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A Guide to Implementing the Theory of Constraints
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How To
Use This Site
It struck me
one day, as I was searching, that even in the largest technical bookshops in
some of the largest industrialized cities in the world, such as Tokyo or
Singapore, we are hard-pressed to find an aisle for operations. Sure, there is no shortage of advice on
strategy, but there is a very real dearth on the tactics that are needed to
put the strategy into place. And,
honestly, if we don’t know the tactics, then how on earth can we really know
the strategy that goes with the tactics?
Strategy and tactics are interrelated. I find this
very strange, there is no shortage of advice on the thinking/talking part of
business, but there is a very apparent shortage on the people and doing
part of business. Nevertheless, the
information does exist, it is pragmatic, and it is very successful. We just need to know where it is, and we
just need to know how to make use of it. This website
is about the Theory of Constraints – how to substantially improve an
organization, any organization, by moving a group of people towards a common
shared goal. It is an
application-based view of Theory of Constraints. The intent is to make much of the available
background and practice more readily accessible while presenting it within
the broader context of other parts of the general management literature and also
my personal experience. The site is
divided into a number of basic topics as shown in the headings at the top of
this page, and each of these basic topics will in-turn reveal a list of
sub-topics once you click on the topic heading. Start at the start with the introduction. Then
work your way through the topic and sub-topics on the bottom
line, the core concepts needed to implement Theory of Constraints
are there. Core concepts such as; the
goal and necessary conditions, the 5 step focusing process, and throughput
accounting. Thereafter, you will
probably want to jump to your special area of interest; production,
supply chain, thinking processes, strategy, project management, or
healthcare. All the topics
and sub-topics are listed and can be accessed directly from the site map. There is also a table of contents with details of the paragraph headings for every page. People who like to “browse” should check
through the table of contents for items of interest, or actively search using
“Ctrl F” on your internet explorer. In
addition, there are a number of “side-bar” pages that are accessed from
within sub-topic pages, these side-bar pages are listed in the table of
contents and also as an appendix in next step. In next step
you can also find a bibliography,
links to other resources, and some
biographical and contact information. But look,
while I have your attention, I want to explore a few philosophical
issues. Maybe in the future these
issues will find their way into the introduction, but for the moment, this is
as good a place as any. You see,
Theory of Constraints is pretty cool.
If you could just imagine the depth and breadth of the problems that
it can be applied to you would be amazed.
I am often saddened by the number of people who immediately discount
that it has any relevance to their
particular problem. If only they would
stop for a moment and try, they would be quite surprised. Have you ever read “Green Eggs And
Ham? If so, you will know what I mean. Just think for
a moment, too, about going to a bookshop, or searching Amazon, for books on
operations or some other aspect of business.
Why do we use such explicit means?
We do so without even thinking about it. Mankind is quite clever really, through
speech, and more recently, the printed word we can encapsulate and access the
knowledge, experience, and wisdom of others – people from different places,
and people from different times.
Imagine if we could only access such things on a personal and
one-to-one basis by seeing and doing.
Dissemination of knowledge would be severely hampered. Yet, if you
look at modern business operations in their broadest sense they are hugely
tacit – based upon our personal experience and the “knowing” of what to
do. Schemes such as ISO 9000 try to
make this tacit knowledge explicit, but just end up tying the business in
knots instead. Business is based upon
doing – and “knowing” what to do. Yet we seem to
have forgotten about this, we tend to think we can absorb new explicit
knowledge and then just do it. And in
fact we should just do it, because right then
and there we are generating our very own and essential new tacit
knowledge. However, far, far, too
often in our modern society we are awash with the needed explicit knowledge
and yet we fail to act upon it, we fail to do the doing part. Why? The answer is
paradoxical; it is the old explicit knowledge that we know and believe that
we have confirmed tacitly that stops us from looking afresh
at any new explicit knowledge and then seeking to confirm or refute it. In a nutshell it is damn hard to be
dispassionate and removed and analytical about new ideas; they are always
examined with respect to our old ideas.
History is full of such stuff. Let’s put it
another way. We can access the
“know-why” through explicit means, and this allows us to order and classify
our “know-what;” the facts and measures and observations that we make. But we do this within the context our
existing tacit understanding and experience – our current “know-how.” A new “know-why” will generate new “know-whats,” there will be new facts and measures and
observations that will put us “at cause,” rather than “at effect.” That is to say we will be able to control
our system, rather than have our system control us. How would that feel? However, first, we have to get past the old
“know-how.” This places
us, you and me, in something of a conundrum.
This website is explicit, and this is necessary but not
sufficient. My intent has been to make
this website as simple, and as clear, and as concise as possible. I’ve used both diagrams as well as text in
order to circumvent “what you think you know.” Simplicity, however, gives us a good test
of whether our old knowledge, our old “know-how,” is blocking us or not. Theory of
Constraints is inherently simple, therefore when it doesn’t appear simple
then there is something wrong. It is
something of an advantage that I come from science rather than business and
therefore I didn’t always “know” the correct old business approach to many
problems. Nevertheless, there have
been no less than 4 occasions over the last 10 years or so when my old
knowledge blocked me from moving forward.
And I was acutely aware of it each time, and I could only rationalize
that, because Theory of Constraints is inherently simple, then it must be me,
not the theory that is wrong. And of
course that was the case every time.
I’ve tried to write and draw my way around these issues so that there
is much less chance that they will also happen to you. And of course I have had the privilege of
watching numerous people “lock up” at various points, and then had to try and
work out how to avoid that next time around. My advice is
that if things do not look simple and you feel blocked, then back up and wait
a while. Re-read things upside down or
back-to-front and see if this helps, or better still just try to do what
doesn’t seem right in a small and controlled way and see if the scales will
fall from your eyes. But whatever you
do, don’t discount that there is a huge potential for both you and your
organization if only you can overcome the blockage. Once you do overcome the blockage you won’t
be able to believe that one previously existed at all. After all, all that has changed is our way
of thinking about things. Current reality
doesn’t change, we do. You should
also know that you are in very good company.
Deming quotes his mentor Walter Shewhart (pronounced Shoe hart) as
having read C. I. Lewis’ Mind and the World Order
fourteen times before it began to mean anything to him. Fourteen times! This says two things; that Shewhart’s
intuition told him that there was something very important there, and that
his mis-conceptions blocked him, for quite a while, from finding what he was
looking for. You know, we
are very much luckier, we are dealing with non-abstract things, real-life
tangible day-to-day activities of producing products and services. We have the luxury of just trying things. Taiichi Ohno,
one of the major developers of the Toyota Production System put it this way;
“There are so many things in this world that we cannot know until we try
something. Very often after we try we
find that the results are completely opposite of what we expected, and this
is because having misconceptions is part of what it means to be human.” And he goes on to point out that as we move
up through supervisors, managers, and senior managers it becomes harder and
harder to persuade each other – and yet the answer is still the same – to try
things. If you have a
critical look at Jim Collins’ Good to Great
you will see that the companies that he describes have an inherent simplicity
about them. Their goals are unitary,
and the basic supporting
metrics are few and fundamental. It is worth pondering why such companies
can achieve this and yet the more recent aspirants who model themselves upon
them – and there are many – can’t. I would like
to pretend that the word “theory” does not cause any problems, but that would
be untrue. A very recent experience that
I had was with an investor who pleaded with me not to use the word “theory”
in a meeting with another party. Of
course the other party didn’t have a problem with the word “theory” at all,
it was the investor who did, but he couldn’t bring himself to admit
that. And look if you can’t be honest
with yourself then don’t go any further with this web site, it won’t do you
any good. As I have
said, my background is in science, I have no problem with the word “theory”
but I do understand that many people mistake “theory” for “theoretical,” and
“theoretical” becomes synonymous with “impractical.” But remember we operate some fearsomely
large enterprises in a manner that no one else can, so any notion of
“impractical” is way off the mark. It
beggars my belief, when Theory of Constraints can make unbeatable
contributions over a wide range of activities from neurosurgery to
continental distribution systems, and from putting new ships together to
taking old planes apart, that this impracticality issue pops up the second we
say “theory.” Of course
there is a good reason for this, most existing business theory is absolutely impractical – but it doesn’t cop any flak
for being impractical because almost everyone else is equally hobbled by
using exactly the same approach.
Ironically, the one approach that really is
practical happens to have the word “theory” in the title. My advice is that there are much larger
problems in the world; learn to get over this one quickly. Somewhere I
did read a good retort to this perennial problem, it goes like this; There
is nothing as practical as a good theory You may find
that useful to remember. But more
importantly, “theory” as used by Goldratt in “Theory of Constraints” is to my
way of thinking the same as “hypothesis,” to which I quickly want to add; as
in “working hypothesis.” This is to
say, I’ll continue to use this hypothesis until it is proven to be not
working. So far that has not happened. In fact, I would argue the opposite; it
just gets better and better. Deming didn’t
mince his words around theory. He, and
countless others, argued that everything we do is based upon theory (whether
testable or not is another issue) – usually so implicit that we don’t even
think about it, and if this were not so we could hardly be certain of
anything. Every outcome would be
unexpected and a surprise – no matter how often we repeated them – we
wouldn’t learn a thing. That most
outcomes aren’t unexpected is indeed a measure of how embedded our implicit
assumptions are. Mintzberg
managed to sum this up so well without recourse the to the word “theory”,
I’ve added some underline to the text; “What managers need is descriptive insight to
help them choose or develop prescriptions for their own particular
needs. The fact is that better description
in the mind of the intelligent practitioner is the most powerful prescriptive
tool we have, for no manager can be better that the conceptual frameworks he
or she uses. That is the basis of
wisdom.” Once you sort
out the “descriptive” from the “prescriptive,” then this is just plain old
Deming-speak once again – without good theory (descriptive insight) we can not make predictions (develop prescriptions). Boil it all down, and then no manager is
better than their working assumptions (theory or conceptual framework). Theory of Constraints offers an
unparalleled set of working assumptions. Elliott Jaques
argued that there was indeed no testable theory in business. He was wrong. His own theory of Human Capability is
testable. Theory of Constraints is
testable. That is we can challenge
these entities with the chance of proving them wrong. And that is a very significant test indeed. But let’s
leave the last word on this to John Boyd, inventor of the OODA
loop amongst a number of other significant contributions. Boyd’s Trinity was; people,
ideas, things. People
create ideas, be they; theory, hypothesis, conceptual frameworks, mental
models, schemata, paradigms, perspectives, perceptions, beliefs, viewpoints,
assumptions, opinion, or whatever else you wish to call them. These allow us to interact in the way that
we do and to create the things in our world around us. People, ideas, things, in that order. There is an
important convergence between inherent simplicity and theory. Taleb in his book The Black
Swan argues that we have a confirmation bias; once we develop an
opinion we tend to look for confirmation and we tend to ignore failure. You might like to level such an assertion
against me. However, I have a defense,
and that is that the simpler a theory is, the more likely we can find a case
where it might fail. Simpler theory
is better testable, simpler theory applies to more and more cases than a complex theory and therefore it should be
easier to find an instance that might falsify it. The greater the chance to falsify a theory,
and yet remaining unable to do so, the more robust the theory becomes and the
more likely we are to be near to the understanding of an underlying
reality. Thus there is a convergence
between inherent simplicity and good theory (with all of its practical implications). Anyway, enough
of that, there is something else of importance that we need to look at. I spent quite
some time living in Japan working within a large corporation that was both a
batch manufacturer and a significant supplier to Toyota. Their batch production mode had always
caused them to decline “offers” from Toyota to improve their process and
timeliness (but not their products which were in every sense of the word
“World Class”). However, together, we
were able through Theory of Constraints to produce very significant
improvements within a very short period of time. Results that were significant enough to be
reported in the national business press and also national television. Let me say
that I have deep respect for the fundamental techniques of Japanese kaizen,
and of Toyota in particular. Let me
also say that I am not ignorant of Lean nor of its predecessors; World Class
Manufacturing, Just-in-time, and so forth.
But there is something that is wrong with Lean (and Six Sigma) and I
want to try to explain this. There is
something that is wrong, and it is on two levels. The first is simply mechanistic, all of the
Western interpretations of Lean freely leave out things that the Japanese do do, and add in things that the Japanese do not do. I’ve tried to describe the critical parts
of this in the introduction to healthcare. That may seem like an odd
place to address these issues, but healthcare like many parts of industry and
services, is applying Lean and suffers hugely as a consequence and doesn’t
even know it. More
importantly, however, is not the mis-representation of the mechanics, but
rather the absence of proper context.
This is a problem that has repeated itself time and time again since
Taylor in the early 1900’s. It is not
a cultural context that is missing. I
can attest to that; in my own country we had the highest quality
non-robotized Toyota assembly plant in the world – and we certainly aren’t
Japanese. The context isn’t cultural,
the context is social. If we check
the literature (you know that explicit source of knowledge we all rely upon)
then a couple of things are clear to me.
Westerners miss the social
context. I suspect that this is simply
because they don’t see it/experience it.
We’ve almost outlawed learning by doing so how could we know of
it. The Japanese who write for Western
audiences don’t mention it. Maybe they
take it for granted, which is a very likely reason, or they just plumb think
Westerners can’t get their heads around it. The trick for
us, is to read the English translations of the Japanese texts written by
Japanese for Japanese. There are a
couple by Ohno, many by Shingo, but my personal favorite is by an emeritus
professor of Keio University in Tokyo; Takeshi Kawase’s Human-centered
problem-solving: the management of improvements. Get a copy, you will find aspects addressed
there that are not addressed anywhere else. You know we
have only ourselves to blame, there is excellent material available we have
just to learn to winnow the wheat from the chaff. And all that I
have said about Lean equally applies to Six Sigma. Deming warned us about TQM, and nobody
listened, it failed, and now parts of it have been renamed as something
else. These parts, too, will fail and
that is a shame, the toolsets are superb, the context is most often dead
wrong. “World Class”
use to be the catch-phrase that large organizations aspired to. But there was a problem with this, Toyota
stood as an absolute standard with which such a company could be only too
readily compared with. More recently I
have seen a large number of organizations, especially those with significant
supply chains, claim “International Best Practice.” Scratch the surface, however, and you will
find the same old paradigm of; maximized local efficiency, local costing,
economic order quantity-based decisions, and large and infrequent transfer
batches. The very antithesis of
Toyota. This type of approach belongs
in the 1950’s. People are denied the
right to question this because the words “international’ and “best practice”
suggest that this is the pinnacle. It
is not. Moreover, it discourages any
further improvement. It is very sad,
and it is very common. Why do we so
earnestly embrace such ideals? We
continue to do “the thing right” without ever stopping long to ask if this is
“the right thing” to do. You know the
story about the definition of insanity – continuing to do the same thing and
expecting different results. Well
isn’t that what we are doing with Lean and Six Sigma. We are repeating World Class Manufacturing
and we are repeating TQM under different names and we are expecting different
results! Are we really
so crazy? Well, I’m not
crazy, and I’m sure you are not either.
But do you see the issue here?
We know Theory of Constraints demonstrably delivers huge results and
yet so often we block ourselves and don’t go full the distance. Yet we readily accept some parts of Lean
and Six Sigma (and readily reject other parts) even though time and again
they fail to deliver for us. Why? I want to
address these issues in the section & More,
in fact it exists in nearly complete draft off-line as The
Paradox of Systemism. What
I have done previously, however, is try to tease the basics out and put them
into a number of power point presentations.
What we learn and experience day-to-day as individuals stops us from
truly understanding our recent systemic industrial endeavors. The metrics that our psychology causes us to
impose upon ourselves, and each other, ensures that this situation is locked
into place. Check the power points on values, beliefs, and industrialization, also logical types, clouds, and fantasies, and the reformulated lieutenant’s cloud to see how this happens. We still have
a great deal to learn – the social context for these methods. I’m sure I
have used this heading more than once and I will continue to do so until I
think that the message is getting in.
It is all about people. We
think that our huge tin sheds with their skylights and machines and noise and
hum have an existence that is separate from us; it is not so. We think that this extant structure is
populated with “workers” and “managers” who function as the props in a play;
this is not true. The machines and the
buildings and the noise and the hum are the props. We are the players – we write the play and
we act it out – everyday – and then we wonder why we don’t like the part that
we have given ourselves. Well go and
talk to the playwright – go and talk to ourselves. A little bit of honest
introspection wouldn’t hurt. Taylor found
in the late 1890’s that craftsman “soldiered,” but that the very same people
with the very same equipment could produce vastly different results given the
right conditions – nothing to do with scientific management. It was a people problem; not an individual
problem “of” the craftsmen or laborers themselves, but rather “of” the system
in which they worked. The business
owners, with the best of intents, placed their workers in a position where
they were forced to do less. Taylor
addressed this. The consequent rise in
real wealth of people is credited with avoiding a class war roundly expected
in the late1880’s and early 1900’s.
Without proper knowledge, people with the best of intents, make the
process worse. Shewhart found
in the 1920s, as electrical items became production items and industry moved
more and more from craft-made-to-fit to mass-made-to-spec, that people took a
stable process and tampered with it and made it unstable. That is, with the best of intents, people,
good people, took something good and made it worse. Can you imagine that? Would that happen today? Oh yes, in just about every service
industry imaginable – and to paraphrase Deming; including health, education,
and government. Shewhart showed how
knowing what not to do, and thereby refraining from tampering with the
system, lead to better results for all.
Without proper knowledge, people with the best of intents, make the
process worse. Ohno found in
the 1950’s that good people, unless expressly unable to do so, made more
goods than were needed and that this had negative ramifications throughout
the business that frankly many people still do not even partially
understand. “The situation where
‘the parts were made' is surprisingly common.
Everyone worked hard and the parts were made. If you asked me ‘What is the most important
part of production control?’ I would say it is to limit overproduction.” Machines don’t make parts, people do. It is a people problem. Without proper knowledge, people with the
best of intents, make the process worse. Deming was a statistician; so they say. Actually, he was a physicist first and
foremost, however it might have been a more accurate to say that he was, as
were the others before him, a humanitarian.
It is only through such a perspective that notions of trust and
collaboration could have come to the forefront of his methodologies. Deming like Taylor recognised that we are
“of” the system and that only management are in the position to effect change
to the system. It is a people
problem. Without proper knowledge, people with the best of intents, make the
process worse. Theory of Constraints sets out to ensure that
all of the non-constraints are fully subordinated to the constraint. This means not doing more for most people,
and indeed most often it means doing less.
People with the best of intents do too much and make the system worse,
not better. Goldratt is a physicist,
but again it would be far more accurate to say that he is a
humanitarian. Why do these
humanitarians care about this capitalist beast – the modern business
organization? They care because these
organizations are full of people. There is an often too easily forgotten
necessary condition in Theory of Constraints; the need for secure and
satisfied employees. It is there for a
purpose, it isn’t there for decoration or lip-service. It is a fundamental necessary condition, if
we violate that then we will violate all of our attempts to improve. Without proper knowledge, people with the
best of intents, make the process worse. You know, the playwrights of business keep
writing tragedies – and as they say; it would be comical if it weren’t so sad. Is this the only thing that we know
how? I don’t think so. It is a people problem, and not “their”
problem but “our” problem. We know the
things that we should do and that we don’t do, and we know the things that we
shouldn’t do and yet we still do them.
It’s not rocket science, but it does require stopping and thinking and
listening to what is happening around us. Who uses this
website? Well many, many, people and
for many different reasons. However,
as an illustration, I trawled through the identifiable substantial users over
just two evenings and this is an extract of those that are large enough or
significant enough in other ways to be identifiable to most people in most
parts of the world. Sears (North York, Ontario, Canada), U.S. Navy (Pensacola, Florida), Bombardier
Aerospace (Belfast,
Northern Ireland), General
Motors (Detroit,
Michigan), Bank of America (Concord, California), Comalco Aluminium
(Brisbane
Australia), Schlumberger (Houston, Texas), Detroit Edison (Detroit, Michigan), The Boeing
Company (Seattle,
Washington), Stockholm Healthcare (Sweden), Deutsche Bank (Hong Kong), Lufthansa (Frankfurt), Smart Systems for Health Agency (Toronto),
Intel Corporation (Santa Clara, California),
Intermountain Healthcare (Salt Lake City, Utah),
Hitachi Europe Ltd (Bracknell, United Kingdom), Micron Semiconductor Asia Pte Ltd (Singapore), Komori Corp (Tokyo), NASA (Palmdale California), Deere & Company (Moline, Illinois), Baxter
Healthcare Corporation (Chicago, Illinois), Xerox
Corporation (Rochester,
New York), Kaiser Permanente Medical Care
Program (San
Jose, California), Bristol Myers
Squibb Pharmaceutical Research Institute (Princeton, New Jersey), Roche Diagnostics Gmbh (Germany), Alaska Department Of Transportation And Public Facilities (Juneau, Alaska), Idaho National Laboratory (Idaho Falls, Idaho),
Combustion Engineering (New York), Terex
Corporation (Westport,
Connecticut), Calpine
Energy Services (Houston, Texas), Midwest
Perinatal (Kansas
City, Missouri), Ford Motor
Company (Dearborn,
Michigan), Standard Chartered Bank (Singapore), IBM Corporation (Poughkeepsie, New York),
The Corporation For Financing And Promoting Technology (Ho Chi Minh City, Viet Nam), Abbott Laboratories (North Chicago, Illinois),
General Services Administration (Arlington, Virginia), Commission Europeenne (Brussels). Of course this
doesn’t do justice to the substantial volume of traffic coming through
telecom ISP’s from South America, South-East Asia, Japan, China, India,
Africa, West and East Europe and the Nordic Countries. I trust however that this illustrates
something of the depth of penetration that Theory of Constraints finds in
today’s businesses. It is far better
known and in use than you might ever suspect.
The vast majority of this traffic is self-referred and doesn’t come
from “surfing the net” but rather from bookmarked pages or from internal
links. The best way to print a section of this website is
not to print it at all. Part of the
original philosophy was that people, when implementing Theory of Constraints,
don’t read the necessary books or even parts of chapters of books that will
provide a well thought-out and exact answer to the questions asked. “Yes we want to improve but we are so busy
that we just don’t have time to read anything.” So printing another book won’t help – all
the information already exists. Part of the problem is that we make people just too
busy with everyday detail to sit and read and reflect. Partly also, Western culture deems that
anyone sitting reading, or heaven forbid, thinking must be doing
nothing. Therefore, I rather hoped
that something in html on a screen would enable people to learn at work and
to also feign being busy at the same time – you know the routine; lots of
paper around the desk, a few reports, and a drawer open or a file box on the
floor, and of course an excel spreadsheet open in another window to flick to. Another reason for using html is that it allows
wonderful freedom from page breaks; therefore I know that the diagrams and
text will flow. However, for those who
must insert page breaks and who want to read on the train home then you can
print pages out in html by setting your printer margins to 5 mm or less. That surely is a win/win. Just, please, respect the copyright and the amount of effort that has gone into this
project. This Webpage Copyright © 2008-2010 by Dr K. J.
Youngman |
