Theory of Constraints Handbook - James Cox Iii [608]
The S&T tree for the VV in health care shows a hierarchical logical tree to achieve the goal. It starts with the firm agreeing on a goal. An example of a goal in a for-profit organization is to improve shareholder value. However, shareholder value can only be achieved if S1 the company is making profits over time. The profits are possible only if S2 the company is providing high value at a reasonable price to its customers. In order to develop high value services, S3 the company must develop delivery systems that provide this value and delivery systems that require highly capable people to make it happen. The highly capable people must be hired, trained, and motivated by its leadership to make it possible. Goldratt calls it strategy and tactics. The lower level specific objectives or tactics to achieve higher-level goals is the strategy.
As seen in Fig. 31-11, all of the steps S1/T1 + S2/T2 + S3/T3 are necessary and sufficient—to achieve the strategy at the above level. The tree includes the strategy and tactics with the logical linkages for the parallel assumptions, necessity assumptions, and sufficiency assumptions.
Parallel Assumptions
Parallel assumptions show why tactics are necessary and how they lead to a strategy being met. At each step, we claim that the specific action plan or tactic will achieve the strategic objectives. This claim is subject to the following challenges:
1. There is no need for an action to achieve the strategy.
2. It is not possible to take the action.
3. There is another, better alternative.
4. There is a need for additional action.
FIGURE 31-11 S&T with assumptions relationships.
How to Find Parallel Assumptions
A parallel assumption is constructed to explain the following:
1. What is currently missing that is preventing us from attaining the desired strategy?
2. Why nothing else besides what is written in tactics can achieve the strategy.
3. Disqualification of the selection of less suitable alternatives.
4. In case the tactic is challenged as a flying pig,20 the lower level details substantiate the claim.
It is important to use language as a tool to verbalize these assumptions. For example: In order to achieve the strategy, I must take the action in the tactic, because . . . . The “because” response of the statement is the parallel assumption.
Necessary Assumptions
A step (for example, S1, S2, or S3) is necessary to achieve the corresponding next higher level (for example, from Level 1 to Level 2). It is important to have an explicit explanation (the necessary assumptions) of why a given step (S1, S2 or S3 in Level 2, for example) is necessary to achieve the higher next step (Tactic x in Level 1). There could be several necessary assumptions. It could be an answer to objections raised that this step is not necessary to achieve the next level results.
Here again the assumption should be verbalized. It should be stated as follows: In order that this step is achieved, we must do another step at the next higher level because . . . Again, the “because” response is the necessary assumption.
Sufficiency Assumptions
When we claim that a group of steps (S1, S2, and S3) is sufficient to achieve the next corresponding higher-level step (S X), we must explicitly explain (sufficiency assumptions) why all the corresponding steps of the lower-level group are sufficient to attain this step. We write only the necessary conditions that are sufficient as a group, and an action that is necessary to achieve them. Sufficiency assumptions are expressed as: If Step 1 and Step 2 and Step 3 (S1, S2, and S3) . . ., then the higher-level step can be completed.
In order to build the tree, it is prudent to start at the higher level. Start with an objective. What is the purpose of this system? What is the reason for the system’s existence?
What is the action (tactic) necessary to achieve this purpose? We write all actions necessary to achieve this purpose in the present context