Fast Company

Changing Change

I continue to come across references to the theory of constraints; it's probably time I dive in and learn a little more about it. Today, Frank Patrick piqued my interest by addressing the theory of constraints' process of ongoing improvement -- or POOGI, but skip the acronyms. To whit:

  • Identify the system's constraint.
  • Decide how to best exploit the constraint.
  • Subordinate everything else to the above strategy.
  • Elevate the constraint.
  • If, in a previous step, the constraint has been broken, go back to step 1. (Prevent inertia from becoming the system's constraint.)

Rooted in manufacturing, it seems to be a solid way to approach working around any limitation or lack of resources.

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6 Comments

  • Sorin

    I'm new to TOC, but now I'm completely sold on this TOC speech. Sounds like a sensible approach to improving business processes, like a whole bunch of good management ideas. My question is: how do you sell it ? Imagine you see the constraints in an organization, you devise smart changes allowing to eliminate those constraints but you don't have the power to implement the changes yourself. You need to 'sell' your ideas to the management of that organization. How can you use TOC speech (Goldratt's name, books, references, etc.) as an effective wrapper to gather change momentum ? Especially in Europe, where I believe not many senior managers have heard about Goldratt and TOC ?

  • Brian Potter

    Key Point: EVERY organization with an objective faces SOME limiting factor (perhaps, a small number of limiting factors) which prevent the ogranization from being more successful at reaching its objective. The limiting factor (barrier to greater success) is also a throttle. Adjust (improve) the limiting factor so that it allows superior objective performance and the whole organization improves. Adjust (improve) ANYTHING other than the limiting factor, and nothing much happens because (normally) the limiting influence did not also improve.

    The limiting factor might be market demand (perhaps, inadequate quality; perhaps, sales terms and conditions), production capacity, logistics (getting the product to places where buyers will find it), supplier capacity, a policy or tradition which errects barriers to effective customer service, new product development, marketing, or any other factor either "internal" or "external."

    All the markets in which an organization competes (as either a buyer or a seller) become part of the organizational system. When an organization's constraint lies in one of its markets, the organization must recognize the "external" constraint and improve the way it interacts with the customers (or sellers) in that market to improve organizational performance by improving performance at the "external" constraint.

  • SKI

    Yes, this thing called TOC (Theory of Constraints) is responsible for a huge number of changes in the real world. Changes that make significant differences. Like the saving of GM's Cadillac brand. Of course, call GM and they know Goldratt's name, but few know he saved their bacon! Consider Goldratt's business novel, "Critical Chain" as your first "must read" in this field of study... or, dare i suggest my own "Purple Curve Effect?"

    -ski

  • John Sambrook

    I'd like to mention a specific tool from the TOC toolbox. That tool is the "evaporating cloud" (EC). Note that this tool is known by a few different names, including the "conflict resolution diagram" and the "dilemma diagram."

    The EC is a good tool for 1) describing a problem precisely, 2) exposing the assumptions upon which the problem rests, and then 3) searching for weak or invalid assumptions that can be challenged in order to resolve the problem without compromising.

    I believe these skills are critical to effective problem solving.

    The EC helps people reject compromise solutions. After all, if your objective is to have a highly successful business, you can't get there if people are constantly compromising legitimate needs of the business. Unfortunately, if they don't know how to do anything else, or if they believe that the way to solve serious problems is by immediately seeking to compromise on something, compromising is exactly what they will do.

    There are any number of good books available that describe the EC process in detail. You can also find a couple of whitepapers here that describe it, in different contexts.

  • Frank Patrick

    By the way, the appropriate means of "exploiting" a "policy constraint" is to eliminate/replace it, which requires the analysis and buy-in communication that the Thinking Processes were designed to provide.

  • Frank Patrick

    Rooted in manufacturing...Yes, to the extent that the concept was first applied in manufacturing environments. Goldratt's classic book, THE GOAL, is a novelized tale of such a manufacturing implementation. But TOC is more than just bottlenecks and buffers. It's really a means of managing systems, their performance, and growth, by managing their constraints.

    These constraints don't have to be resource-based; they're often really found in erroneous policies and practices that end up mismanaging existing resources. And those policies and practices could be anything from how projects are launched in an IT or R&D shop, product pricing based more on questionable cost analyses than on value to customers, trying to manage quantities rather than flow in distribution systems, and over-emphasizing cost cutting to the detriment of top-line growth.

    Each of the above examples is related to TOC-based starting point solutions in various common business functions. In addition to these "applications," the TOC toolkit also includes a set of logical "Thinking Processes" that I like to think of as practical "systems thinking" diagrams to help understand and communicate the various cause-and-effect relationships that lead from things like the aforementation erroneous policies and assumptions to problems faced in (complex) organizational systems.

    Some of the non-manufacturing applications and the early introduction to the Thinking Processes can be found in Goldratt's sequel to THE GOAL, a book entitled IT'S NOT LUCK. Another good intro to the range of TOC is DEMING AND GOLDRATT, by Cohen and Lepore. Descriptions of these, as well as a number of other resources related to TOC can be found on the "bookshelf" on my site.