Theory of Constraints Handbook - James Cox Iii [332]
One way to ensure that good ideas are turned into results is to capture the outcome of a TOC analysis workshop in the powerful S&T format, described in Chapter 15, and then to go one step further by using the S&T tree to develop the implementation plan and manage and monitor execution. Figure 16-14 shows one of the S&Ts created in Harmony (www. goldrattresearchlabs.com) by the InWEnt/TOC and Waste Management expert team for a Solid Waste Management project.
Holistic TOC Implementation in the Private Sector
Where the public sector is typified by bureaucracy, the private sector is typified by competition and immediacy. Companies prosper from their ability to innovate and renew. As soon as a for-profit organization achieves significant levels of profitability, competition will enter the same market sector. All for-profit strategies contain two simple requirements:
1. Defend what you have for as long as possible. Traditionally, this is achieved through intellectual property rights, embedded technology, skills that are difficult to replicate, and price manipulation.
2. Change and improve more rapidly than competitors. Again, this is achieved through successful technology, R&D, mergers and acquisitions, and product or service enhancements.
Before the advent of TOC, the ability to manage change itself as an explicit and discrete strategy had rarely been considered to be the key to rapid and sustained business growth.
It is frequently easier to focus on the first option highlighted above because most of the variables are known, costs can be calculated, and outcomes are fairly predictable. The second option is more difficult to execute and inherently more risky. However, only the second option ensures long-term prosperity. Therefore, the rate of improvement is the crucial variable in long-term success.
We advocate a new frame of mind: one where the process of change in itself becomes the central and accepted function of management. This is not about incremental change, but about large, system-level step change. Top managers who understand this have the greatest potential of success. This type of change is not easy to do because it involves significant work and risk, but has the potential to deliver impressive results as described in the case of First Solar Inc.
FIGURE 16-14 Example of a public sector SWM S&T created in harmony.
The Birth of First Solar Inc.
First Solar’s origins can be traced back to the oil crisis in the 1970s. At that time, a well-known American entrepreneur, the late Harold McMaster, realized the need for low-cost renewable energy to mitigate the risk of fossil fuel supplies. With his experience and financial success in glass production and related manufacturing equipment, Harold rounded up 57 investors to fund Glasstech Solar in 1984. He wanted the investors to help fund his vision of producing solar panels so efficient that 2000 square miles of solar panels located in the Arizona desert would satisfy the entire United States’ need for heat and light.
In 1987, with the sale of Glasstech holding company, Harold kept ownership of the solar business. With 47 of the original investors and $11.5 million, he continued to pursue his vision. Based in Toledo, Ohio, the company focused on a unique photovoltaic semiconductor process—that of depositing thin-film semiconductor on a glass substrate. The initial focus was on amorphous silicon as a semiconductor but, by 1990, after burning through $12 million, the company was running out of money.
Under pressure from Jim Nolan, Vice President of Operations, Harold decided to change course. Glasstech Solar became Solar Cells Inc. (SCI) and Harold offered to pay back any of the investors who wanted out. He raised another $12 million and started again with a relatively unknown and risky photovoltaic semiconductor material—cadmium telluride (CdTe). Cadmium telluride had an ideal band gap, a