To POOGI forum members,

Somehow we are all fascinated by numbers. So when the most common way to measure dates is reaching a nice round number, I too feel compelled to summarize.

When the POOGI forum was launched at the beginning of May, it was an experiment. Now I can declare that, at least as far as I am concerned, it was a successful experiment. Your feedback has helped me to verify many of my speculations and more than once it highlighted corners that I was blind to. All in all, it did accelerate the rate at which necessary know-how was verbalized.

I have only one problem; not everyone contributed enough.

Why is it a problem? Only because I personally don‘t believe in encouraging "free lunches". At the same time I hate to just cut people off.

So I was thinking; what might be the reasons causing many of you to answer my questions only infrequently? I came up with three speculations:
1. You are much too busy.
2. You feel uncomfortable writing English.
3. You have the impression you don‘t have anything of significance to add to the specific issue discussed.

If the first speculation is actually the main reason for lack of frequent answers, then I can help. I don‘t have any problem to save your time required to read my letters.

As for the second reason, I personally understand it perfectly. I too had huge problems in writing in English. Until I realized that I don‘t have to write in English; broken American will do. Especially when you adopt Mark Twain attitude toward spelling ("I despise people whose imagination is limited to the extent that they know only one way to spell a word"). Don‘t tell me that no one of your friends is able to reasonably communicate in that international language. Solicit their help.

That brings me to the third plausible reason. In reexamining the questions I asked you in my various letters, I realized that - depending on the question - there are positions that will have little to contribute. The way to rectify it is quite obvious, I‘ll have to broaden the scope of the discussion.*

*This carries with it a potential negative branch. Broadening the scope of the discussion may throw me into bad multi-tasking. Well, if it happens I‘m sure we‘ll find a suitable injection to trim it.

The current scope of my work (Not to be confused with the things that take-up most of my time, like computer games).

A. Moving an organization.

This is the topic we have been concentrating on for the last six months. Actually we concentrated on just one aspect of the topic: how to move an organization from the top down. Let‘s not forget that for many people access to top management is problematic, so we‘ll have to continue and develop an effective process that will enable moving an organization from bottom up.

Middle level managers in large companies; please be patient for another page or two as I summarize where we stand on top-down. It is relevant also for you because if (when) we will be successful in devising the bottom-up approach there will come a stage where it will be not just desirable but also possible for you to pass the baton to the top managers (Remember, passing the baton to the top is necessary since middle level managers are not the ones who devise the strategy of their company).

The meaning of moving a company from top down is that, almost from the start, top managers are leading the POOGI. For that we concluded that we need:

1. An effective way to cause top mangers to devote enough time to listen.
2. An effective means that doesn‘t take more then a few hours (the longer the time the more difficult is to achieve step 1) to understand what is the potential POOGI and how they should lead it.
3. An effective mechanism to bring top managers to agree with our paradigm shift approach to manage a company.
4. An effective mechanism to cause all top managers together to re-devise the company strategy and tactic and to commit to an aggressive implementation
plan.

The chance of success is the multiplication of effectiveness of the above steps. Since we do want a high chance of success the effectiveness of each
step should be somewhere in the nineties. This was our target. No doubt an ambitious target.

When we started we had the answer to the most difficult step - step 3. And the answer was the 8 sessions of the Goldratt Satellite Program. In the ensuing 6 months we tried to develop and polish the answers for the other steps. I think that we have accomplished it.

Two weeks ago I gave (four times) the presentation that was described in letter 8. Two things were confirmed by these presentations.

1. As long as medium and small companies (under $500M) are concerned, the wording used in the invitations* (either sent by mail or communicated through telemarketing) is strong enough to bring top managers to want to hear the presentation. Otherwise it is hard to explain why about 1000 managers (more than half were top executives) came, even though it was the worst part of the year (middle of December) and attendance was restricted to a maximum of 3 people from a business unit. Just as a reference, in October when inappropriate wording was used in the invitation, only 73 people registered
to the same four events. And almost none of those registered were top managers.

So we now know how to accomplish step 1, at least as long as small and medium companies are concerned. As for the larger companies, see my comment below.

______________
*I think that the exact wording of the invitations was included in letter 7. If I‘m wrong you can get it from IIL.
______________

2. Judging by the many hundreds of the written evaluations, the higher the manager and the larger the company the more they embraced the entire message
to the extent that they are eager to move on. We do have now an effective presentation for top management. This is a major achievement. It actually means that we now know how to accomplish step 2.

During the last six months we also developed the 4x4 process and checked it in about twenty different companies. 100% success is a nice hit ratio.

Where do we stand? We now have an effective invitation to bring top managers to devote 3 hours of their time. We have an effective three-hour presentation that motivates top managers to move on to explore the solution. We have an effective series of tapes that convince (top) managers of the effectiveness of the solutions to the extent that they are willing to devote the time needed to reshape the company. We have an effective process - the 4x4 - to cause top managers, as a group, to re-devise the company‘s strategy and tactic. And to put a realistic and aggressive implementation plan to achieve it.

What is needed now is an effective mechanism to overcome the logistical problems.
A. To send to the market - on an ongoing basis - the information about the 3 hour presentation.
B. To bring the presentation to the interested top managers (who are already convinced by you, their friends or the invitations, to devote the required 3 hours to hear it).
C. To provide an easy access to see the 8 sessions in groups guided by suitable facilitators.
D. To provide access to real TOC experts who can safely facilitate the top managers of a company in the latter four days of the 4x4.

Some reputable organizations have already agreed to take upon themselves to do the above. E.g. International Institute of Learning (IIL) took the task for the USA and Canada. The Confederation of Indian Industry (CII) took the task for all of India. Hopefully before the end of the year, most of the world will be serviced.

No matter how fast they will move and how thoroughly they will cover the territory, there will always be cases where the location and/or the dates do not suit the schedule of your top managers. To overcome that problem I suggest reverting to a second best solution. The best is to attend a live presentation given by a real expert who can answer all the specific questions of your top managers (something that I couldn‘t do in my presentations given the number of people who attended each presentation). Second best is to see a tape of me giving that 3-hour presentation. By the time you read this letter I hope that it is already available.

This 3-hour tape of my presentation will hopefully go a long way in moving even the large companies. As I pointed out before, the evaluations filled in by attendees clearly indicated that the higher the manager and the larger the company the stronger was the readiness to embrace the message. That means that in a large company, a person in a corporate staff position (even a relatively low position) now has the tool to propagate the message up hill. To persuade such a person to devote 3 hours is much easier than to persuade a corporate VP. So maybe our process is good enough even for large companies. More experience is needed.

NTU is going to broadcast the 3-hour tape on a regular basis through their satellites. Since most clients of NTU are the large companies we will soon see if we do have a complete solution for the first step.

As for the third point, starting in late January, there will be five locations in the USA where Holistic Approach Workshops (the eight-session videos of the satellite program) will be given. A knowledgeable person facilitates each workshop. Hopefully, we‘ll succeed to rapidly increase the number of places where these open workshops will be conducted.What about having enough real experts of TOC? That is a problem that already starts to raise its head. There are areas where the availability of real experts has already become the constraint and it does look like, not before long, it will be the constraint everywhere.

So first let‘s elevate the constraint; let not waste it on tasks others with less education can do. To facilitate the eight sessions of the videos there is no need to spend years becoming a real TOC expert. If you have some talent in guiding a group of people and you‘ve watched (carefully) all the videos, I think I can teach you to do it effectively in a very short time. This is important because we are not talking here about just off-loading the experts from doing the open workshops and the first four days of the 4x4. We are talking about off-loading a major task of the work needed to implement the holistic approach - educating managers (and other employees) throughout the organization.

So, what I have in mind is to set up, within the next three or four months, a two day workshop with me. My intention is to use these two days to teach you how to be an effective catalyst for your (or other) company. In particular I will try to teach the following:
1. How to facilitate the 8 session videos to managers who need to see them all.
- How to tailor which sessions are needed for whom (after the 4x4 has been already done) and how to facilitate a stand-alone session.
And not less important:
- How to move a company from bottom up (my opinion is that without the videos there is almost no realistic chance).

Of course, I will assume that every participant knows ALL the videos by heart before attending my class.

Give me some time to put the logistics in place.

Before I continue to cover my current scope of work let me pose some questions to you.

1. If you do have access to top management. What else do you need to cause them to move?

2. Are you interested that I‘ll put the above mentioned class? Why? If so, are you going to attend? Why?

Now, if you want that the answer for bottom up will be as complete as possible, please take the following question seriously. I need the information otherwise I might neglect to consider your specific situation:

3. If you have already implemented part/s of TOC and you got results but the rest of the organization is not accepting it, will you please describe, in detail: the actions you took, the results you already achieved, who is resisting and why (both what they claim and your speculations), what is the specific damage to the company resulting from that resistance, what is the damage to your department and to you personally?

(remember, your letters to me are confidential and aside from the trusted person who handles the logistics I‘m the only one who has access to them)

B. The conceptual base of TOC

This is the topic that interests me the most but I have published almost nothing about it. As you may know, I‘ve derived the conceptual base of TOC directly from the logic that governs Physics. Only much later did I realize that it would have been easier to reach the same results if my starting point had been the logic that governs theology. It is the same logic but in theology it is more refined to encompass human behavior.

Part of the conceptual base of TOC is, of course, the definition of "constraint".

What is a constraint?

When TOC was starting to emerge there was no need to define the word "constraint" because at the early stages the discussion was limited to the logistics of scheduling the shop-floor. The key word was "bottleneck". Everybody knows what a bottleneck is, so for some time there was no urgency to formally define it. Later, as the know-how grew, I realized that I could save myself (and my clients) a lot of floundering if I was more careful defining the key words I‘m using. Bottleneck was defined as "any resource whose capacity is less or equal the demand placed on it for the specified horizon".

Now suppose that marketing went out of control and committed to hundred times more than the operation‘s capacity, what then? Then, according to our definition, almost any resource in operations is a bottleneck. Are all what you may call a constraint - are all resources the weakest link? No!That is when the word constraint started to appear in our terminology. It appeared as part of the phrase "capacity constraint resource". Defined as "any resource that if its capacity is neglected to be considered the throughput of the company is compromised." At that stage I went out of my way to explain why a bottleneck might not be a capacity constraint resource while a capacity constraint resource might be a non-bottleneck. It didn‘t help, people continued to use the term bottleneck. And so did I. Not much later the scope increased to include things beyond production. The definition of constraint and the five focusing steps have been created simultaneously and the name TOC was coined. The definition of constraint was "anything that limits the system from achieving its goal". We lived with this definition for the last 15 years.

A few months ago I was asked to visit India. As part of preparing for my visit I was asked to be interviewed for a feature article in the prestigious Indian magazine - Business Today. Since I hate when people misquote me, I agreed provided that the journalist would prepare himself by reading all my books and would submit his questions in writing, and I would answer in writing. In reading my own answers I‘ve noticed that some of my answers are not in line with the TOC traditional definition of "constraint". Here are examples:

Q: Constraints are, often, intangible. They have something to do with the way managers think, or the way they do a particular thing. So, the system may actually be able to do something, but it may not be willing to do so because the manager isn‘t willing to do so. This is different from a bottleneck, which is either a machine or a process which does not have the capacity to deliver what is required from it. Tackling a bottleneck, once you have identified it, is not difficult. But how do you tackle a constraint that is intangible?

A: I‘m coming to the conclusion that, in organizations, the constraint is always an erroneous assumption we make about reality. Yes, there are production plants that do have bottlenecks, but you must ask yourself why they have not been properly exploited and elevated. In The Goal, I‘ve described a plant with a bottleneck but, if you have noticed, in the book, as in the thousands of plants that implemented the lessons learned from the book, the bottleneck was removed without adding more machines or people. So, what prevented managers from removing these bottlenecks before reading the book? An erroneous assumption! The assumption that a resource standing idle is a waste. That is, probably, one of the most wasteful assumptions a company can make… (here comes the part of the answer that I trimmed out)… Luckily, the same erroneous assumptions tend to be held by almost any organization. I say luckily because this enables us to find a generic solution that needs only minor adaptations from one environment to the other. This is certainly the case for production.

If you noticed I used here an entirely different definition for "constraint".
Did I?

Let‘s look at another example:

Q: One thing we all hear from companies and managers is how everything is constantly changing, and how difficult it is to keep step with the changes. What they are referring to may be changes in competitive situations, customer preferences, or technology.
But what if they were referring to constraints?
Do constraints change too?

A: Constraints rarely change. How come? Most managers will tell you the opposite, and, to prove it, they will point to bottlenecks that change frequently, to periods of overloads followed by lack of sufficient sales. The difference is in our understanding of what is a constraint. As I‘ve already mentioned, a constraint is an erroneous assumption that we make about reality. To illustrate how a fixed constraint can directly lead to the impression that constraints are constantly changing, let me… (I trim the examples)

Did the constraint-the erroneous assumption- change? Not at all. Not in the last who knows how many years. Technology might change a constraint. For instance, for some organizations, e-Commerce has changed the constraint. Before e-Commerce, the system‘s performance was defined by one erroneous
assumption, and now, by another. When people realize how difficult it is to erase a rooted erroneous assumption - it is the equivalent of a culture change - they will not fool themselves that constraints are changing from one month to the other. So, you see, until people become, God forbid, much more flexible in their rooted beliefs, we don‘t have to struggle with the question of how to deal with rapidly changing constraints.

Well, what is the definition of "constraint". Even if we agree that a constraint is an erroneous assumption, we haven‘t yet defined it since it is obvious that weare not intending to call any erroneous assumption, a constraint. If we do then any organization has thousands of constraints.

Luckily I have a son who studies philosophy so I have someone to discuss such things with. Between us we spent on it, so far, at least 30 intensive hours. I think we are close to reaching satisfactory conclusions. But we‘ll not really know until we finish putting it all in writing.

My question to you is:
4. Are you interested in such stuff (e.g. the resulting article once it will be finished)? If no, tell me why not. If yes, definitely tell me why.

C. Supporting systems

Almost in any aspect of logistic the computer is an invaluable tool. I‘m old enough to remember plants managed manually when the planning and control were done using huge boards with stickers.

Using a computer system doesn‘t only make the material manager‘s job easier, if used properly it significantly improves the performance of the entire operation. Probably the biggest improvement provided by MRP was the fact that it enables plants to move from batching production on a monthly basis to batching on only a weekly basis (or less). I say provided rather than achieved because even today you‘ll find mature users of MRP that are still batching production on a monthly basis. Changing technology is much easier than changing management concepts.

The gap between what can we gain from using computer systems and what companies are actually gaining is widening with every jump in computer technology. MRP, MRP-II, ERP, and now the biggest jump of them all E-commerce and Business-to-Business commerce. Unfortunately, being immersed in this field for many years, and after an in-depth analysis, I have very bad news. I‘m convinced (and can prove it rigorously) that due to the way the systems are written, implemented and used, in most companies the mammoth investments will yield a mammoth negative return.

Why it should interest us? Because of two reasons.

One is that in implementing TOC we need to tweak the existing computer systems. Actually, if your operation is a T type operation, it‘s not tweaking it is some work. If your operation is A or V and you have an internal bottleneck, most probably you have to really deal with the system. If you are in distribution, chances are you‘ve already developed some in-house private programs. If you are in a multi-project environment you either reverted back to manual methods or invested in a suitable stand-alone package.

Computer technology is going to continue to advance. There will come a time when you‘ll have to face an unpleasant choice: not to upgrade your computer technology or to rewrite and re-debug all your patches and interfaces with the "private systems". The "private systems" that are actually the heart of your supply chain.

Wouldn‘t it be better if the software suppliers would have provided, which none of them do, full systems that are in line with the logistic rules of the holistic approach?

The second reason is that E-commerce and B-B commerce are a major part of the internet new industry. They are traded in the stock markets in unprecedented multipliers. If, as I am afraid of, it is just a matter of time until most of their clients will be disillusioned, the future of these companies will start to be questionable. The bubble will burst. And this sector is big enough to possibly take the entire stock market with it.

But it should not be a bubble. If the systems (software and implementation) will be adjusted to bring the immense value they do carry, than it will not be just a bubble. In that case, the huge multipliers the stocks are traded in will be a result of prudent insight into the potential of a powerful new technology.

So, on the second of January I‘m flying for three weeks to Aruba (it is an isolated enough place to guarantee that I will not be disturbed and it has a casino). There I‘ll meet with two good friends Eli Schragenheim and Carol Ptak and together we will try to do the impossible: to write a book that will, hopefully, bring common sense to this field.

My question is:

5. To what extent did your existing computer systems have to be modified to enable you to implement TOC? What are the limitations they still impose on you?

D. TOC for education

This is properly the most important field of application. Currently it is also the field where most of the rapid developments and implementations are done.

There are three main areas:
- Conduct (building justified self-confidence: win-win resolutions, giving and receiving true constructive criticism, achieving ambitious targets etc.).
- Content (using all subjects in curriculum to teach critical thinking and innovation rather than just memorizing).
- Education system as an organization (so different and still so similar to any other organization).

The development and decimination efforts are lead by TOC for Education. This not for profit organization is currently helping hundreds of teachers in many countries, it runs many free of charge courses, has a weekly news letter and holds conferences.

Since the POOGIforum members are not immersed in education (except for trying to raise their own kids) I will not elaborate. Those who are particularly interested can get more information by turning to Toc for Education.

Summery

In this letter I ask you five questions relating to three different subjects. Mark Twain once wrote: "I don‘t have enough time to right you a one page answer so I wrote fifteen pages." I hope that you do have enough time to answer me.

I don‘t expect that you‘ll answer all five questions; one will do. I will interpret no answer as a request to stop bothering you with my letters.

Yours truly,

Eli