Sunday, November 28, 2010

Focus and Leverage Part 22


As I told you in my last blog posting, I’ve asked my good friend Bruce Nelson, to contribute to my blog for the next series of postings. Bruce has over 28 years combined experience in the manufacturing and production industry, and is currently employed at L-3 Communications. Bruce excels in the areas of TOC problem solving concepts, including systems analysis, Drum-Buffer-Rope (DBR), Critical Chain Project Management (CCPM), Distribution and Replenish modeling and Supply Chain Management – all focused on generating bottom line results.

Bruce has been trained as a TOC Jonah, Jonahs Jonah and is a board certified TOC Expert with the Theory of Constraints International Certification Organization (TOCICO). Bruce is also an Academic Jonah maintaining a faculty position at Weber State University. I am grateful to Bruce for agreeing to write a series of postings for my blog. This introductory blog will be longer than my normal ones, but I think you will find it to be very interesting and informative.

Bob Sproull

Current Reality Trees - Basic Principles
Sometimes when you are faced with solving a problem being able to precisely verbalize the problem is 95% of what is needed to solve a problem. From a preliminary problem analysis you can quickly understand ALL the things that are going wrong (the effects), but you aren’t sure why they happen (the cause). Sometimes, what might appear to be many different negative effects happening all at once can be reduced down to a single core problem. If the core problem is removed from reality, then there is a high probability that ALL of the negative effects will be removed as well, especially if the cause-effect-cause relationships can be established. As Bob has mentioned in his earlier posts being able to focus is the single most important element of solving a problem. When faced with many different negative effects, the question becomes – “Which one do I focus my attention on?” When you review and analyze the negative effects there are usually many things you can fix, but which one should you really focus your attention on? Which one provides the long lever that if it is removed most of the other problems go away. The CRT provides such an analysis tool. The CRT is a powerful logical thinking tool that can help you filter the insignificant many from the important few. The CRT is probably not a document that you will assemble and analyze in 15 or 20 minutes. It will take some time – but the effort is well worth the results.

Current Reality Trees are sufficiency-based logic structures that enable individuals to investigate situations with a high degree of assurance that they are distinguishing reality from fiction. When people are asked to "find out what's going on" in a given situation, their first step usually involves gathering data. They take the data and categorize it while looking for correlations. Often, the categories are prioritized according to the investigator's intuition about the existing correlations. This method of investigation is helpful – to a point. Classifying things to be dealt with or considered separately is not as efficient or effective as identifying one or two focus areas that will significantly impact the remaining areas in a positive way.

By revealing and examining the underlying intrinsic order of entities using cause-effect-cause relationships, one gains the ability to:

1) To distinguish fact from fiction without spending a lot of time gathering data.
2) To focus on a core problem instead of multiple symptoms;
3) To succinctly communicate the past or current situation to others.

The Current Reality Tree is based on the fundamental natural law that order does exist. Events within a system do not happen with near the randomness that people think they do. Something happens (effect) because something else happened (cause). This technique provides the means for careful examination of hypotheses, assumptions and pursuing common causes that account for more and more of the effects in the system.

When using a Current Reality Tree to determine “what to change” in your existing system, you should search for those few entities that are causing most of the Undesirable Effects (UDE’s) in your area of concern. It is always possible to build a comprehensive enough Current Reality Tree in which at least one cause leads to the existence of most of the UDE’s.

Figure 1 displays an example for the structure of a CRT. As a sufficiency based logic tree it is read using the “IF’ and “THEN” statements. In other words, the logic is; if the entity at the base of the arrow, then the entity at the tip of the arrow. The arrow represents the logical connection and also signifies that the entity at the base of the arrow is sufficient to cause the entity at the tip of the arrow to exist. As an example: IF the car battery is dead, THEN the car won’t start. Obviously if the battery is dead it is sufficient to keep the car from starting. At this stage it is important to apply the Categories of Legitimate Reservation (see Bob's prior posting on CLR’s) and validate the arrow’s existence. In other words, make sure the arrow is logically solid.
Figure 1. Example structure for a Current Reality Tree (CRT).

In the example CRT you notice ellipses that combine some of the arrows. These ellipses are the logical “and” statement. So, reading the statement becomes If entity #1 “AND” entity #2, THEN entity #3. The “and” statement implies that both entities (causes) are required to generate the effect.

Current Reality Trees can be used to:
1. Identify the core problem – What is constraining the Throughput of the system?
2. Focus and leverage improvement efforts.
3. Determine what is happening or what has happened.
4. Communicate information about a past or a current situation clearly and concisely to others.
5. Provide a pattern from which future events may be predicted.
6. Analyze the validity of an article or argument.

STEPS TO CONSTRUCT A CRT
1. Choose the topic you wish to address.
Do you want to find the weakest link in your area of responsibility? Do you want to investigate why certain things happen? Do you want to understand your teenager? This step results in concisely defining the system you want to analyze.

2. List the Undesirable Effects within the chosen system
Focus and direction are gained through clarifying the preliminary boundaries of the area to be analyzed. Undesirable Effects should relate to the unsuccessful attainment of the goal (or necessary conditions) as revealed by its measures. You can find the UDE’s by asked the question “When I think about this system it bothers me that…” Your list of “it bothers that…” statement translate into the list of UDE’s

3. Map out the causal connections among the Undesirable Effects.
Through mapping the sufficiency relationships that connect the UDE’s, common causes begin to take shape and the picture of the current situation becomes clearer. This step involves rigorous use of the Categories of Legitimate Reservation (logic-checking tools) to minimize self-deception. What you are looking for is a relationship between the UDE’s. Is there a particular UDE that exists because another UDE exists? If there is, draw the arrow between your two entities and apply the CLR’s to check the validity.

4. Modify the tree to reflect your intuition about the system being analyzed.
The previous action had you working at a micro-level. This action provides a safety net – just in case you "can't see the forest for the trees." You may find this step enables you to limit or expand the analysis so that it is in proper perspective.

5. Identify those entities you perceive to be the most undesirable
Your initial list of UDE’s was a mini-brainstorming session. At this stage of the game, you should have a much clearer picture of what is going on and a better sense of what the important UDE’s are – the ones that are impeding the organization.

6. Trim entities that do not participate in connecting the major Undesirable Effects
When seeking to find the constraint in a given system, one must focus on the connections that matter – the connection between a common cause and the effects you want to eliminate. This step asks you to remove the extraneous entities. The point here is to trim the UDE’s that fall outside of your area of control or sphere of influence. It helps establish the focus and defines the boundaries of what you really want to analyze. Knowing this information provides the Leverage to accomplishing the effort.

7. Identify the core problem
This final action entails examining the entry points (entry points are UDE’s that DO NOT have an arrow pointing to them) to the tree and finding one that is responsible for a significant portion of the major UDE’s. Which entity is responsible for most of the UDE’s? A general guideline is whatever entity is causing 80% of the UDE’s is usually a good candidate for the core problem.

The CRT allows you to focus on those one or two things that can really make a difference and concentrate your resources on solving that particular problem. In other words, you gain the ability to filter the insignificant many from the important few. When you focus on the proper core problem, and remove it, the other UDE’s, by default, will also disappear. If the causality is gone, so is the negative effect. So, now you have found the core problem – Now what? You’ve found “What to change”. Now, we need to answer the question; “What to change to” – what is the best solution to solve the core problem?

In my next blog I will create a simple, but real, CRT to demonstrate what a completed CRT looks like. We’ll then get into what comes next and move onto the next TP Tool. The Conflict Diagram.

Bruce Nelson

Thursday, November 25, 2010

Focus and Leverage Part 21

Before we begin to construct a current reality tree, we need to discuss something called the Categories of Legitimate Reservation (CLR), which will act as our “rules-of-engagement” for construction of Current Reality Trees. The Theory of Constraints (TOC) Thinking Processes relies heavily upon the intuition of the individual using it. In order for this intuition to be useful, it usually must be verbalized and communicated to others. Since the verbalization process can be difficult for many people, TOC has developed some intuition-helping tools. One of the most fundamental is a dual-purpose set of tools, referred to collectively as the Categories of Legitimate Reservation (CLR’s). These CLR also serve to help solidify the logic of each causal connection. The CLR’s also help us construct our own logical relationships and help us evaluate the logic of others. That is, the CLR’s help us all avoid errors in logic as we progress through the construction of our Current Reality Tree.


The understanding and use of these tools is essential for constructing and verifying the validity of cause-effect-cause relationships. Once verbalized, these tools also play an important role in the communication process.

There are a total of eight different CLR, each serving a different purpose and while they’re not difficult to understand, they do require some practice using them to keep them in your head. Or you can do what some people do and simply use a cheat sheet.

1. Clarity – Be certain that the individual words used in the various boxes (1) are understood by everyone involved in the construction of the CRT, (2) are a clear grasp of the idea being presented, and (3) there is an obvious connection between the cause and the effect being introduced.

2. Entity Existence – Entities are complete ideas expressed as a statement. When constructing the graphic blocks (entities) be sure that the text is a complete sentence, not a compound sentence, and the idea contained in the sentence is valid and legitimate. Normally there is evidence to demonstrate its validity.

3. Causality Existence – The cause and effect relationships must really exist and there should be no doubt in anyone’s mind that “if we have this,” “then we will definitely have that.” A clear cause and effect relationship must exist.

4. Cause Insufficiency – Sometimes it requires more than one cause to be present to create the predicted effect so be certain that you have identified and included all major contributing causes.

5. Additional Cause – It is possible that two completely different causes will result in the same effect, so each time you observe or imagine an effect, you must consider all of the possible independent causes.

6. Cause-Effect Reversal – Don’t mistake an effect for a cause. People sometimes confuse the effect for the cause, so be careful.

7. Predicted Effect – This category is firmly rooted in the scientific method as evidenced by its primary function – to strengthen or break the proposed hypotheses. Predicted Effect may be used to test the validity of entities or causal relationships. It focuses the user on seeking the valid effects that must stem from the existence of the causality or the entity if they are valid. The Predicted Effect category asks the following question: Does another entity co-exist that will either strengthen the causality entity or disprove it?From a single cause can come many effects, so be sure to list all of the possible effects that you know about. This is where the team approach to CRTs becomes effective.

8. Tautology – This is sometimes referred to as circular logic because the effect is offered as a rationale for the existence of the cause. Don’t take the effect as unequivocal proof alone that the cause exists without considering other alternatives.

Communicating Productively

When two or more people are having a discussion, how do they communicate differing perspectives or ideas? We have all experienced discussions, which deteriorate into fruitless arguments. These discussions usually take some time to unravel; time for individuals to understand what is being proposed and to determine if they can agree on a conclusion. Why does this happen? Many times it is because we don’t know how to constructively scrutinize our claims and the claims of others. Usually this situation is magnified because we also do not know how to communicate our concerns to others in a way that does not lead to defensive reactions.

When used to verify causality, the CLR’s greatly diminish the impact of the first phenomenon (not knowing how to constructively scrutinize claims). CLR’s can also be used in a specific order to promote non-defensive, focused, productive discussions. This process is based on four valid assumptions:

1. It is more effective to give people a chance to explain what they mean than to attack what we’ve
    understood them to say.

2. People are responsible for substantiating their claims.

3. People are not idiots.

4. What is said, and what is meant, are not always the same thing.

OK, so now that you know about the CLRs, how do we use them and what is their real purpose? Unlike the IO Map, which is based upon necessity-based logic, the current reality tree uses sufficiency-based logic. Whereas the IO Map was read as, “in order to…..I must have …..” CRTs are read in an “if-then” form. So, to determine sufficiency, we might ask questions like “is this enough to cause that?” or “is this sufficient to result in that?” In short, a sufficiency tree implies that the causes are sufficient to actually produce the effect.  As we construct the CRT in the next few blogs, there will be more clarity on how we use the CLR's to construct them.

A Current Reality Tree (CRT) is a logic-based structure designed to illustrate current reality, as it actually exists now or how it previously existed. As such, it reflects the intrinsic order of the cause-effect-cause phenomenon. The next blog will cover the basic principles associated with the CRT. I have invited a great friend of mine, Bruce Nelson, to actually write my next few blogs. Bruce is referred to as a Jonah's Jonah which means that he is certified to teach others to become Jonahs. I'll tell you more about Bruce in my next blog. HAPPY THANKSGIVING TO ALL!!

Bob Sproull

http://www.sproullconsulting.com

Saturday, November 20, 2010

Focus and Leverage Part 20

On my last blog I introduced you to the Intermediate Objectives Map (IO Map) as the first of the TOC Thinking Process Tools (TP). Now let’s continue with the second of these tools referred to as the Current Reality Tree (CRT). The CRT is a sufficiency based logic tree and is extremely useful when trying to solve organizational problems.

The Theory of Constraints is systemic in nature and strives to identify those few constraints that limit the organization’s success in terms of moving in the direction of its goal. It’s important to keep in mind that most organizations function as systems rather than as processes. Goldratt introduced his five focusing steps, discussed in earlier blogs, plus what he calls a logical thinking process. Goldratt then teaches us that good managers must answer three important questions in order to be successful:

1. What to change?

2. What to change to?

3. How to make the change happen.

As part of the logical thinking process, Goldratt introduced a set of tools used to identify the root causes of negative symptoms or Undersirable Effects (UDE’s, pronounced oodees) that exist within organizations. Goldratt believes that there are generally only a few core problems that create most of the UDE’s and if we can identify these core problems (i.e. What to change?) and find their root causes and eliminate them, then most of the UDE’s will disappear. Let’s talk a bit more about these things called Undersirable Effects (UDE’s) and how we can identify and understand them.

In order to understand what UDE’s are, we must first understand that they must be considered in the context of an organization’s goals, critical success factors, necessary conditions and performance metrics. For example, suppose the organization’s goal is to make money now and in the future and its critical success factors and necessary conditions are things like generating enough revenue with low operating expenses, keeping its employees happy and secure, keeping customer satisfaction high, achieving superior quality and on-time delivery, etc. Further suppose that the organization measures its performance by things like on-time delivery, some kind of productivity measurement, the cost to produce products, a customer satisfaction index, and quality through parts per million defective (ppm). Any organizational effect that moves the organization away from its goal or violates one of the critical success factors or necessary conditions or drives a performance metric in a negative direction with respect to its target is considered undesirable. So think for a minute about what UDE’s might exist in your company.

The tool Goldratt developed to expose system type problems or policy constraints is referred to as the Current Reality Tree (CRT). The current reality tree is used to discover organizational problems, or UDE’s, and then work backwards to identify at least one root cause that leads to most of the UDE’s. Dettmer1 defines a root cause as, “the lowest cause in a chain of cause and effect at which we have some capability to cause the break.” His point being that the cause and effect chain could continue on indefinitely, but unless the cause lies within the span of control of the organization or at least within its sphere of influence, it will not be solved.

Dettmer further explains that two characteristics apply to root causes:

1. It’s the lowest point at which human intervention can change or break the cause.

2. It’s within our capability to unilaterally control, or to influence, changes to the cause.

The CRT begins with identifying undesirable effects (UDEs) or negative symptoms existing within an organization that let us know that a core problem exists. Core problems are unique in that if the root cause or causes can be found, they can usually be traced to an exceptionally large percentage of the undesirable effects. Actually Dettmer1 suggests that this percentage could be as high as 70 percent and sometimes higher. Dettmer refers to a CRT as a “snapshot of reality as it exists at a particular moment in time.” Dettmer further explains, “As with a photograph, it’s not really reality itself, just a picture of reality, and, like a photo, it encloses only what we choose to aim at through the camera’s viewfinder.”

By aiming our “logical camera” at the undesirable effects and their root causes, we’re essentially eliminating all of the details that don’t relate to them. In other words, the CRT helps us focus in on and pinpoint core problems. There are several different versions of the CRT available in the literature on the subject, but they all provide the same end product, at least one actionable core problem. Some CRT’s are very detailed while some are more general in nature.

The example I will present is a company that was having a problem generating enough throughput (i.e. capacity constraint). They had plenty of orders, but were unable to produce enough parts to satisfy the market demand. It is clear to me that many of the problems organizations encounter on a daily basis are really interconnected, systems-related problems. It is further clear that by focusing on these core problems, organizations can essentially kill multiple birds with a few stones!

It is not my intention to present an in-depth discussion of Current Reality Trees (CRT’s) or how to construct one in this posting, but I do want you to be aware of their existence. Over the next several blogs I will present a simple example that I developed for a company that produces flexible tanks used to hold and transport volatile organic liquids. This company had serious problems generating enough throughput to satisfy the volume and delivery requirements of their customers. By creating a CRT, this company was able to pinpoint specific system problems that were constraining their throughput and then take actions to alleviate the problem.

In my next several blogs I’ll show you the step-by-step basics of how to create a Current Reality Tree and expand upon how to use one in your company. Because a CRT is fairly detailed, I want to go through it slowly so that you can appreciate its usefulness.

1 H. William Dettmer, Breaking the Constraints to World Class Performance, (Milwaukee, WI:, Quality Press, 1998)

Bob Sproull

http://www.sproullconsulting.com

Sunday, November 14, 2010

Focus and Leverage - Posting Delayed

For those of you who are following my blog, due to unforeseen circumstances my blog posting for this week will be delayed at least until next week and maybe longer.  Sorry for any inconvenience caused.

Bob Sproull

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)