Theory of Constraints Handbook - James Cox Iii [282]
Mr. Herman and Ms. Smith are currently coauthoring a revision of The Measurement Nightmare, due to be released in the fall of 2009.
CHAPTER 15
Continuous Improvement and Auditing
Dr. Alan Barnard
Introduction
The Goal—Achieving Continuous or Ongoing Improvement
Fundamental to the success and viability of any organization is a realization (by the management team) that improvement is not a once-off event and that continuous or ongoing improvement requires continuous change. Unfortunately, not all changes result in improvement and continuous changes can jeopardize stability. Ensuring that every significant change results in an improvement (in both performance and stability) for the organization as a whole is one of the most significant challenges faced by the management of any organization. It requires a reliable focusing mechanism to differentiate between all the many parts and processes that can be improved from those few that must be improved (to achieve more organization goal units now and in the future).
Dr. Eli Goldratt (1986) became one of the continuous improvement pioneers in the modern era with his book, The Goal. Its subtitle hints that the real goal for organizations is not just to make more money now and into the future, but simply to ensure the organization is on a “Process of Ongoing Improvement,” or POOGI, to achieve sustainable growth and stability. Achieving POOGI in any organization not only requires a reliable focusing mechanism (to identify where and what to change and when and what not to change), but also a holistic decision-support mechanism (to judge the system-wide or global impact of changes). Then, a fast and reliable feedback mechanism is needed for auditing progress/compliance or for identifying other important system performance gaps or variations. Even more importantly, it requires a different mindset and thinking about improvement at all levels in the organization to systematically identify and challenge the policies, measurements, behaviors, and underlying assumptions that limit the current organizational performance.
Copyright © 2010 by Dr. Alan Barnard.
In the introduction to The Goal (1986), Goldratt describes such a process:
Finally, and most importantly, I wanted to show that we can all be outstanding scientists. The secret of being a good scientist, I believe, lies not in our brain power. We have enough. We simply need to look at reality and think logically and precisely about what we see. The key ingredient is to have the courage to face inconsistencies between what we see and deduce and the way things are done. This challenging of basic assumptions is essential to breakthroughs. Almost everyone who has worked in a plant is at least uneasy about the use of cost accounting efficiencies to control our actions. Yet few have challenged this sacred cow directly. Progress on understanding requires that we challenge basic assumptions about how the world is and why it is that way. If we can better understand the world and the principles that govern it, I suspect all our lives will be better.1
One of the major “inconsistencies” relating to the topic of continuous improvement and auditing is why, especially considering the advances and discoveries over the past 100 years in continuous improvement and auditing of organizations and the intense competitive pressures, so many of the changes made in organizations are not sustainable. And why do most changes “fail”—either not resulting in any measurable improvement in organizational goal units or even causing decay in performance to the extent that organizations themselves frequently fail.
Purpose and Organization of This Chapter
This chapter aims to provide a framework for designing a continuous improvement and auditing process within organizations from a Theory of Constraints (TOC) perspective and to share some of the important new TOC developments in this field since The Goal was first published in 1984. The chapter