Sunday, November 7, 2010

Focus and Leverage Part 19

As I mentioned in my last blog, I’m going to focus on another side of TOC, the Logical Thinking Processes (TP). The TP is made up of six logic trees and the “rules of logic” that direct their construction. The following are as follows:

1. The Intermediate Objectives Map

2. The Current Reality Tree

3. The Conflict Resolution Diagram

4. The Future Reality Tree

5. The Prerequisite Tree

6. The Transition Tree

Before we get into how to construct each of these logic trees, let’s talk about the purpose of each type of logic tree and the whole idea of using logic tools in general.

If you’re a manager, do you have a good understanding of your company’s goal is? Usually, intuitively your company’s goal is to make money especially for the stockholders, but being a manager you know that it’s more than just making money because there are other important things to consider. For example, things like having a competitive edge, having enough market share, having high levels of customer satisfaction and first-time quality levels, and what about costs….aren’t they important as well? Not all of these items can be classified as goals, but we know that without them, we wouldn’t be making money in the long run. So it seems that we need an orderly way to classify different things that are critical to our long term success and we need a roadmap on how to get to where we want to go. So where do we start. If you’re a fan of Stephen Covey he would tell you to begin with the end in mind. To me, Steven Covey got it absolutely right….beginning with the end in mind with the end being achievement of the goal.

Achievement of the goal of an organization must be considered as a journey simply because there are intermediate steps along the way that must be achieved first. In TOC we refer to these as critical success factors (CSF’s). But even before we achieve these, there are necessary conditions (NC’s) that must be met first. The Goal, CSF’s and NC’s arrange themselves as a hierarchy. The Intermediate Objectives Map (IO Map) is the tool we use to determine these three entities. Dettmer1 refers to the IO Map as a “destination finder” and rightfully so. The IO Map begins with a clear and unambiguous statement about the purpose of the organization….the goal. Next on the hierarchy are several CSF’s followed by NC’s. These three elements are structured as such and represent what should be happening in our organization. So how do you construct an IO Map and what will it do for us. Let’s look at an example.

An IO Map is really intended to create a firm baseline or standard of what should be happening if the system is going to successfully reach its goal. In order to determine how you’re actually doing, you must have a good understanding of what you should be doing. So how do you create an IO Map? The first step is to define the boundaries of the system you are working on, your span of control and your sphere of influence. Boundaries are determined by answering the questions of “For who are you performing the system analysis?” and “Who is the ultimate decision maker in this system?” Once you answer these two questions, your boundaries are set. The span of control represents how much unilateral decision making you actually have and usually it’s not much. Think about it….how much decision making authority do you actually have? Not much. What you do have is your ability to influence.

Once we know the boundaries of the system we’re working with, we need to articulate its goal. Just remember, the purpose of the IO Map is to identify the ultimate destination we to reach. What this means is that the goal is a terminal outcome and not an activity. We then identify the 3-5 critical success factors that must be achieved before the goal can be achieved. These too are terminal outcomes and not activities. But the CSF’s can’t stand alone because they are high level outcomes that are only slightly abstract than the goal itself. Next comes the necessary conditions that must be satisfied before satisfying the CSF’s. Ok, time for an example.

Suppose that we are not meeting our throughput requirements to meet our customer orders. So state our goal as “Greater than 95% on time deliver.” What must be in place before we can reach this goal or what are the CSF’s we need to reach our goal? By the same token, what must I have in place to achieve our CSF’s. The figure below is an example of a lower level IO Map and is read as follows:

In order to have “Greater than 95% On-time Delivery, I must have an effective scheduling system (First CSF). In order to have an effective scheduling system, I must have DBR in place and I must have parts available when needed. In like manner the IO Map is read in the same fashion for the remainder of the CSF’s and NC’s. The bottom line is, we cannot reach our goal without achieving all of our CSF’s and we cannot achieve our CSF’s without satisfying all of our individual NC’s. This type of logic is referred to a necessity based logic.

In my next blog, we will see how to use our IO Map to construct another logic tree called the Current Reality Tree.
1 H. William Dettmer, Breaking the Constraints to World Class Performance, (Milwaukee, WI:, Quality Press, 1998)


Sindy Su Chu said...

Looks like a great series to come about the logical thinking process. Can't wait for the next post about CRT!

Anonymous said...

Hello Bob,

this is Mathieu from Belgium (just to let you know where to locate me :-).

I have really enjoyed all of your Focus and Leverage-blogs (although Part 11 seems to have gone missing in my list).

You bring together a wealth of understanding and knowledge and add a wonderful sauce of wisdom (to use Ackoff's categories of content of the human mind).

But your scope is clearly manufacturing-for-profit oriented. What about organisations that are services-not-for-profit oriented? Because that is the line of business I am consulting in.

Kind regards,

Mathieu Bussels

PS: I will continue reading your inspiring blog as I subscribed to it.