Theory of Constraints Handbook - James Cox Iii [634]
Entities or systems that go beyond the definition of complex organizations, that is, those that are quite unpredictable and lacking even a rudimentary flow structure (such as in sociology or politics) we will refer to as chaotic systems. A chaotic system has many processes, policies, and procedures that frequently change and confound the solution space. While elements of the TOC proven solutions may help find a solution in chaotic systems, there is not a generic solution. Such systems require the TOC Thinking Processes (TP) to develop a solution.
In complex organizations, as in most organizations, the various departments or units each focus on maximizing the performance of their own limited resources. This aspect of the definition of complexity can apply to small organizations, such as an elementary school (each teacher trying to do the best for his or her classroom), or huge organizations like a country’s armed services (and many other types of organizations in between). One could argue that complicated organizations without a single strong, integrating TOC solution often appear as complex organizations. As a result, the solution for complex organizations may be helpful in some complicated organizations.
Major Problems with Complex Organizations
Complex organizations suffer the same problems with on-time delivery, quality performance, sales, inventory management, and unstable workloads that have been discussed in earlier chapters of this handbook. Those issues, however, are exacerbated by the problems of connecting the different parts of the organization and motivating local managers to maximize global Throughput rather than local measures. The problem of multiple interactive constraints in a quickly changing environment is aggravated by many near constraints operating within local optima guidelines and without a clear, overriding schedule. This problem is similar to the significant shift from single project CCPM to multiple-project CCPM (as discussed in previous chapters). In single-project CCPM, all conflicts are removed in the planning stage and Buffer Management (BM) manages the task variability in execution. In multiple-project CCPM, eliminating every conflict is a poor solution that is inefficient, too long, expensive, temporary, and impractical.2
In complex organizations, the different product divisions, departments, resource silos, supporting plants, subcontracting entities, and other individual business units within the organization cannot all be synchronized for the same reasons that multiple projects cannot be synchronized in multiple-project CCPM. In addition, while the resources in one business unit are not always available to assist other business units, the effectiveness and efficiency of the overall organization are tied to the availability and allocation of resources and cooperation between all interested elements. In the economics literature, these problems are referred to as diseconomies of scale—problems of communication, coordination, and control that eventually overwhelm economies of scale as organizations grow larger and cause companies to become uncompetitive. Let’s focus on those areas.
Undesirable Effects of Complex Organizations
Complex organizations frequently experience these typical undesirable effects (UDEs) to a varying degree:
1. Most of the experts are heavily overloaded.
2. Resources are not available when needed. Project managers hold on to experts, saving them for their next project.
3. Much work has to be done by less qualified experts.
4. There are too many needless delays.
5. Too often, the promised content is not achieved.
6. It is very difficult to respond quickly to every customer demand.
7. There is a frequent mismatch between what the customer wants and the resources available to perform the tasks.
8. Sometimes, our very expensive resources are left idle.
9. Promises are made without confidence in our ability to deliver.
10. The organization