Theory of Constraints Handbook - James Cox Iii [14]
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Reality is exceedingly simple and harmonious with itself.
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The standard ways to identify the needed actions, the standard ways to focus the improvements, were obviously not adequate. They usually started with a list of problems, of gaps between the existing situation and the desired situation. The gaps were quantified and, following the Pareto principle, items at the top of the list were taken as the targets for improvement.
This approach leads, at best, to just marginal improvements, since at the base of the approach is the erroneous assumption that the gaps are not interdependent. When the interdependencies are taken into account, it becomes apparent that the gaps are nothing but effects, undesirable effects (UDEs) of a much deeper cause. Trying to deal directly with the UDEs does not lead to the recognition of what actions should be taken. Actually, it leads to many actions that should not be taken. There was a crying need to provide a logical, detailed structure to identify the core problem, to zoom in on the ways to remove it, and to do so without creating new UDEs. From 1989 to 1992, the Thinking Processes of TOC were successfully developed and polished.
The Market Constraint
When TOC is implemented in operations, the improvements are substantial to the extent that the constraint moves into the market. Very early on, it was noticed that the improved performance of operations opened new opportunities to gain more sales. That situation was described in The Goal (Goldratt and Cox, 1984). But it took several years, and many successful implementations, until it dawned on me that the improvements in operations not only open new opportunities but actually provide the company with a decisive competitive edge. When the constraint of a company is in the market and at the same time the company has a decisive competitive edge, the obvious interpretation of focus is to concentrate on capitalizing on the existing competitive edge, rather than being distracted with ongoing refinement in operations. To provide the bridge from the focus on operations to the required focus on strategy, The Goal (1992) was extended.
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A decisive competitive edge is gained only when a company satisfies a significant market need to an extent that none of its significant competitors can.
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To gain the required focus, a clear verbalization of the resulting competitive edge was needed. That wasn’t a triviality. What obscured the picture was the fact that the same improvements in operations gave rise to not one but many vastly different competitive edges (depending on the company’s products and the nature of their clients). In It’s Not Luck (Goldratt, 1994), some examples of competitive edges were described, alongside the introduction of the Thinking Processes.
Capitalize and Sustain
Surprisingly, most companies that implemented TOC in operations did not move on to capitalize on the resulting competitive edge. In other words, they became totally unfocused, being satisfied with the results of improved operations and blind to the much bigger gains that were now readily available—the profit increase when much more sales are won and serviced with already exposed excess capacity. What was missing was a whole body of knowledge.
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Be careful of what you wish for. (You might get it. Too much, too soon.)
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Rarely does a company have a decisive competitive edge. No wonder that most sales people are not trained to conduct a sales meeting when they do have a decisive competitive edge. The nature of such sales meetings is different from conventional meetings. Rather than concentrating on the company’s products, the meeting should revolve around the client environment, exposing its significant need that currently isn’t satisfied by the vendors. Since there are many clients’ environments, deciphering the causes and effects that govern each of them, constructing the sale cycle in accordance, and finding