Theory of Constraints Handbook - James Cox Iii [314]
Historical Perspective to Holistic TOC Implementations
Most people are introduced to TOC through reading The Goal (Goldratt, 1984). A common question by readers after reading it is, “How can we replicate in our organization Alex Rogo’s achievements described in The Goal?”
Since The Goal was first published in 1984, the application and implementation of TOC have resulted in thousands of success stories from almost every imaginable industry and type of organization. The facts related to most TOC implementations are very impressive.
Almost anyone who tries implementing TOC achieves results.
Results are normally very impressive, frequently above what was assumed to be possible.
Results are normally achieved within a very short period.
Most of the time, almost no real additional costs or investments are needed.
Copyright © 2010 by Dr. Alan Barnard and Raimond E. Immelman.
Considering these assertions, considering the pressures most organizations are under to do more in less time with the same or less resources, and considering that many large organizations today already have one or more success stories of TOC within their own organization or at least within their industry, one would expect that more organizations would be attempting to implement TOC and especially attempt to implement TOC in a holistic way.
Unfortunately, most of the past successes are from implementing TOC in only one or a few parts of the organization. Such “local” implementations always carry with them significant risks and lost opportunities (as shown by a few cases of TOC success stories that did not stand the test of time1), which include:
1. Implementing TOC in an area (non-constraint) where the improved level of performance is already at a “good enough” level and therefore an improvement in this area, will not translate into more goal units for the organization.
2. Improving a constraint to the level where the constraint moves to another link in the chain, and then being forced to cut “excess” capacity in the TOC link most likely killing any further continuous improvement initiatives.
3. Not capitalizing on improved performance of an area by turning it into a competitive advantage that can get customers to pay more or buy more (just a 1% increase in sales volume or average selling price from such a competitive advantage can result in a 10% or 20% increase in net profit)
4. Not reapplying TOC’s Five Focusing Steps (5FS) when the constraint moves or not elevating non-constraints to keep the constraint in the same place.
Goldratt himself, as far back as the late 1990s, started sharing his concerns about the fact that in his view, most TOC implementations are not holistic and reminded TOC practitioners and consultants that the real goal was not simply to make more money or achieve more goal units, but as per the subtitle of The Goal, the real goal was to put organizations on “a process of ongoing improvement” (POOGI) and ultimately turn them into “ever-flourishing organizations (the desired outcome of a Holistic TOC Implementation).”
However, how do you put a whole organization (not just Operations, Distribution, Engineering, or Sales) on a POOGI and do1 it in a way where the implementation of all the win:win:win changes is synchronized to achieve both ongoing exponential performance growth, value, and improved stability/security for all stakeholders?2
As it turns out, answering this broad question was a bigger challenge than anyone had ever imagined. No wonder that in order to develop the first answer to it, it took Goldratt, with the assistance of hundreds of dedicated TOC experts and practitioners, an additional 15 years of work from the first publication of The Goal.
The Goldratt