Theory of Constraints Handbook - James Cox Iii [652]
Dr. Boyd has published articles in the Journal of Cost Management, Production and Inventory Management Journal, International Journal of Production Research, International Journal of Operations and Production Management, Journal of Education for Business, and Industrial Management. Dr. Boyd lives in Crestwood, Kentucky, with his wife Rose and children Lisa and Derek.
CHAPTER 34
Applications of Strategy and Tactics Trees in Organizations
Lisa A. Ferguson, PhD
Introduction
After being exposed to writing a strategic plan using the application of the Strategy and Tactics (S&T) tree (a Thinking Processes tool of TOC), a Fortune 500 executive referred to his company’s past planning efforts as “amateurish.” How can organizations be much more effective in strategic planning and execution of that plan? This chapter explains why the S&T tree is the tool for achieving this.
In order to address how to improve strategic planning, let’s first discuss the purpose of a strategic plan. This plan provides an explanation of the specific actions to be implemented over the next several years to achieve the high-level strategy or goal of the organization. Strategic plans are divided into the necessary strategies and tactics that have been agreed upon by top management.
We tend to think that strategy is what the top level of the organization focuses on, while the tactics are what the lower level of the organization implements. How do we move from strategy to tactic in our planning process? The literature does not provide clear answers on this subject. To find the answer, it is helpful to understand how this type of obstacle has been overcome successfully in the past. When Einstein came up with his Theory of Relativity about time and space, he first had to begin by defining time. Once he realized that there was no agreement in the literature on a definition of time, he came up with his own: Time is what is measured by a clock. With this definition, he was able to develop his theory. Dr. Eli Goldratt (founder of TOC) followed Einstein’s example in order to develop a theory and application for strategic planning. He defined strategy as the answer to the question “What for?” and tactic as the answer to the question “How?” With these definitions, we realize that for every action, both of these questions can and should be answered.
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Strategy (S): Answer to the question “What for?”
Tactic (T): Answer to the question “How?”
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Copyright © 2010 by Lisa A. Ferguson.
The S&T tree is the name of the theory and application of strategic planning in TOC. The purpose of this chapter is to provide an understanding of various applications of the Viable Vision S&T trees for organizations. A Viable Vision (VV) is a plan for how to become an “ever-flourishing” organization. An ever-flourishing organization is one that continues to grow exponentially, while maintaining stability at the same time.
S&T trees are a powerful tool for synchronizing all the actions needed to achieve the high-level strategy of an organization and for communication of this detailed plan to all within the organization. S&T trees can be used by any organization to achieve its strategy, not just ones focused on achieving a VV.
On Becoming an Ever-Flourishing Organization
The top strategy of the VV S&T trees is: The Company is solidly on a Process of Ongoing Improvement (POOGI). For a company to prosper it must be on POOGI; otherwise, competitors will just wipe out the company (eventually). What is the meaning of POOGI? Performance of the company must improve over time. Under this definition, two conceptually different curves exist—the red and green as shown in Fig. 34-1. Note that each curve represents a concept and that there are multiple possibilities for each curve.
Both show performance improving. Which curve looks more realistic to you and to the people in your company? Most will answer that the green curve looks more realistic and believe that a red curve may only be possible for a short period