Theory of Constraints Handbook - James Cox Iii [665]
The huge pot of gold is the strategy in Level 1. The strategy points out what the pot of gold is and that we can do it. It must be a strategy to which all would readily agree. Next we show how steep the cliff is (Step 2)—these are the PAs summarized in the tactic of Level 1. We show that we have nothing to hang on to in order get up the cliff. The PAs show how impossible it is to reach the pot of gold.
Step 2 of the plus buy-in process shows why it is not going to be easy to reach the pot of gold. The last PA of Level 1 usually shows why there is hope, but is not always in an S&T tree. The tactic states what will be done to reach the pot of gold, after establishing why this is the case in the PA’s. The pot of gold may be a target they wanted to reach before, but decided was not possible to achieve. Step 2 is for generating credibility, to bring insight to the executives about how well we understand the problem of reaching the pot of gold. They will be more inclined to listen to us because they will assume we might have found a solution. The PAs establish the parameters of the solution—what the solution has to address.
The NAs in Level 2 of the S&T tree are the anchor for the ladder—the third step of the plus process. The rest of Level 2 is the silhouette of the anchor. Level 2 is about how to meet the needs of the stakeholders, such as those of the external market. We consider the purpose and essence of the organization to write this level.
Level 2 below the NAs and Level 3 (which is how to build, capitalize, and sustain the DCE in the VV S&T trees) of the S&T tree are the ladder (Step 4 of the plus buy-in process)—the major rungs of the ladder and major ways in which to break your legs (Step 5 of the plus buy-in process). First, we start with showing the rungs of the ladder to climb, and then we think of major ways in which to break our legs, especially ways that can happen when we are successful.
Level 3 provides the method for achieving the strategies and tactics, but no clue how to do it. In the VV S&T trees, Level 3 explains how to build, capitalize, and/or sustain the DCE. In the VV S&T trees, Level 3 typically starts with an implementation of one of the logistical solutions of TOC (Pull Distribution, Critical Chain Project Management, or the TOC production solution of Drum-Buffer-Rope/BM). Then, if needed, a marketing or sales solution of TOC is implemented to capitalize on the DCE achieved through the logistical solution. Finally, to sustain the DCE, we are focused on how to ensure that the performance does not deteriorate as sales increase.
Every time we go down a level in the S&T tree, we are detailing the steps of the ladder. Level 4 is the level in which we are making the switch to TOC through the “golden assumptions.” These types of assumptions of Level 4 explain what we can do. In other words, we are moving from theories into practice (the actions move from being a direction to being practical actions). In reality, we tend to call everything above the golden assumptions strategy and everything below them tactics. This is why people have the belief that the strategy is for the high level of the organization and the tactics are for the low level. This explains how the S&T tree concepts fit with conventional views of strategy and tactics.
There are cases when Level 5 does not need to be written. Here are the considerations. Are there any real difficulties to do the step in Level 4? Are there fundamental concepts that must be changed? In these cases, we need to write Level 5. We should also think about typical mistakes that might be made in implementation. We check to see if the conventional way of doing the step in Level 4 would result in mistakes. Level 5 is written if a change in a key belief is needed. Level 5 presents the actions and the implementation issues. Once Level 4 has been validated, management has already agreed to make the required changes. The logic of the how to do it is in Level 5.
The criteria for judging a solution listed below were kept in mind when writing S&T trees.7