The five focusing steps of TOC capture holistic management in the most simple and elegant way:
- Identify the constraint
- Exploit the constraint
- Subordinate to the constraint
- Elevate the constraint
- Go back to Step 1
The challenge of adopting TOC is in implementation of Step 3. All of the struggles of TOC center on the difficulty of creating true subordination. This is the “Ugly Problem“.
It is natural for individuals to seek their self interest. To try and make things better for themselves. The hierarchy in an organization encourages a certain level of local optimization. Each silo protects its performance. Each person wants to appear successful. Wants to succeed at their measurements.
“Tell me how you measure me, and I will tell you how I will behave“. If everyone wants to succeed at their measurements, why cannot we set up measurements that would allow each part to act in a way to make the whole organization successful? This would solve the problem. We could leverage the self interest of human behavior to achieve a larger interest of the organization. It would be beautiful….
Unfortunately my experience is to the contrary. I have some to believe that “Every measurement is a buffer and every buffer is a measurement.” Measurements are impossible to make perfect. This is the problem. There is variability and dependencies in the system. To protect their performance against a measurement, every person or department will want to have a buffer to protect them. If you measure people on staying busy they create piles of work, if you measure them on efficiency they do the minimum, if you measure people on sales they make infeasible commitments. Sergei Bubka a great pole vaulter broke his world record 35 times. He could have broken it once but he was incentivized with a reward every time the world record was broken. He created a local buffer to optimize his measurement. Creating and protecting these local buffers when there are dependencies is a recipe to make flow turbulent. Priorities get de-synchronized, people are working at cross purposes. Attitudes get sour. Work proceeds in fits and starts. Once an organization is in turbulent flow – it loses Throughput, Lead times extend and Costs go up. The system is not operating at peak performance any more.
The reality is that in order to “optimize” the system the sub-systems need to be sub-optimized. This is the challenge. To implement TOC successfully we need a cultural change. Players have to rise above their self interest to fight for the team. This requires “sacrifice”. A company without a strongly differentiated offering that delivers true value to its customers will always struggle to create this culture. The ones which have such a culture will be”ever flourishing”.
TOC has at least two facets – the a) mechanics of flow and b) the thinking tools to create unity of purpose and focus. The former are the prescriptions for the different environments – production, supply chain, projects, retail, MRO etc. The latter are the key to subordination. The belief system that Eli brought to bear to achieve Inherent Simplicity in thinking deeply about any situation:
A. Every situation is simple
B. People are good
C. Every conflict has a Win-Win solution
D. Every situation can be improved – Never say I know
These are the beliefs that guide leaders in creating simple solutions. In focusing on delivering value in the true sense of the word. With a focus on Inherent Simplicity and Value an organization can create unity of purpose. Without these the best that can be achieved is locally improved flow within the confines of the cost world.
There is a temptation to adopt a “secular” approach. Focus on the mechanics of flow not the content/value being delivered. Can we get into the minds of the leaders in an organization? Should TOC consulting be focused on the problem of saving money by improving the flow? Why should we focus on holistic implementations tied to delivering value? After all beliefs, values, culture these are soft issues. Policies, metrics and Rules these are concrete things we can implement. I think this is a mistake. As Mr Sadashiv Pandit (Chairman of Fleetguard) recently reminded me – only a holistic implementation will be successful. Everything else will not last. The forces of inertia will keep bringing the “ugly problem” to the fore. Implementation will become a Sisyphean task.
On the occasion of Eli’s death anniversary I am reminded of the evolution in his thinking. From software to Wa (Harmony). From physics to belief. From the red curve to accepting the green curve. His unflinching acceptance of what reality was telling him led to this evolution. I can only re-iterate my thoughts from the day he passed away
“I will always cherish the opportunities I got to listen and learn from Eli. It sometimes felt that every meeting with him planted seeds of ideas that continued to grow and influence my thinking for a long time. I am fortunate to have interacted with him in this way. The focus and determination he brought to an otherwise impossible ambition to change this world was deeply inspiring. To aim so high and then pursue the goal with such practical and deliberate steps is humbling to watch. It cannot help but leave one committed to continue in the footprints he has left us.”
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