Theory of Constraints Handbook - James Cox Iii [12]
SECTION I
What Is TOC?
* * *
CHAPTER 1
Introduction to TOC—My Perspective
* * *
Here Dr. Goldratt, developer of TOC gives his perspective on what TOC is; its goals and objectives, and the state of its progress in bringing about improvement. Dr. Goldratt discusses the evolution of TOC: how the identification of major system problems led to the development of solutions and significant system improvement only to surface the next system problem. . . . Thus the evolution of TOC followed the natural scientific approach to system improvement. As the developer of Theory of Constraints, he has brought the mind of a scientist to the problems and needs of business, private sector organizations, and individuals. His scientific approach has led to the breaking of several business paradigms and the development of new simplified approaches to managing systems. In the section, his chapter leads forward to the remainder of the book where the depth and scope of the TOC concepts are seen in action.
CHAPTER 1
Introduction to TOC—My Perspective
Eliyahu M. Goldratt
* * *
There is a famous story about a gentile who approached the two great Rabbis of the time and asked each, “Can you teach me all of Judaism in the time I can stand on one leg?”
The first Rabbi chased him out of the house, however, the second Rabbi answered: “Don’t do unto others what you don’t want done to you. That is all of Judaism, the rest is just derivatives. Go and learn.”
Can we do the same; can we condense all of TOC into one sentence? I think that it is possible to condense it to a single word—focus.
* * *
Focus
There are many different definitions to the word focus, but a good starting point is a simple definition such as “Focus: doing what should be done.”
* * *
Focusing on everything is synonymous with not focusing on anything.
* * *
In almost any system, there are plenty of actions that will contribute to the performance of the system, so what is the difficulty in focusing? True, we can’t take all the beneficial actions because we don’t have enough time or enough money or enough resources, but the more we do, the better it is. This naïve view was shattered by Pareto1 with his 80-20 rule. What Pareto proved is that 20 percent of the elements contribute 80 percent of the impact. Therefore, when we can’t do it all, it is of the utmost importance to properly select what to do; it is of the utmost importance what we choose to focus on.
Copyright © 2010 by Eliyahu M. Goldratt.
However, as Pareto himself pointed out, the 80-20 rule is correct only when there are no interdependencies between the elements of the system. The more interdependencies (and the bigger the variability), the more extreme the situation becomes. In organizations, there are numerous interdependencies and relatively high variability; therefore, the number of elements that dictate the performance of the system—the number of constraints—is extremely small. Using Pareto’s vocabulary, one might say that in organizations 0.1 percent of the elements dictate 99.9 percent of the result. This realization gives new meaning to the word focus.
Constraints and Non-Constraints
There isn’t a more grave mistake than to equate non-constraint with non-important. On the contrary, due to the dependencies, ignoring a non-constraint can impact the constraint to the extent that the performance of the entire system severely deteriorates. What is important to notice is that the prevailing notion that “more is better” is correct only for the constraints, but it is not correct for the vast majority of the system elements—the non-constraints. For the non-constraints, “more is better” is correct only up to a threshold, but above this threshold, more is worse. This threshold is dictated by the interdependencies with the constraints and therefore cannot be determined by examining the non-constraint in isolation. For the non-constraints, local optimum is not equal to the global optima; more on the non-constraints does not necessarily translate to better performance