|
A Guide to Implementing the Theory of Constraints (TOC) |
|||||
|
Check Point I
really wanted people to have an understanding of the environment that Theory
of Constraints can create. And in
order to do that it is not important to fully understand the logistical
solutions; therefore it isn’t absolutely essential at first to have read the
production or supply chain or tool box sections. However, it is necessary to have an
understanding of the material in the pages on; measurements, people, process
of change, agreement to change, evaluating change, and leadership &
learning. That is why I put those
pages at the beginning. It is also
necessary to have an understanding of the material in the pages and sub-pages
on; flexibility, strategy, and paradigms.
You guessed it; that is why I put those pages at the end. So,
please, read this page now and then, if you haven’t already done so, go back
and read the other necessary pages over the next week or two and then come
back here. Some
people have a problem with the word theory. As in; “this is just a theory, but I deal
with reality.” Well a theory is a way to describe reality. We can’t increase output by 45% or profit
by 90% or reduce lead time by 66% using fiction. However, if the “theory” in the Theory of
Constraints title is really bothersome, then substitute in the term “reality”
as in the Reality of Constraints. Constraints are real unless we are making
infinite amounts of profit. We can
choose to manage the constraints or choose to allow the constraints to manage
us. Conversely we can choose to ignore
the constraints, but rest assured that the constraints will not choose to
ignore us. The constraints will
dictate the way that our organization performs. In other words the constraints will impact
upon us regardless of whether we know it or not, and we will also impact upon
the constraints regardless of whether we know if or not. So it is best to know it, to acknowledge
their reality. I trust
that I have conveyed some of the immense respect that I have for Taiichi
Ohno, the inventor of the Toyota Production System, a system probably better
known in the West as just-in-time. If
more people would pay more attention to Ohno’s wisdom then we would all be
better able to understand how Toyota has become so incredibly successful. What,
then, if we could be better than Toyota, and sooner. Not in the repetitive manufacture of
automotive of course, but in our own chosen field of endeavor. Think about it. It’s not so far-fetched. As an example there is another very
successful Japanese company that we can mention – Komatsu. Komatsu developed a very effective slogan (backed
up by action) in the 1960’s; “Maru-C” or to encircle Caterpillar or to “catch up with and beat Caterpillar”
(1, 2). Komatsu knew that the American
company was superior and they chose to aim even higher. For the rest of us that leaves Toyota. Do you want to Out-Toyota Toyota in your business environment? Let’s aim then to improve faster and better
than Toyota did. Much faster and much
better in fact. We have
all the tools to do this, but we are missing out something very important. What is
it that we are missing? I
thought that the “Star Wars” series of films was responsible for entering the
term prequel into the English
language, but apparently it has been around for a little longer (since the
1970’s). But just as film producers
can produce prequels, maybe that is also what we need in Theory of
Constraints. The
main part – the part with the Jedi’s and Jonah’s – is already done. These are the logistical and non-logistical
solutions, the thinking process, and the holistic approach. There is also Strategic Navigation and
Constraints Accounting. But you should
work out where these two more recent additions belong for yourself. We need
to go back to the future and write the prequel. How it all starts. Or rather how to start it all, and to make
sure that we establish the essential germ of the understanding needed for a
robust and on-going process of improvement. Way
back on the measurements page we introduced a small tree for the strategy of
a company. It lists 3 necessary
conditions for securing the future of a company and ensuring a process of
on-going improvement. Let’s redraw it
here.
What
then of making money? Well sometimes
it is difficult to work out where the logistical solutions leave-off and the
management accounting function begins.
Maybe we shouldn’t seek to make a clear-cut differentiation. What does seem to be clear is that even if
we use the logistical solutions, if we then continue to use cost allocation
methods we won’t make nearly the profit we could by using either throughput
accounting or constraints accounting – in fact the whole effort is quite
likely to come undone. Constraints
accounting is inherently more systemic than throughput accounting so let’s
select it. It is the necessary condition to making money now and in the future. It is
apparent then that we already have all the parts that we need to
continue. So why can’t we do it? Why do we talk, nod our heads in agreement,
and then do nothing? It must
be something to do with the middle-most entity. We don’t have a pre-requisite there. Do we need one? Apparently so – otherwise we should be able
to fire ahead and start our process of on-going improvement right now. And of course quite a few companies can do
exactly that. For the rest of us,
however, we must then ask what is the pre-requisite necessary condition that
we are missing? What is the missing
piece that stops us from starting? Certainly
we addressed this, in part, for North American companies on another
page. Although this was a security and
satisfaction issue, it was more to do with why these companies stop once they
have started. Here we are still
concerned with trying to start. In Japan
where the security and satisfaction issue for continuing once started is
addressed we find that we still have the same reluctance to start. There must be a more generic pre-requisite
that we haven’t addressed yet. It is
generic to both North America and Japan.
Generic to people actually. Let’s
have a look. In order to address this missing piece we must turn
once more to Efrat’s cloud. Efrat’s
cloud is a personal cloud, rather than a system cloud. This is how it looks (3).
We have a small dilemma, and yet we also broke this
exact dilemma much earlier on, in the accounting for change page. In the section on direct labor as operating
expense and strategic implication we noted the following. In Japan job security is a precondition of
kaizen, and maintenance of this precondition is the key foundation for
independent kaizen. In fact based upon
Japanese experience it appears that this becomes a circular argument. In order to improve we must be secure, and in order to be secure we
must improve. This is the
key to Efrat’s cloud, at least in this instance. In order to improve we must be secure, and in order to be secure we must improve. All improvements are a change. We must change. Let’s use this as an
injection to break Efrat’s cloud.
We must
initiate change. We might
be quick to deduce that change is more likely to occur in an organization
that is faced with an impending receivership or a restructuring. But be careful. Let’s look at the cloud for this particular
situation.
So
let’s not be lulled into a false belief that firms with their backs to the
wall are any easier to work with. They
are no different – its just that they’ve had much more practice. We must
still initiate change. Let’s
add to our strategy this new and generic pre-requisite necessary condition
that we have derived.
Yes, but …, we are blocked. We are blocked by a paradigm. The successful change that is required is
in another paradigm. It is in a new
paradigm that is concerned with systemism and subordination, the paradigm of
our industrial future. It is a
paradigm that we can't access from our current and older paradigm, the
paradigm of reductionism and efficiency, the paradigm of our pre-industrial
past. We need help.
We need help to cross the divide from our old pre-industrial past to
our new industrial future. We need
help to pass through the mirror to the other side. That is the job of the prequel. The
prequel is 4 half days in succession.
It is experiential – it is do, not talk. Because when we talk, the language of our
current paradigm betrays us access to the new paradigm. And the “do” is simple, not threatening,
because the more fundamental the understanding that we can attain early on
the better the final result. And it is
the result that counts. This is
not the Satellite Tapes; this is not the 4 by 4, and this is not any of the
application workshops. You don’t need
to read The Goal and you don’t need to read It’s Not Luck. Some of these may become necessary sometime
later, but they are not sufficient.
Sufficiency is attained by doing something else first. By
concentrating on generating an experience, rather than a seminar, the prequel
is culturally and linguistically independent.
It is an opportunity to internalize the tacit components of the
systemic approach. Indeed
our intuition tells us that in order to engage in fundamental improvement,
rather than simple incremental improvement, we must understand the
fundamentals first. Leaders know this,
but we must allow our managers the opportunity to develop this understanding
as well. If you
express an interest, then I will make an offer. (1) Hamel,
G., and Prahalad, C. K., (1994) Competing for the future. Harvard Business School Press, pg 128. (2)
Bartlett, C. A., and Ghoshal, S. (1995) Changing the role of top management:
beyond systems to people. Harvard
Business Review, May-June. Also
republished in: Champy, J., and Nohria, N., (1996) Fast Forward: the best
ideas for managing change. Harvard
Business School Press, pg 197. (3)
Dettmer, H. W., (2003) Strategic navigation: a systems approach to business
strategy. ASQC Quality Press, pp 117-119. |
