The theory of constraints and how it can help efficiency
Blog: Monday Project Management Blog
Constraints are restrictions or limiting factors, and every business has them. What’s important is how we adapt and engineer projects around removing constraints, rather than neglecting to deal with the bottlenecks and allowing them to negatively affect flow. The theory of constraints (TOC) is a management philosophy that suggests businesses should identify and address bottlenecks to improve efficiency. At its core, the theory is based on the idea that businesses should focus on their most important goal and then work to remove any obstacles that prevent them from achieving that goal.
This is done by identifying and eliminating bottlenecks, which are any factors that impede progress. As the author of the theory eloquently put it, “Since the strength of the chain is determined by the weakest link, then the first step to improve an organization must be to identify the weakest link.”
So what exactly is the theory of constraints, who came up with it, and how does it apply to project management? Let’s explore some of the details that make the theory of constraints such a popular project management method in the world of business.
What is the theory of constraints?
The theory of constraints is a management philosophy that was first proposed by Eliyahu M. Goldratt in his 1984 novel, “The Goal.” The basic premise of the theory is that every process has at least one constraint or bottleneck that limits its output. The goal of any organization should be to identify and then address these constraints to improve overall performance.
Practically speaking, businesses need to continually identify where bottlenecks are occurring and then take steps to correct them. This may involve making changes to the way work is performed, investing in new technology, or revising processes altogether.
However, if done correctly, addressing constraints can lead to significant improvements in efficiency and productivity. For this reason, the theory of constraints has become an essential tool for many businesses around the world. It even offers a useful toolkit for businesses to overcome constraints holding them back.
The five focusing steps of removing constraints
The method for identifying and eliminating constraints proposed in the theory is known as the Five Focusing Steps. Here’s an overview of the cyclical process of using these five steps.
- Identify the constraint: Start by identifying the current constraint. This can also be conceptualized as the “weakest link” or most limiting factor in your work process. What’s the biggest obstacle between you and your goal?
- Exploit the constraint: Make the most of your resources to make improvements to the constraining situation. What improvements will result in quickly increasing throughput?
- Subordinate the constraint: Analyze all other aspects of the work process to ensure they align with and support the requirements of the constraint. In other words, subordinate everything else in the process to the constraint.
- Elevate the constraint: If the constraint still isn’t eliminated, consider what else needs to be done to reduce and eliminate it. This is known as elevating the constraint.
- Repeat the process: To avoid falling into inertia and capitalize on continuous improvement, repeat this process with subsequent constraints.
The thinking processes
The thinking processes help figure out what needs to be changed, what it should be changed to, and what actions are required to implement the change.
- Current reality tree: This is a diagram that demonstrates the current state of the workflow and highlights what’s unsatisfactory.
- Evaporating cloud tree: This diagram helps map out potential changes that would improve the current state. These changes are referred to as injections.
- Future reality tree: A diagram of the future state after injections have been implemented. This tree demonstrates the effects the injection has on the whole system.
- Strategy and tactic tree: This diagram proposes an action plan for reaching the desired future state. The diagram replaces the formerly used prerequisite tree.
A brief history of the theory of constraints
Although the theory was introduced in 1984 in Goldratt’s “The Goal,” a similar idea was posited by a German author, Wolfgang Mewes, in two books: “Power-Oriented Management Theory” and “Bottleneck-Focused Strategy,” written in 1963 and 1971, respectively. It’s unclear whether Goldratt leveraged any inspiration from these works, but it was he who first used the term “theory of constraints” in his novel.
Realizing how well-received his books were in project management, Goldratt wrote a second book on the concept, specifically adapted for that field. The book, “Critical Chain,” was published in 1997.
Goldratt died in June 2011, and shortly afterward the Theory of Constraints Institute was founded to preserve his work and legacy.
The theory of constraints in project management
In the context of project management, the theory of constraints can be used to identify bottlenecks in the project execution process. By focusing on these areas and working to mitigate or eliminate the constraints, it’s possible to significantly improve project outcomes. For example, if a project is constantly being delayed due to a lack of resources, addressing the resource constraint could have a major impact on the overall success of the project.
Similarly, if a project is consistently behind schedule due to unrealistic timelines, focusing on the timeline constraint could also lead to significant improvements. In short, the theory of constraints provides a framework for identifying and addressing key project execution issues, which can lead to better overall project performance.
When should you implement the theory of constraints?
Businesses should first consider their current level of productivity and whether they’re satisfied with it. If there’s room for improvement, they should then assess which constraint is causing the greatest bottleneck and determine whether addressing that constraint would be feasible. In some cases, implementing the theory of constraints may not be possible or practical, but in other cases, it could provide a significant boost to productivity.
Examples of the theory of constraints and how it helps
One of the most famous examples of the theory of constraints is the Story of Goldratt, which was popularized in the best-selling book “The Goal.” In this story, a manufacturing plant is limited by its slowest assembly line. By identifying and addressing this constraint, the plant significantly increases its overall output.
Other examples of the theory of constraints can be found in many different industries, from agriculture to health care. In each case, the goal is to identify and remove the limiting factors to improve performance. While the theory of constraints has been criticized for its simplistic approach, it nonetheless provides a useful framework for thinking about how to improve systems.
The theory of constraints and monday.com
monday.com is a one-stop shop for project management. You can build on and customize it to your needs, and it also operates as a CRM for tracking leads and sales. It’s the ultimate collaborative medium and enables users to see how their teammates are progressing on tasks.
Our dashboard is filled with charts demonstrating productivity levels so you can easily visualize which aspects need to be worked on. Our advanced reporting allows you to track productivity and identify possible constraints that need eliminating.
Frequently asked questions
What is TOC in business?
The theory of constraints is a management philosophy that posits that every system is limited by one or more factors that constrain its performance.
The goal of the theory is to identify and then remove those constraints so the business can achieve its full potential. The logic behind this philosophy is that businesses are only as productive as their weakest link, and by focusing on improving the performance of the constrained resource, the business will see the biggest overall improvement.
When should a business apply TOC?
When deciding whether to implement the theory of constraints, businesses should first consider their current level of productivity and whether they’re happy with it. If there’s room for improvement, they should then assess which constraint is causing the greatest bottleneck and determine whether addressing that constraint would be feasible.
Understanding the theory of constraints
In his bestselling work of fiction, Eliyahu M. Goldratt describes how constraints and bottlenecks holding a business back should be dealt with to achieve greater productivity. He demonstrates how businesses are only as strong as their weakest link and how, by implementing five focused steps, we can eliminate constraints and strive toward continuous improvement. By using the advanced reporting features on monday.com, you’ll be able to get a feel for possible constraints holding you back. Our highly visual data can help you decide whether to implement the theory of constraints in your workflow.
The post The theory of constraints and how it can help efficiency appeared first on monday.com Blog.