing the localized waste of over-production is not because it produces excessive inventory and longer lead times, but rather because it destroys sprint capacity.  Sprint capacity on non-constraints is an integral part of buffer management.  Buffer management in turn is an integral part of ensuring the timeliness of our plan.  We will return to these concepts again in our logistical examples.

Subordinating the local and system measurements to the constraint and the goal of the system is also a key and under appreciated facet of Theory of Constraints.  If we provide the wrong feedback then we can’t be surprised if we get the wrong behavior.  This means not only ensuring that we do measure and communicate the effectiveness of the constraint, buffer management, and shipping, but also that we don’t measure local efficiencies or utilization of the non-constraints.

The local performance measures of inventory-dollar-days waiting and throughput-dollar-day late are important parts of ensuring the correct subordination of subsystems to the goal of the whole system.

We will return to subordination issues in more detail shortly.


Elevation is the stage at which we bring in additional resources in a logistical solution and raise the capacity of the constraint in some way.  This action will require some operating expense and/or investment.  The intention is to leverage off the constraint so that a small elevation results in a substantial increase in output.  In a for-profit organization we are trying to decouple net profit from operating expense.  If in our funnel analogy we could bore out the neck of our funnel, without having to buy a whole new funnel for instance, we could elevate the constraint.  If we bought a second funnel we would also elevate the constraint.

In the non-logistical solutions elevation means a new break-through idea that enables us to do things that were previously not possible.  Generally speaking this is not capital intensive, however as Newbold notes; if the leverage point is a policy, political capital may be needed to be invested (9).”

Go Back – Inertia

The last step is important.  The first part; “If in the previous steps a constraint has been broken, go back to step 1,” is straightforward enough, it introduces a looping structure.  It reminds us that if we break a constraint then clearly we will have another newer one to hunt out and deal with in the same manner.  However, the meaning of the second part; “but do not allow inertia to cause a system constraint,” is less clear.  In this case the meaning is that when we do break a constraint we should be careful not to let our satisfaction with the new level of performance stop us from seeking out even higher levels of performance.

Colloquially, inertia is often interpreted to mean that it is difficult to start moving something from rest, but it also has a meaning that once something has started moving at a constant rate it is difficult to change it to a new direction or to a new rate of movement.  It is this second part of the meaning that is important in this context.

The best description of inertia comes from Mark Woeppel (10).  “How about a 43% annual ROI? Could you sit there awhile?  I know a company that did.  How about taking your order fulfillment cycle from 3 weeks to 3 hours and stalling there.  I know another company that did that.”  These are rather fine examples of inertia.  The message is; once you break a constraint, go and look for the next one; don’t accept the new current and higher level of performance as satisfactory.  There is something else blocking you from going even higher.  Go back and look for it.  Don’t let the satisfaction of the current improvement constrain us from seeking even more improvement.

I read the 5th step not only as an instruction to go back and identify the next constraint – physical or policy, but also as an admonishment to Don’t Stop.  This is a process of on-going improvement – POOGI – it’s a journey not a destination.

The Hourglass Analogy

There are several analogies that are used to illustrate the focusing process.  We used funnels above, let’s use an hourglass (or a minute timer – depending upon your experience) to summarize what we have learnt.

Step 1: Identify.

Step 2: Exploit.

Step 2: Exploitation continued…

Step 3: Subordinate.