Sunday, August 1, 2010

Focus and Leverage

How's your improvement effort working for you?  If you're like many companies, you've invested lots of money in training, but you're not seeing much hit the bottom line.  Like any other investment you expected a fast and acceptable ROI, but it isn't happening.  Maybe your investment was in Six Sigma and you've trained hundreds of people to become green belts and black belts?  Maybe you've invested a large sum on money training people on Lean Manufacturing?  Or maybe you've gone the Lean Six Sigma route?  So why aren't you seeing an acceptable return on investment?  You know improvements are happening because you see the improvement reports, but you're just not seeing the return on investment that you expected.

I too experienced this dilemma, so I decided to analyze the results of failed and successful improvement initiatives.  What I found changed my approach forever.  What I discovered was that it was all about focus and leverage.  By knowing where to focus my improvement efforts transformed me.  In doing so, I discovered something called The Theory of Constraints (TOC).  TOC teaches us that within a company there are leverage points that truly control the rate of money generated by a company.  Sometimes these leverage points are physical bottlenecks, but sometimes they are policies that prevent us from realizing our true profit potential.  Over the course of the next few months, I'm going to demonstrate exactly how TOC can work for you.  I'm going to show you how to use the power of TOC to truly jump-start you improvement efforts.  Better yet, I'm going to help you turn all of those training $'s (or whatever currency you use) into immediate profits and then show you how to sustain your efforts over the long haul.

Bob Sproull
http://www.sproullconsulting.com/

46 comments:

Mary said...

It's great to see your blog. With that intro, you definitely have me tuned in!

sbonacorsi said...

Hi Bob,

I look forward to hearing more about TOC and how companies are applying the methods.

Bob Sproull said...

Thanks to all who have responded to this initial blog. I have received so many encouraging emails directly that I am amazed at the interest level.

Bob

Utopia said...

Hi Bob, it was wonderful reading about TOC on your blog.. Look forward to many more such articles..

Natasha Chakerwarti said...

Great initiative Bob.. going to learn a lot from it :)

Aamir_X_Arnold@unipart.co.uk said...

Bob,

Excellent, I look forward to see further developments.
BR

Tammy said...

You make an interesting and important distinction. Many companies believe that CI initiatives will have an immediate impact on the bottom line, yet the improvement initiatives may not have a bottom line focus. CI efforts need to be focused on the desired outcomes.

Jeffrey said...

Hi Bob,

Terrific introduction. We have tried to apply TOC thinking in a very small way. I am looking forward to learning much more.

Sindy Su Chu said...

Hi Bob,
After learning TOC from your book, I start to examin my life and see where is my constraint? Profound and practical. Thanks for sharing the wealth of your knowledge and expertise. Look forward reading to learn more from you on this blog.

tina said...

Fantastic - I think this will be extremely helpful for organizations on recovery mode after the recent lull... It gives a fresh new perspective - looking fwd to more..

Cheers!

Imelda said...

Great blog Bob, and so true. Analysis and reflection is so important to identify areas for continous improvement

Jürgen Kanz said...

Hi Bob,

I appreciate your initiative. Let's hope that a lot of people will learn much more about the Theory of Constraints (TOC)itself and their benefits.

Regards,
Juergen

http://www.juergen-kanz.de

Ravindra said...

Hi Bob,

Hearty congrats and all the best for your new blogs assignment.

I would like to see how TOC concept would help in end to end solutions covering SCM,procurement and project mgmt& apprisal,communication,Risk mgmt & ROI. I observed TOC concept is misconsieved by non-operational guys due to, may be, less awareness and less reports of non-operational people interest. So It would be great if you add some details and presenetaion which would help CEO and CFO in top line & bottom line & above aspects

thanks
Ravi
+91 9820176449

Jim Baran, Owner Value Stream Leadership said...

Bob,

Congrat's on blog launch. TOC is knowledge building block for many things.

I recently wrote a piece on TOC focused on lean careers - "Turning the Lean lens on your career".

http://bit.ly/bamAQ0

I'm interested in your views - or collaboration on such.

Jim Baran
Owner, Value Stream Leaders
www.valuestreamleaders.com

Big John said...

With regards to leverage, I have found in my TOCLSS journey that two primary leverage points must be immediately won.

First, through the usage of Critical Chain Project Management and focusing on the constraint, the improvement implementer has a golden opportunity to affect positive change through the subject matter expert (SME). Gaining the trust and confidence of the process SME's are vital in your understanding of their dilemma. Because most SME's have been "brow-beaten" into submission in the past by management, you must be sincere and earnest about your intention. You now can gain influence through the usage of TOC, Lean and Six Sigma.

Because you have focused on the constraint, the process flow cycle time is running faster. Of course, by improving process flow, you have also improved cash flow. The second great leverage point is cash and those who manage it. By demonstrating positive cash flow in the process, you are able to gain confidence of the money managers.

Congratulations Bob with your new blog post! Thank you for helping me expand my process improvement skill set. And, most of all, thank you for your friendship!

Jeff SKI Kinsey said...

Interesting "opening" post Bob. I will watch and see what develops. I am with Big John in recognizing "cash is king" (more accurately cashflow is king) with my clients (mostly biz owners under $100MM in annual revenues). While CCPM is important, I personally would not make it a primary lever. CCPM is one of the many applications (or tools) of TOC. Most often, I am using sDBR (simplified Drum-Buffer-Rope) to effect change. Therefore, the concept of TOC as lever works better for me. But I digress...

Also, what I find most lacking in the USA (my only domain) is mutual trust, hence my appreciation for what Lean brings to the party.

Great start, let's see where you are taking us.

-ski

josephaknecht said...

Integrating TOC, Lean, & Six Sigma makes perfect sense. Using TOC in project selection may be the best approach for increasing financial performance. Bob, you are correct when you mention that the constraint may not be physical - could be a policy, practice, or the culture of an organization. It will be interesting to learn how some of these are successfully addressed by others.

Vishnu said...

Hi Bob,
Great introduction to TOC and why companies fail to realise the bottom line ROI. Please continue to share your thoughts.
Kind Regards,
Vishnu

tobita said...

Thank you for your invitation to your brand new blog page.I certainly cannot wait for the next post. If you could describe the changes caused by TOC from viewpoints of workers and lower level managers in addition to the executives, this page would be even more accepted, I think.
Best Regards,
Motoi Tobita

MP said...

Congratulations, Bob!

I'll definitely stay tuned in.

Best wishes,

Mary Pat Whaley
http:www.managemypractice.com

Sandra said...

Actually, TOC's was what got me tuned into Lean and Six Sigma originally. Goldratt's book "The Goal" started me thinking about all that could be accomplished using it as a method of prioritizing improvement efforts, and i continue to use this approach with great success. Looking forward to sharing our approaches with respect to TOC.

Lu said...

Bob, love it. My sense composes a coming of TOC getting more exposure, more understanding, therefore apprecitation for its effectivenss, leading to more application of it. I look forward to learning and sharing. Thank you!

bicsy said...

I am all ears Bob!

Graeme said...

Hi Bob

Thanks for this, really looking forward to your views, experience and furture blogs

All the best
Graeme

Graeme Walwyn
graemewalwyn@hotmail.com

Kurt Peterson said...

Bob, thanks for inviting me to join your Blog. I am actually writing an article on this exact subject which will be printed in an upcoming e-magazine. My company is using this approach quite successfully. I will be happy to read as you go and help if you need.

yasi said...

Hi Bob, thank you very much for sharing ! The topic is very interesting and Im looking forward to learn more about it....
Congrats & All The Best

Cheers
Yasemine

yasemine.ozsen@gmail.com

Business901 said...

Good Luck and keep writing. Always great stuff from you!

christianpaulsen62 said...

Bob,

Looking forward to reading your insight on TOC.

Chris

Rogerio said...

Bob,

I'm sure an integration approach for TOC and LSS allows much better results.

Congratulations for your sharp thoughts. I'm looking forward to learning more from you...

Thank you

Acharakorn said...

Bob,

I have experienced the same quest and look forwarding to hearing for more of TOC.

Thank you
Acharakorn

venkat karthik said...

Hi Bob,

Looking forward to learn more

Thank you
Venkat

Bob Sproull said...

I'm interested in knowing if the subject matter I'm presenting on my blog makes sense to everyone following it. Am I giving you all that you want? Thanks everyone.

Bob Sproull

Ignacio said...

Hi Bob.
It´s a great pleasure following you again and reading these words with deep meaning and value for the world we are actually living.
Answering your last question, what you are presenting us makes complete sense for me and my company.
Thanks again for this great work.
Ignacio Heredero

David said...

Hi Bob,

It sounds very interesting to look at the focus and leverage from TOC perspective. I am pretty much sure that you are quite familiar with "The Goal", a top selling business novel dealing with TOC. I thought there might be some similar thoughts or useful information that you might get from that novel. Another side note, I would love to see how service companies alike can also benefit from this topic. With oil service and health care companies all around Houston, you can expand your audience base by targeting at service industry as well.

asif raza said...

Hi Bob, been away for a while. Enjoyed reading your post. What I have noticed in my practice is that TOC is used to eliminate bottlenecks, it normally does not increase throughput, although it may reduce cost. And at the same time, I use it because to me, it is superior to TQM systems. The key is really the project selection.
Good to see you on LI.
I have subscribed to your blog.

Chiara Paliani said...

Many congratulation also from Rome, Italy.
Waiting for more details.
Thank you
Chiara Paliani

Bob Sproull said...

I want to thank everyone for the comments I have received which have all been very positive. I will continue writing as long as everyone enjoys reading it. Thanks again everyone.

Bob

Rajeev Senta said...

Hi Bob,

Its true that company growth depends on focus and leverage. Your TOC concept is extravagent and would like to read your upcomings. Overcoming the constraints is called growth.

Anonymous said...

Good info. I think the major barrier to many companies dealing with TOC is that they don't have the right personnel on board to identify the Constraints which leads to a lack of visibility and identification of what needs to be improved to drive the business forward.

Basically, you can't fix what you don't see...


J. Lee Powell

Vail Brown said...

Bob, Really appreciate this blog. Looking forward to more. The operations and constraint based focus of TOC is hugely valuable. But, where TOC really shines is the financial focus of business decisions. Eli's rants about traditional costing and analysis destroying many good businesses are true. I have experienced this personally (and diverted some near disasters). Hope you have the opportunity to explore the impact of TOC on business decisions as your blog progresses. Best of luck and and keep those pigs flying. Vail Brown, Jonah.

Rowena said...

I am excited with the TOC best practice samples if you have it. I am particularly applying this method in financial analysis that is driving some business decisions (CapEx, etc. Best, Rowena

Bob Sproull said...

Hi Rowena. If you contact me directly, I'll try to send you what you need. My email address is ras8202@live.com. Thanks for your interest.

Bob

Marketing Project Management Guy said...

Great to see more coverage of TOC for focusing on visible ROI rather than just local efficiencies that get absorbed into the abyss.

Kim Rochetti said...

This is great. I am very interested in seeing more on this topic. I have found that the main reason companies don't see the results is because no one is held accountable for the projects, they pick the wrong projects, and leaders are not engaged. I see these three things consistently across companies. It starts at the top and must be led consistently.

Bob Sproull said...

Hi Kim. Although I agree that the reasons you have listed might be responsible, ask yourself why they pick the wrong projects. If you read this whole series of postings (i.e. 1-16), you might come away with a different opinion. No question that unengaged leaders don't help, but the project selection is key. Identifying the contraint and then focusing your improvement efforts on the constraint is really the key to achieving outstanding results.

Thanks for the comment,
Bob

Bob Sproull said...

Anonymous, this blog site is free, so I would start with it. My only recommendations are, write about what you know and know about what you write. It's fun, so just do it!

Bob