Theory of Constraints Handbook - James Cox Iii [297]
In Ford’s (1926) Today and Tomorrow, he gives an indication of his CI approach when he says, “We do not make changes for the sake of making them, but we never fail to make a change once it is demonstrated that the new way is better than the old way” (1926, 53) and “our method is essentially the Edison method of trial and error” (1926, 64).
In Ohno’s (1988) Toyota Production System: Beyond Large-Scale Production he said, “All we are doing is looking at the timeline, from the moment the customer gives us an order to the point when we collect the cash. And we are reducing the timeline by reducing the non-value-adding wastes” (1988, ix).
The other important part of the solution at Ford and Toyota, was to achieve and sustain continuous improvement was standardization of work (but ensuring the new standard would always be challenged). Ohno is famously quoted as saying (Shimokawa et al., 2009, 9), “Where there is no standard, there can be no kaizen.” Without standard work, we cannot be sure what impact our changes will have on our process and company performance.
It is clear that Henry Ford and Taiichi Ohno both approached the problem of achieving continuous and (when required or possible) step-change improvement in the same way. They started with the belief that anything can be improved, communicated a clear vision of where CI will be most valuable to the organization, and created an environment to encourage continuous experiments to find better, simpler, faster ways of doing things with less waste. They then made sure that there are continuous audits to ensure alignment (no inherent conflicts) between organizational policies. This is in full alignment with the direction of the solution proposed by TOC today.
Importance (and Risks) of Measurements and Incentives
Measurements play three important roles in CI and auditing:
1. To help managers determine the status of the system (good/bad).
2. To help managers determine the likely cause of the system status.
3. To drive the right behavior (doing what should be done) and discourage or prevent the wrong behavior (doing what should not be done) for all the stakeholders.
TOC’s Buffer Management (BM) satisfies all three conditions as it provides a reliable mechanism to indicate the status of the system (the percent red and black within TOC’s time or stock buffer status indicate to what level the system is in control or not.). The level and causes of these buffer penetrations can be used to track the level and causes of downtime or unavailability on capacity constrained resources (CCRs) and level and causes of delays on the critical chain (longest chain of dependent events) to provide an indication of the likely causes of the system status.
With respect to the third role of measurements, Goldratt realized early on the important part that measurements played in the behavior of people, which drives their contribution toward organizational improvement, inertia, or decay. Goldratt’s insight (Goldratt, 1990b, 145) was captured in his now famous quote “Show me how you measure me and I’ll show you how I behave!” In BM, a “black” or “red” status serves as a visible signal that everyone needs to prioritize and, where possible, expedite such orders (to drive the desired behavior).
One aspect not frequently reported on is Goldratt’s insight that it appears to be more important to remove “bad” measurements that drive “bad” behaviors (such as local efficiency measurements that result in local optima and poor synchronization), than it is to replace these with “good” measurements.