Theory Of Constraints
The name itself has ‘Theory’ in it, why should I be interested if I need solution to a “Practical” problem?
- Dr. Eli Goldratt who coined the name ‘Theory of Constraint’ was a physicist. For a Physicist, the term ‘theory’ is very different from the word ‘theoretical’. Theory refers to a hypothesis which has yet to be proved wrong. You might have heard about ‘Theory of Gravitation’, do you go about saying.. ahh.. it’s just a theory and I’m not affected by it?
Umm .. so what is this TOC?
- Theory of Constraints (TOC) is a body of knowledge which was developed by an Israeli physicist, Dr. Eli Goldratt. He introduced his framework through his very popular book, The Goal, which was published in 1984. Time Magazine rates ‘The Goal’ as 1 of the top 25 business books to read of all times. Elsewhere, a certain Jeff Bezos claims that TOC had a great influence on the entire Amazon architecture framework.
There’s never a shortage of new books about how to be more effective in business. Most of them are forgettable, but here are 25 that changed the way we think about management
TIME Magazine
What does TOC help me do?
- Through this body of knowledge, Dr. Eli taught how companies can significantly increase how to achieve their goal units by learning how to stop wasting the capacity of the constraint unit.
So whats the big deal? I do this “Theory of constraints” everyday! Everyday I encounter problems (just that you have a fancy name for it – Constraint), I solve it and then go on to the next problem. Err.. whats the big deal?
- What you have just explained is exactly the OPPOSITE of TOC. Most of us are busy solving the symptoms rather than root cause of the problems. In TOC, we don’t start working on the problem before we are convinced that we are indeed working on the root cause of the issue and not of the symptom.
How do you go about finding this ‘root cause’ ?
- We start by understanding all the symptoms. Then use the process of ‘Cause and Effect’ to understand the motivations and business policies and realities which are leading to many of the problems (symptoms) we are experiencing.
What do you do when you find the root cause?
- By the time we have understood the root cause, we have understood ‘What to Change’. You see we haven’t wasted capacity by trying to change everything. We now know where we should focus our energy so that we can solve many problems that we are experiencing.
So how do you solve the problem once you find this root cause? I already know my root cause and it’s not in my control. What will you do once you have understood my root cause?
- The fact that you believe that root cause is not in your control, means that you may have not completely understood your reality or the cause and effect. Statistically, a very significant part of the ability to resolve our problems lies within our span of influence (if not in the span of control). Before you jump to ‘How to cause the change’, we validate if the direction of our solution is correct.
How do you validate if your solution is better?
- Before deciding on any solution, we get agreement with all related parties that we are not solving the problem for one department only to make the problem of another department. We also confirm that we are not solving a problem of today only to make a problem of tomorrow. If we can get agreement on both the criteria, we can go to the ‘How to cause the change’
Hmm .. basically Constraints are the only thing I need to worry about, right? Whats so tough about all this?
- It is true that in TOC we aim to exploit the constraint. But a very important feature of exploiting constraint is understanding how the non-constraints can end up wasting the capacity of the constraint resource.
- In our regular business practices, the concept of efficiency and productivity are so deeply ingrained in our belief that anyone asking us to deliver less productivity on any part of the value chain would lead to suspect the IQ or even the motivation of the individual. However, if we devote some time to it, we will realise that in any given system (set of interdependent entities) the number of non-constraints are much more than the number of constraint. By trying to ensure the highest efficiency or productivity of the ‘non constraint’ , we can actually endanger the system!
All this sounds interesting, but there are so many consultants. Why you ?
- Our leadership has worked in more than 20 implementations across the world and helped them deliver breakthrough results.
- First, because the diagnosis is free. That means that you start paying once you agree with the root cause of the issues that you face. It also means that you may decide to do it yourself after learning of the problem.
- Second, unlike consultants who come and recommend. We will help you deliver results by working with your team and your system.
- Third, because we put our skin in the game. The fees will be structured in a way that significant portion of it will be linked to you actually achieving the goal units