Contributed on May 7, 2015

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An Introduction to the Theory of Constraints by Will Evans

Description

This talk is an introduction to Eliyahu Goldratt’s Theory of Constraints, and how it can be applied inside large organizations to remove constraints and increase the flow of value through a system.

The theory of constraints (TOC) is a management paradigm that views any manageable system as being limited in achieving more of its goals by a very small number of constraints. There is always at least one constraint, and TOC uses a focusing process to identify the constraint and restructure the rest of the organization around it.

At PraxisFlow, we use this introductory talk to cover with broad strokes Eli Goldratt’s TOC before we move into a workshop setting and conducting a Current Reality Tree session to uncover undesirable effects that prevent the organization from achieving their strateic intent / organizational goal.

Transcript

WILL EVANS PRAXISFLOW @SEMANTICWILL
“If we dive deep enough we’ll
find that there are very few
elements at the base, the root
causes, which through cause-
and-effect connections, are
governing the whole system.
The result of systematically
applying the question “Why?” is
not enormous complexity, but
rather wonderful simplicity”
– Eliyahu Goldratt
“When reason and
instinct are
reconciled, there
will be no higher
appeal.”
– Jean Philip Rameau
WILL EVANS PRAXISFLOW @SEMANTICWILL
WHAT IS TOC?
The Theory of Constraints (TOC)
is a management concept that
views any manageable /
organization as being limited in
achieving its goals by a very small
number of constraints on the system.
WILL EVANS PRAXISFLOW @SEMANTICWILL
LOGIC OF TOC THINKING
The Theory of Constraints (TOC)
applies the cause-and-effect thinking
processes to understand and improve
all systems, but particularly, how
teams work within organizations to
achieve flow.
WILL EVANS PRAXISFLOW @SEMANTICWILL
WILL EVANS PRAXISFLOW @SEMANTICWILL
Symptoms, those you
believe you recognize,
seem to you irrational
because you take them
in an isolated manner,
and you want to
interpret them directly.
– Jacques Lacan
WHAT IS A CONSTRAINT?
A constraint is, “anything that limits a system
from achieving higher performance versus its
goal.”
(Goldratt, 1988, p. 453).
A constraint is could also be any thing, object,
person, process, or structure in an organization
that prevents the flow of value to a customer.
WILL EVANS PRAXISFLOW @SEMANTICWILL
WHAT IS VALUE?
When we speak about value, what we really
mean is products or services that solve a
problem for a customer or end-user for
which they are willing to exchange some other
value, like money.
It could just as well be time or energy, or
really any form of currency.
WILL EVANS PRAXISFLOW @SEMANTICWILL
VALUE STREAM
WILL EVANS PRAXISFLOW @SEMANTICWILL
VALUE STREAM?
WILL EVANS PRAXISFLOW @SEMANTICWILLWILL EVANS PRAXISFLOW @SEMANTICWILL
IDENTIFY THE CONSTRAINT
WILL EVANS PRAXISFLOW @SEMANTICWILL
constraint
BALANCED CAPACITY PLANNING
WILL EVANS PRAXISFLOW @SEMANTICWILL
WHY BALANCED CAPACITY FAILS?
WILL EVANS PRAXISFLOW @SEMANTICWILL
PRIMARILY FRICTION
PRIMARILY FRICTION
WILL EVANS PRAXISFLOW @SEMANTICWILL
new constraint
VALUE & THROUGHPUT
WILL EVANS PRAXISFLOW @SEMANTICWILL
ON FLOW
ON FLOW
ON CHANGE
HOW DO WE IMPROVE?
We should realize that to improve means to
change! To improve means we must:
1. Provide products and services that solve customer
problems
2. Release products and services consistent with demand
3. Reduce variability in our processes
4. Have measurements that indicate success relative to
achieving our goal
5. Reward people for their contribution to change
WILL EVANS PRAXISFLOW @SEMANTICWILL
TOC’S THREE QUESTIONS
For an organization to have a process of on-going
improvement, certain basic questions need to be
answered faster and more effectively.
These are:
1. What should we change?
2. What should we change to?
3. How do we implement the change?
WILL EVANS PRAXISFLOW @SEMANTICWILL
APPLYING TOC TO
ORGANIZATIONS
“IN the layman’s eyes the
symptom shows the
nature of the disease, and
cure means removal of
symptoms. The physician,
however, finds it
important to distinguish
the symptoms from the
disease and recognizes
that doing away with the
symptoms is not
necessarily curing the
disease.”
– Sigmund Freud
WILL EVANS PRAXISFLOW @SEMANTICWILL
WHAT TO CHANGE?
From a list of observable symptoms (UDEs), cause-
and-effect is used to identify the underlying common
cause, or root cause(s), for all the symptoms.
In organizations, however the root cause(s) are
inevitably unresolved conflicts that keeps the
organization trapped and/or distracted in a constant
tug-of-war.
CURRENT REALITY TREE
potential root cause
WHAT TO CHANGE TO?
By challenging the logical assumptions behind the
conflicts, counter-measures to the root cause(s) can
be identified.This is only the starting point for the
development of a complete solution – as strategic
intent – for resolving the root cause(s), as well as all
the initial symptoms.
This often involves changes to the policies,
measurements, and organizational structures
identified in What to Change? As well as the
organization’s strategic intent.
HOW TO CAUSE THE CHANGE?
Taking into consideration the unique culture which
exists in every organization, a plan is developed to
transition an organization from where it is today to
realizing the strategic intent which is aligned to
eleviate the key constraints on the system which are
preventing the organization from achieving flow.
WILL EVANS PRAXISFLOW @SEMANTICWILL
FIVE FOCUSING STEPS OF TOC
MAXIMIZING VALUE STREAM FLOW
Just as the strength of a chain is dictated by its weakest link,
the performance of any value stream is dictated by its
constraint.The steps to maximize the performance of the
value stream are:
1. Identify the constraint
2. Decide how to exploit the constraint
3.  Subordinate everything else to the above decisions
To improve the performance of that same value chain,
continue:
4. Elevate the performance of the constraint
5. If in any of the above steps the constraint has
shifted, go back to Step 1.
WILL EVANS PRAXISFLOW @SEMANTICWILL
Strategic Tactical
Select
Exploit
Subordinate
Elevate
Evaluate
Constraint
Loop
Non-Constraint
Loop
MANAGING CONSTRAINTS
https://www.youtube.com/watch?v=mWh0cSsNmGY
Theory of Constraints 3 Bottle Oiled Wheels Demonstration
KAIZEN
CONTINUOUS IMPROVEMENTS
•  Kaizen (continuous improvement) is strongly
connected to the theory of constraints.
•  To improve flow means exploiting and
elevating constraints – not just inside the
processes, but between the silos.
•  Kaizen is focused on small, incremental
experiments that attempt to identify the
constraints in a system, and remove them.
WILL EVANS PRAXISFLOW @SEMANTICWILL
KEYS TO SUCCESS
Focus on the constraint
Use the right measures
Understand the dependencies in the system
•  Re-examine policies, organizational
structures, and operating procedures that
impact flow
•  Involve the people closest to the work
•  Consider the wider context
WILL EVANS PRAXISFLOW @SEMANTICWILL
WILL EVANS PRAXISFLOW @SEMANTICWILL
OBSTACLES TO FLOW
•  Silo thinking (vertical vs horizonal thinking)
•  Leadership is incented through performance evaluations
and promotions to form and protect silos
•  No coherent strategic intent
•  Focusing on processes that are not the constraint on
the system
•  Leadership maximizes organizational resources for
local efficiencies, not system throughput.
WILL EVANS PRAXISFLOW @SEMANTICWILL
ADDITIONAL READING
WILL EVANS PRAXISFLOW @SEMANTICWILL
Thanks.
Will Evans
will.evans@praxisflow.com
@semanticwill