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to put such non-negotiable requirements such as adherence to the law, compliance with regulations, or environmental responsibility inevitably comes up. None of these factors, and others comparable to them, directly affect profitability, so they clearly don’t fit as critical success factors. However, they usually do serve to define the behaviors associated with fulfilling them. In other words, their proper place is as necessary conditions for the generation of Throughput, the reduction of Inventory, or the control of Operating Expense. This positions them at least three layers down in any IO Map, and probably even lower.

FIGURE 19-8 OODA loop and the Five Focusing Steps.

How far down should the IO Map be “drilled?” For constructing a subsequent Current Reality Tree (CRT), it’s not necessary to go much below the CSF and perhaps one or two layers of necessary conditions. However, for resolution of conflicts that might develop in using the LTP for either strategy development or for complex problem solving, it might be advisable to penetrate down five or six layers.

When the IO Map is completed, it provides two crucial ingredients for the successful application of the rest of the LTP. First, it clearly delineates the discrete activities and outcomes required to ensure achievement of the system goal (without regard to what is actually happening at the moment). Second, it provides the basis for consensus among everyone within the system—executives, managers, and specialized employees alike—on what they should be doing to support one another in a coordinated way. This might be called a “unified vision” of where the company is going and what’s required to get there.

Constraint Management Model: A Synthesis of TOC and the OODA Loop

The 5FS, the heart and soul of constraint theory, constitute the guiding framework for real system improvement. The OODA loop represents an articulated model for a true cybernetic system—one that is not only capable of self-improvement, but self-determination of direction as well.8 There is an implicit relationship between the two (see Fig. 19-8).

The 5FS are inherently a subset of the OODA loop. Identification of system constraints requires observation and orientation (the first two steps in the OODA loop). Exploitation, subordination, and elevation are all elements of the decision step in the OODA loop. The actions to follow the prescriptions of the 5FS are the same as the final step of the OODA loop. Both employ a feedback process to begin the cycle again. What makes the OODA loop more generic than the 5FS is its applicability to situations in system operations that don’t involve identifying and breaking constraints or dedicated system improvement effort.

Boyd originally conceived the OODA loop to help manage tactical operations. The O-O-D-A (and repeat) cycle is inherent in activities as narrowly focused as driving a car safely on a winding road, or as broad as steering the progress of a corporation into its future. However, it’s this last, broader perspective with which we’re concerned when we talk about strategy.

If we accept the idea that developing and deploying strategy is an expression of the OODA loop, the question that naturally follows is, “How do we go about doing this?” This is where the LTP offers an ideal solution. The combination of the OODA loop and the LTP produces the Constraint Management Model (CMM) for strategy development and deployment (Dettmer, 2003). It’s so named because the LTP was derived from the effort to apply TOC to whole systems, and in using the LTP to develop and deploy strategy the management of constraints is a natural byproduct. In other words, you can’t effectively execute whatever strategy you might develop without identifying and breaking your existing system constraints. Figure 19-9 illustrates the CMM.

The CMM is, itself, a seven-step cyclical process.

Step 1. Define the paradigm. The first step in any strategy development process should be to define the system, its goal and CSFs, and the characteristics of the environment in which it operates.