Monday, June 10, 2013

Focus and Leverage Part 223

You will remember that we finished my last posting by saying we will look at each of the four assumptions of Constraints Management in more depth.  The basis behind the first assumption, that every system must have a goal and a finite set of necessary conditions, is that without a defined final destination (i.e. the organization’s goal), an organization could wander aimlessly and take actions that may or may not help them become a more effective organization.  Unfortunately many organizations don’t take the time to define their goal and necessary conditions or even articulate it to their employees.  It’s so much easier to reach your destination when your entire organization knows what it is.  If, for example, your organizational goal is to maximize your profitability, then you must define a set of necessary conditions required for goal realization.  The bottom line is, you must have a sort of road map that clearly defines the route or pathway to your goal and without defining the necessary conditions for achieving it, the organization simply won’t get to where it wants to be.

The second assumption of Constraints Management tells us that the sum of the system’s local optima does not equal the global system optimum.  This simply means that efforts to optimize each individual part of the system are usually counter-productive in terms of the overall positive impact on the total system.  The fact is, not all parts of the system are of equal importance and unless and until we locate that part of the system that is most important, total system improvements will not be achieved.  This assumption is tied very closely with the third assumption.

The third assumption tells us that usually only one variable limits the performance of a system at any one time….the system constraint.  The key to system improvement is by following Goldratt’s five focusing steps in an orderly manner as follows:
1.  Identify the system constraint
2.  Decide how to exploit the system constraint
3.  Subordinate everything else to the decision to exploit the constraint
4.  If necessary, elevate the system constraint
5.  If the constraint is broken, return to step 1, but beware of inertia

The real message behind assumption number three is that you should identify, focus on and exploit that part of the system which is limiting performance.  And once you have improved it sufficiently, don’t stop….return to Step 1 and continue this process of on-going improvement.

The fourth assumption tells us that all systems are subject to logical cause-and-effect and that the undesirable effects we observe within the organization are typically symptoms of a larger problem.  Most of these undesirable effects are linked together in a cause-and-effect relationship originating from a single root cause or core problem. 

Goldratt developed what he referred to as the Logical Thinking Processes which are a set of logic-specific trees used to first, identify the organization’s UDE’s and then link them together in a chain of cause-and-effect until the organization’s core problem is identified.  The remainder of these logic trees are then used to develop a future reality in which the core problem has been eliminated.  And when the core problem has been removed, almost magically, 80% of the UDE’s disappear.

The Logical Thinking Process (LTP) tools use either sufficiency or necessity type logic.  Sufficiency type logic uses discrete If-Then statements to provide linkage.  Necessity based logic uses the syntax, In order to have “x”…..I must have “y”…..  Let’s briefly discuss the original LTP tools.
-  The Current Reality Tree (CRT) – The CRT was designed to identify the system constraint, but particularly if the constraint was policy related.  The CRT, which uses sufficiency type logic (i.e. if-then statements), is the tool used to identify the organization’s UDE’s and then links them together through a chain of cause and effect to identify the organization’s core problem.
The Conflict Resolution Diagram (CRD) – The CRD, also known as the Evaporating Cloud, is a necessity based logic tool used to resolve conflicts that arise within an organization.  In effect the CRD helps initiate breakthrough solutions for an organization.
The Future Reality Tree (FRT) – Although the FRT (as well as the other LTP’s) can be used as a stand-alone tool, it is commonly used in conjunction with the CRT.  Its purpose is to test and validate potential solutions prior to implementing the solution.  It is, like the CRT, a sufficiency based logic tool (i.e. If-Then statements).
The Negative Branch (NB) – The NB is used with the FRT to help identify and avoid any potential negative effects that might arise from the proposed solution developed as part of the FRT.  The NB uses sufficiency based logic.
The Prerequisite Tree (PRT) – The PRT assists in the identification and elimination of potential obstacles that might interfere with or block the proposed solution.  The PRT also uses necessity based logic.
The Transition Tree (TT) – is used to facilitate the development of your overall improvement implementation plan and helps explain your rationale for taking the improvement actions you want to take.  The TT uses sufficiency based logic for its creation.

An important point to remember is that these tools are used to answer three important questions as you attempt to resolve the improvement conundrum:

-  What must I change?

What must I change to?

How do I cause the change to happen?

Without successfully answering these three questions, improvement initiatives will most likely stall or never even get off of the ground.
In my next posting we will begin looking at some of the key tools and methods that TOC offers and continue forming the essence of Constraints Management.
Bob Sproull

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