The Boundaries of TOC or What is “Not TOC”?

By Eli Schragenheim

A colleague of mine, Alfonso Navarro, a TOC expert from Colombia, made the point that when people challenge a TOC methodology, offer substantial changes, or raise a new idea never discussed before, they get the response “This is not TOC!” Alfonso concern is that it forces people to keep their ideas and methods to themselves and refrain from sharing them.

Umbrella icon

Do we know what TOC is?

The main body of TOC is about managing human systems, which I prefer to call ‘organizations’.  I deal here only with TOC as an approach to managing organizations.  TOC, like any scientific area, is built from several key axioms. I recognize two critical axioms for TOC to be effective for managing organizations:

  1. The organization has a clear and well-agreed-upon one GOAL.
    • Usually with a set of necessary conditions that must apply, but when valid there is no desire to get more from those conditions.
    • For instance, maintaining good level of employee satisfaction and also client satisfaction and trust.
  2. The performance of the organization is NOT CHAOTIC.

The above axioms are not valid everywhere, but they are absolutely necessary for the TOC approach to be useful.  I have seen organizations, naturally not-for-profit, with critical disagreements between several powerful leaders about the goal and how to measure it.  Many universities live in constant internal struggle between different research fields and between research and teaching.  Many performing art institutions are in the same situation: struggle on what should be the goal and how it is measured.

When it is impossible to know whether the overall performance last year was better, worse, or about the same as the year before then I’m afraid TOC cannot help.

I treat an organization as chaotic when there is high uncertainty in the delivery to clients.  When an order might be delivered today, or only in three months and even that is not guaranteed then the organization is in chaos.  However, it seems that a chaotic organization is doomed to die pretty soon and I doubt whether TOC intervention can stop the fall.  Chaos in an organization is usually caused by several interactive constraints that suddenly emerge.  Most organizations naturally solve the chaotic situations quickly by adding capacity when the first signals of too much noise in the delivery are identified.  The others simply die.

When both axioms are valid then TOC can be applied.  The target is to lead to ongoing and significant improvement in the performance of the organization.

When an idea aiming at improving the performance is considered “not TOC”?

When TOC logical analysis, based on cause and effect using the categories of legitimate reservations (CLR), claims that either there are no benefits to the idea, meaning no evident improvement in performance, or that there are severe negative branches, which are likely to cause bigger overall damage, then the idea is flawed and one might call it “not TOC”. I prefer to point to the flaws of the idea, rather than describe it as non-TOC.

Checking the validity of cause and effect arguments is not hard science.  See my previous post on The Thinking Processes and Uncertainty.  We all use certain beliefs that we treat as truth, but there is no logical way to validate or invalidate them.  How can you treat a claim that if “one prays every morning” then “higher performance is achieved”?  I don’t like to deal with religion, it is just a reminder to the limitations of logic to give us full and secure judgment on the validity of an idea to improve performance.

TOC has its own beliefs and observations that look as common sense that guide the TOC thinking and solutions.  The four pillars, presented by Goldratt, summarize the most important ones.

The four beliefs above are tied to basic philosophy that enables the TOC thinking and methods. However, the four pillars are not black-and-white orthodox beliefs.  Even if in a certain environment one of the beliefs is not fully valid then TOC is still applicable.

For instance, when I see an environment that does not look simple and harmonious, I should still try to look for the inherent simplicity, but not necessarily wait until I see it – I should do my best to come up with the best improvement I can think of.  The same goes for facing a conflict without realizing how to evaporate it. I’d realize my solution is limited, but it is the best at that time.

The belief that “People are good” requires an interpretation, because as a general belief I cannot accept it. However, as an initial guideline it is very beneficial.  The point is when we assume that people are good then we are able to outline their perspective and interests and then understand their actions.  So, when we see something we don’t like, this initial assumption guides us to understand.  Then we can better judge whether a specific person is good.

The statement “this is not TOC” is irrelevant to the judgment of any idea and it should not be used within the TOC community.  I don’t care whether the idea has been conceived using the TOC tools or guidelines.  Be aware that the current TOC tools do NOT guaranty inspiration! The TOC guidance might push us towards it, but we also might miss it.  As Goldratt said:  Never Say I Know!

Original article written in http://elischragenheim.com/2015/12/04/the-boundaries-of-toc-or-what-is-not-toc/
Posted in Articles, TOC Focus 9 | Tagged | Leave a comment

Agility: How SMEs can benefit from agile methods

By Wolfram Müller, VISTEM GmbH & Co. KG
Agile methods are often unsuitable for the structures involved in SMEs. A mixture of classic and agile project management can be the solution here.

Small and medium enterprises (SMEs) are currently exposed to a lot of pressure to conform. Competitiveness is growing, rival firms are snapping at their heels – everything needs to be quicker and cheaper. To be able to survive and even grow under these circumstances, organisations need to stay one step ahead of the competition, and new innovations and products need to be ready for the market more quickly. When the demands of the marketplace change, the key is to be flexible and react quickly. Many SMEs are therefore jumping on the agility bandwagon – and often ending up crushed under its wheels.

Particularly in Europe, SMEs are now concentrating particularly on agile methods. Originating from software engineering, agile management has come to prominence remarkably quickly. Agile management restricts the work in process to the level of teams. This restriction increases team output – quick results are observed. This positive experience means that the SMEs turn again and again to agile management. But agility, as we now know, also brings with it potential problems for the majority of organisations.

Keyword: Agile project management

Agile project management covers different methods which prioritise flexibility and adaptability. Instead of planning extensively and comprehensively at the beginning of a project, these methods support adaptive planning and quick decision-making at team level. Agile project management came to the fore in the context of software development.

Where agile methods don’t work

Classical agile methods are well suited for the field of software development, where work is completed in small teams. However, if an organisation works with suppliers in different locations, or develops on a platform basis, agility in its original form will not work.

Additionally, agile methods cannot guarantee agreement on dates – which is absolutely key for project work. Another well-known hurdle is the scaling of agile management – when applied to one team in one location, it works with no problems. When you try and use it on two or more teams, however, it fails. Equally, agile methods are at best partially suitable for multi-project management. The typical features of SMEs, therefore, are not well-served by agile methods.

The problem with agility in multiple teams

Let’s assume an SME uses agile methods despite the potential objections, initially in a single team. Everything is going to plan, and senior management is delighted by the rapid success. As a result, they decide, in the interest of gains in performance, to roll out the agile methods to all teams. The problem? When the agile methods were introduced to the pilot team, all the attention went to the integration phase. When the method was rolled out to the second team, concentration was already slipping. By the time it got to the third and subsequent teams, the plan could no longer be scaled up, and the success was not repeated. SMEs who jump on the agility bandwagon are at a high risk of breaking down, sooner or later.

Using Critical Change Management as a framework

If SMEs orient themselves towards specially-adapted standards and processes, they don’t need to ignore agile management. If they use established principles from Critical Chain Project Management (CCPM), they can act and react quickly and flexibly.

Using CCPM and specially-adapted agile methods brings lasting results to medium-sized enterprises whilst excluding the disadvantages of classical agile management. It is only sensible to put agile methods into practice with a concept that goes above and beyond classical agile methods. It isn’t increased complexity or abstract theory that will help SMEs, but specially-adapted mechanisms towards increased growth and dynamism in the global market.

Mixing classical and agile project management

The most important consideration in adapting agile methods into the project structures of SMEs is the mixture of agile and classical project management. Elements of classical project management offer stability and build established, important structures. Agile methods, however, can only be used in a few suitable areas. Agility can be achieved here through short iterations, quick releases and feedback.

A hybrid solution composed of agile and classical project management gives medium-sized enterprises the desired agility without the risk of being crushed by the agility bandwagon.

Success factors for introducing agility

  • Using Critical Chain Management as a framework
  • Selecting agile methods carefully, and using them only where the bottleneck isn’t under too much pressure.
  • Using a combination of Critical Chain Project Management (CCPM) and agile project management

About the author

Wolfram Müller is the Director of Customer Success (Sales) at Vistem GmbH & Co. KG.He is the founder and director of the “Speed4Projects” business area, and is also responsible for the integration of agile project management methods in the framework of Critical Chain on the systematic- as well as software areas.

 

Contact details Wolfram Müller

VISTEM GmbH & Co. KG

Von-Siemens-Straße 1

64646 Heppenheim

Tel. +49 6252 7953070

Email: wolfram.mueller@vistem.eu

Web: www.vistem.eu

Xing: www.xing.com/profile/Wolfram_Mueller

 

The German version of this article is published on www.business-wissen.de

http://www.business-wissen.de/artikel/agilitaet-wie-mittelstaendler-von-agilen-methoden-profitieren-koennen/

Posted in Articles, TOC Focus 9 | Tagged | Leave a comment

“Am I on my own?” by Martin Powell


In Eli Goldratt’s last ever public seminar, he asked the audience (as he often did) “Who has read my book – The Goal?”  He then says “About 80%. So now a different question. How many of you had the courage to implement it? Ah, about 15%. So let me pick a person at random. Have we ever met or spoken before?” The man in the audience says “No”.

Eli continues “Did you get results?” The man answers that he did; he applied the ideas into a financial services business, dramatically reducing lead times and improving performance. He also states that he got a pay rise and a new corner office!

Eli makes the point that this is typical – anyone who really tried got results. He also makes the point that it takes courage. Courage is definitely a necessity but is it sufficient?

Continue reading →

Posted in TOC Focus 8 | Leave a comment

“Implementing TOC as a Holistic Approach” by Dr. Eliyahu M. Goldratt


The common sense found in the pages of the best selling book The Goal is the foundation of the Theory of Constraints (TOC). Silver bullets do exist. TOC brings fast and significant results, and with such silver bullets there also comes a natural resistance from the prevailing culture.

Listen as Dr. Goldratt shares his analysis of what prevents companies from taking actions shown in The Goal, and HOW by implementing TOC as a holistic approach this can be overcome and major benefits can be achieved.

Watch this video →

Posted in TOC Focus 8 | Leave a comment

Understanding TOC Concepts – Building and Capitalizing on a Decisive Competitive Edge – Becoming an ever-flourishing Company

The goal of TOC is to bring companies to become ever flourishing – a company which continuously and significantly increases value for shareholders, customers and security to employees. Companies must find the silver bullets to achieve such objectives. Building, capitalizing and sustaining a Decisive Competitive Edge (DCE) is the key. But how do we find such silver bullets? How do we build a decisive competitive edge and how do we sell it? The Theory of Constraints provides the answers to these mind-bugling questions.

The TOC Dictionary provides the following definition:

Decisive Competitive Edge (DCE)

A significant sustainable market advantage over competitors.

Usage: A DCE exists only if an organization satisfies a significant market need to an extent that no significant competitor can. In many situations, competitors are unaware of the problems their industry or the conventional mode of operation creates for their customers. An examination of the problems the industry creates for its customer is the starting point for identifying a potential DCE. Price is never considered a DCE. Availability, inventory turns, or reliability are potential retailer‘s significant needs and can be turned into a DCE.

A DCE is similar to the traditional concept of competitive advantage but differs in the mechanisms used to identify the DCE. The DCE is identified through an analysis of customer problems created by the suppliers‘ industry.

Cox III, James F., Lynn H. Boyd, Timothy T. Sullivan, Richard A. Reid, and Brad Cartier, 2012, The Theory of Constraints International Certification Organization Dictionary, Second Edition, page 42.

Dr. Eliyahu M. Goldratt explains HOW to find a significant market need that the company can satisfy to an extent that no significant competitor can:


Building a “blue” market strategy

Click here to watch this video →


Marketing – Unrefusable Offers and Market Segmentation

Click here to watch this video →

Identifying and applying the proper solution can bring companies in few years into an ever flourishing state. Dr. Goldratt masterfully explains how and where the TOC solutions fit strategically and tactically to build a decisive competitive edge:


The Gestalt of TOC

Click here to watch this video →

You can find much more about the topic of “Decisive Competitive Edge” on TOC.tv:

Select Decisive Competitive Edge from the Topics Menu on TOC.tv (or click here) click here)


Strategies & Tactics for Selling a Decisive Competitive Edge

by Lisa Scheinkopf


Ellwood City Forge’s Quest to Become Ever Flourishing

by Daniel Hamilton
Posted in TOC Focus 8 | Leave a comment

The Roadmap for Creating a Decisive Competitive Edge – For Consumer Goods and Project Based Environments

GST CCPM

Solution for
Project Management

  1. Setting the stage for a solution
  2. Planning
  3. Executing
  4. Capitalizing on a Decisive Competitive Edge
  5. Reaching a Viable Vision

Click here for more details →

GST MTA

Solution for
Consumer Goods

  1. Setting the stage for a solution
  2. Keeping correct inventory levels
  3. Dealing with disruptions to flow
    that endanger availability
  4. Inventory turns selling
  5. Reaching a Viable Vision

Click here for more details →

Posted in TOC Focus 8 | Leave a comment

Significantly improve YOUR personal effectiveness – Goldratt Thinking Process Jonah Workshops in 2016



Find the inherent simplicity in your own environment and gain the know how to implement and take advantage of it

This groundbreaking workshop is the place to:

  • Learn the Thinking Processes (TP) first hand
  • Apply the TP directly to your environment
  • Emerge with clearly defined solutions
  • Overview the strategy and tactics tree
Dr. Goldratt explains the role and importance of the Thinking Processes as the means to find and implement the inherent simplicity

Watch the video →

Significantly improve YOUR personal effectiveness

This hands-on workshop offers individualized training. Due to the level and quality of personal instruction required, this workshop will be led by at least TWO Instructors all the time, that are TOC Certified and bring vast knowledge and years of experience in teaching as well as using the Goldratt Thinking Processes.

Limited to 10 participants. Throughout the entire process Instructors will be able to work with each participant on a one-to-one basis and individually guide participants through their learning and application of the Thinking Processes.

The Goldratt Thinking Processes allow participants to succeed in building on intuition to significantly improve personal effectiveness!

* Early Registration: 
20% discount by December 31st, 2015,

Reserve a seat for the 2016 Workshops →
Get more information about the 2016 Workshops →
Posted in TOC Focus 8 | Leave a comment

TOC Events in November and December 2015

Agilidad, Flexibilidad y Productividad – Seminario Internacional

Nov 12 – México, DF, México
For more information and registration →

The Theory of Constraint – Lean accelerator and growth generator

Nov 12-13 (English)Paris, France
For more information and registration →

Executive Decision Making Workshop

Nov 17-18 – Milford, CT, USA
For more information and registration →

Lean Project Management with Critical Chain Project Management

Nov 18-19 – Boulder, CO, USA
For more information and registration →

Agilidad, Flexibilidad y Productividad – Seminario Internacional

Nov 26 – Guayaquil, Ecuador
For more information and registration →

TOC Advanced course – Supply Chain & Retail management

Nov 26-27 – Bangalore, India
For more information and registration →

TOC Club – Distribution

Nov 27 – Bangalore, India
For more information and registration →

Streamlining Project Execution with Visual Project Management

Dec 2-4 – Boulder, CO, USA
For more information and registration →

Lean Project Management with Critical Chain Project Management

Dec 16-17 – Dallas TX, USA
For more information and registration →

TOC Basic course – Project Management

Dec 17-18 – Bangalore, India
For more information and registration →

TOC Club – Distribution

Dec 22 – Bangalore, India
For more information and registration →

TOC Club – Production

Dec 28 – Bangalore, India
For more information and registration →

Posted in TOC Focus 8 | Leave a comment

Companies resort to Theory of Constraints to stay ahead in the game by Priyanka Sangani


Five years ago, Dr Reddy’s Laboratories (DRL) was facing a difficult time in the US. It had a significant number of backorders and supplier ratings were at an all-time low. That’s when the company started implementing processes advocated by the theory of constraints (TOC) to fix its supply chain. Last year, it won a best supplier award in the US. Saumen Chakraborty, DRL’s chief financial officer, says, “When selling in the US, two things matter: your product quality rating and your supplier rating. Today, TOC has become a part of our management philosophy. It defines our manufacturing and R&D pipeline and helps us understand where we need to focus and improve.”

Continue reading →

Posted in Articles, TOC Focus 7 | Leave a comment

CCPM implementation – Dr. Reddys Laboratories by Mahesh Reddy


Mahesh Reddy presents a case study of CCPM implementation in Dr. Reddy’s Laboratories: 11 projects completed (83% increase), 80% projects on time (60% increase), 110 filings in 2010 (30% increase), 149 launches in 2010 (75% increase), 563 days cycle time for full development in 2010 (40% faster).

Watch this video →

Posted in Download, TOC Focus 7, Videos | Leave a comment