Maximizing Profitability Part 17

As I mentioned in my last blog post, I’m going to focus on another side of TOC, the Logical Thinking Processes (LTP's). The LTP's are 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 (aka The Goal Tree)

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? 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 road map 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 the Theory Of Constraints (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, also referred to as a Goal Tree) is the tool we use to determine these three entities. Dettmer [1] refers to the IO Map as a “destination finder” and rightfully so. (In recent years, Dettmer refers to the IO Map as a Goal Tree, but in these posting we will continue using the term IO Map). 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 you’re working with, you need to articulate its goal. Just remember, the purpose of the IO Map is to identify the ultimate destination we hope 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 more abstract than the goal itself. Next comes the necessary conditions that must be satisfied before satisfying each of 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 delivery.” What must be in place before we can reach this Goal or what are the CSF’s we need to be in place in order to reach our goal? By the same token, what must I have in place to achieve each of 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 Drum Buffer Rope (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.

The figure below is the basic structure of an IO Map, with the Goal at the top, Critical Success Factors directly beneath the Goal, and Necessary Conditions directly below the Critical Success Factors.

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

In my next blog, we will see how to use our IO Map to construct another logic tree called the Current Reality Tree.