Theory of Constraints Handbook - James Cox Iii [299]
Pink (2007) suggests that we move to incentives that are based on intrinsic motivators such as autonomy (e.g., opportunities to be independent such as Google’s 20 percent “do what you want” time rule), mastery (e.g., opportunities to improve and excel such as Toyota’s Kaizen events), and purpose (e.g., opportunities to be driven by what really matters to them and others in their organization). An example frequently used to prove the power of intrinsic motivators at the organizational level is how Encarta, with its teams of thousands of highly paid contributors and the backing of Microsoft, was beaten by Wikipedia, which depended on volunteers driven by a common purpose, an autonomy to contribute when and how they wished within certain guidelines and with the opportunity for mastery.
As one might expect, there are other problems with measurements and incentives. For example, when there are (many) conflicting measurements—something that frequently happens in environments that implement a balanced scorecard without aligning each measurement to a business strategy (strategy map)—people will tend to focus on those measurements they believe are most important in the eyes of management, neglecting the others (which might be more important), and making performance unpredictable. For example, if a production manager is responsible to achieve both high due date performance and their monthly cost recoveries, which they believe is their prime measurement, then it is likely that the manager will compromise on due date performance toward the end of the month to meet the targeted tons per hour for the month.
Ensuring the New Direction Addresses All Major UDEs
Overcoming the Problem of Low Expectations for Change
Previously, we identified one of the consequences of the vicious cycle in CI as stakeholders (especially top executives) having low expectations for the impact of change initiatives. To address this problem and ensure that all stakeholders have the same (high) expectations for the outcomes of the selection and implementation of any changes to better exploit their system constraint or to elevate it, Goldratt (2008b) recommends the adoption of the six success criteria listed in Table 15-4 together with the logic of why each is needed, and a recommendation based on extensive field-testing, on how these can be used. Such extensive field-testing (Barnard, 2009) has also shown that these criteria help prevent mistakes of omission and commission in the selection and implementation of changes and that these criteria should be shared with managers and employees at all levels especially during the analysis and “buyin” phases of change initiatives and for use during ongoing audits of these initiatives.
Overcoming “Not Seeing” the Inherent Improvement Potential
The famous quotation, “Necessity is the mother of invention,” can be traced to Plato’s Republic, book II, 369C, which was written in 360 BC. We all know that crises allow us to challenge and overcome prevailing assumptions and identify and unlock potential we never knew existed. However, what if you do not have a real crisis now? In such situations, the literature on managing change is quite consistent—good leaders should create a “crisis” by creating a large gap between the current level of performance and the goal. An example of this is a new CEO coming into an organization that is already doing well at 10 percent profit to sales and then (to inspire them to higher performance) gives the team the goal of doubling their profit to sales (to 20 percent) within three years.
In the case where there is no crisis yet, but where we can observe a stable or growing gap between the actual performance of an organization and its goal, we should see this as