Maximizing Profitability Part 20

I’ve asked my good friend Bruce Nelson, to contribute to my blog for the next series of postings. Bruce has over 30 years combined experience in the manufacturing and production industry. 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’s Jonah and is a board certified TOC Expert with the Theory of Constraints International Certification Organization (TOCICO). Bruce is also an Academic Jonah who held 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 or causes). 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 Current Reality Tree (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

In the example CRT you notice ellipses that combine some of the arrows. These ellipses are the logical “and” statements. 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.