Theory of Constraints Handbook - James Cox Iii [315]
In December 1999, Goldratt invited managers around the world to join him for a series of eight satellite broadcasts to share his insights on overcoming this challenge. In these sessions, Goldratt (1999) promised to share not only the essence of each of the TOC solutions, but also what he believes are the main obstacles standing in the way of a holistic implementation of these solutions.
Goldratt claimed that the obstacles have little, if any, relation to the type of industry to which an organization belongs, to its economic environment, or even to its size. Most, if not all obstacles have one thing in common: they are all human-related, psychological obstacles. Goldratt believed that identifying these obstacles and designing a process to overcome each of them successfully was the key to implementing TOC in a holistic way.
In the eight sessions, each session dealing with a different part of the organization and therefore a different TOC solution, Goldratt presented the answers to three questions. The questions were: What to Change, to What to Change, and How to Cause the Change. The sessions included the TOC way of managing Operations, Finance and Measurements, Product Development and Engineering, Distribution, Marketing, Sales and Achieving Buy-In, Managing People, and finally the TOC way for developing a constraint Business Strategy to synchronize the implementation of all the TOC applications.
For those organizations that participated in this global initiative, Goldratt shared his own insights and the experiences of organizations that attempted to implement TOC in a holistic way through a series of 14 letters titled “POOGI Forum Letters” (Goldratt, 1999b). In Letter 12, Goldratt directly addressed the challenge of “How to Implement TOC Holistically?” and referred again to the “X-Y Syndrome” (covered in Letter 8) which describes the dilemma of “X” (the department that used TOC to improve) when the constraint moves to another department (“Y”).
The X-Y Syndrome of Local TOC Implementations
Goldratt argued in Letter 8 that organizations faced a major dilemma in embarking on a holistic approach. In order to improve the performance of an organization continuously, the management of that organization must move the organization on a holistic approach, which requires them to start with a confined TOC application. At the same time, to improve the performance of an organization continuously, the management must not start another “short-lived” program, which requires them not to start with a confined TOC application.
Goldratt proposed that the way to break the conflict was to challenge the assumption that “the only way to start a holistic approach is to start with a local project.” However, where should we start?
In the section which is the most receptive?
In the section which is the most representative?
In the section which is the constraint?
Goldratt warned that none of the above answers are valid due to the X-Y Syndrome. He challenged managers to think about what happens to a part or link that is managed according to a holistic approach (X) while the rest of the organization (Y) is managed conventionally. (See Fig. 16-1.)
It is clear that even if X was the constraint initially, soon their improvements will be blocked by another upstream or downstream link (Y) since the significant improvement of “X” (e.g., Operations) will create major pressure on “Y” (e.g., Procurement, Engineering, Sales, or even Marketing). When Y fails to improve its performance, “X” will start feeling frustrated and will start fighting the entire system or chain. In most cases, this will be a losing battle.
FIGURE 16-1 The X-Y Syndrome—who will win?
Since reality has shown that although possible, it is unlikely that X’s improved performance from applying the TOC/holistic approach will inspire other upstream and downstream links to follow suit, the question is where or maybe how to start with the implementation of a holistic approach such as TOC?
Goldratt proposed that rather than start with a local implementation