Steven Moreland- August 2010
It is a mistake to strive for accurate answers when the data
is not accurate, answers that pretend to be more accurate
than the uncertainty embedded in the problem are not better
answers. Eliyahu Goldratt, Critical Chain
To solve the incestuous problem of business management – the failure to complete projects on time and within budget – the Theory of Constraints (“TOC”) outlines a proven method of success. TOC attacks the status quo paradigm revealing what we fear most: Uncertainty. Though some prefer the French term “force-majure,” random chaos is more commonly referred to as Murphy’s Law. In his book Critical Chain, Professor Eliyahu Goldratt metaphorically compares project management to a chain and individual stations or departments to its links. My objective is to capsulize TOC in order to apply its functionality to any situation.
The genius of TOC boils down to discovering the ‘constraint’ (obstacle or bottleneck) along the chain of events (links) necessary for a project’s throughput (completion). This chain of evenets is called the ‘critical path.’ In order to protect a chain it’s necessary to ferret out its weakest link – the constraint. Most constraints are simply ‘waiting for something.’ Production is hampered because someone is waiting for: a missing tool, a number, a part, a decision from a superior, or a more effective method of performance. Constraints fall into three categories: the student syndrome, multi-tasking, and dependent delays.
In order to account for Murphy, it has become acceptable practice to sandbag (‘paddling’) or formally referred to as ‘safety’ when job estimates are created each link adds safety to account for Uncertainty. After all these ‘safety buffers’ few jobs ever complete within their estimates. People get fired, contracts are lost, investors lose money, and companies go bankrupt.
The answer to this seemingly unsolvable riddle lies in the constraints.
The student syndrome is pure procrastination until the last minute. Multitasking is ineffectiveness due to scattered attention between unprioritized tasks.
Goldratt’s solution begins with a paradigm shift: “If we continue to do what we have done, which is what everybody else is doing, and we will continue to get the same unsatisfactory results.
In short, doing more of the same old thing, but expecting a different result, is rightly defined as insanity. But how often is that exactly what we do for lack of a better option?
Einstein said that “the significant problems we face cannot be solved at the same level of thinking we were at when ‘we’ created them.” TOC utilizes a four-step method to solve the constraint: identify, exploit, subordinate and elevate. To identify a problem correctly it must be defined as “a conflict between two necessary conditions.” The trick is not to compromise (or optimize) but to “concentrate on exposing underlying assumptions.” Claude Bernard said it this way: “It is what we think we know already that often prevents us from learning” a better way.
In seeking out the common conflict in projects’ failure to perform we discover the local links competing with the global chain where the local objective is strict accounting of costs conflicting with the global objective of throughput or on-time completion. In most projects the pinching of pennies impedes the timeliness of throughput. In others, failure to control costs evolves into overruns even though the project completes. With the conflict between the two necessary conditions defined we then seek to expose underlying (false) assumptions, namely safety.
Why, after adding so much safety, do nearly all projects fail? Goldratt’s conclusion is that “how we measure people predict their behavior.” Industry uses two measurements: pessimistic hindsight performance reviews and negative reinforcement. Every good parent knows that constantly comparing children to their own, or others,’ past failures and then penalizing them harshly for their current mistakes never produces healthy results. Yet isn’t this our basic protocol in managing projects? And I suspect, it’s also the way we deal with life. Maybe even why we suffer defeat so often?
First we must change our perspective: the past does not equal the future and achievements should be rewarded. We accomplish this by altering our focus from past failures and towards future possibilities. Secondly, we deal with life. Maybe even why we suffer defeat so often?
First, we must change our perspective: the past does not equal the future and achievements should be rewarded. We accomplish this by altering our focus from past failures and towards future possibilities. Secondly, we structure incentives for positive results. Then, instead of expecting Uncertainty at every link, we transfer safety sandbagging from each local link and accumulate them into one large safety buffer. We place the buffer just before throughput’s deadline. By changing how each person is measured, instituting incentives to perform beyond the old accepted norms, the necessity to adjust for safety is no longer required.
Subordination, the next step, is about organization and communication along the critical path, once each link becomes aware of how their tasks affect the overall path. Once each link becomes aware of how their tasks affects the overall completion, their real0time collaboration other links ensures optimal capacity (production) : having each link ready to perform, when needed in a single-focused manner, instead of the old method of waiting for something. This changes the critical path from one of busy efficiency to optimized effectiveness.
Elevation, our final step, means adding supporting resources to the weakest link. This could take the form of additional manpower, machinery, or increasing capacity via expertise: know0how of where commonly overlooked assumptions hide. TOC’s results include lower net costs of production, better ROI, increased customer satisfaction and market share, and ultimately profits: the goal of business.
How often do we make decisions based upon potentially flawed assumptions, repeating acceptable but poor performance, and fearing penalties for these failures? The answer is similar to your effectiveness of trying to drive forward but starting in the rearview mirror while being threatened with your poor performance.
Applying the TOC method to everyone’s real constraint – the fear of Uncertainty – provides possibilities far beyond just better run business projects. The key to keep in mind is Goldrett’s beginning comment above. Hoping for better results, for better answers, won’t work! Too often, our assumptions in business and in life are based upon inaccurate data. Because of this, the great Socrates stressed, “The unexamined life is not worth living.”
KAIZEN-DO-KA 