What keeps TOC confidential? (and me angry)

It is one of the frustrations for Theory of Constraints (TOC) enthusiasts: why is their beloved business philosophy so barely known?

No other, neither Lean nor Six Sigma had such a visible high-flying banner like “The Goal”, the (probably) first business novel*, sold over 6 million copies so far. If readers have been so many and as it is reported so thrilled by the content, how come only very few people know anything about TOC?

*The Goal is a business novel written by Eliyahu Goldratt and Jeff Cox. https://en.wikipedia.org/wiki/The_Goal_(novel)

In this video interview, Nicolas Hennion shares his views, answering Philip Marris’ questions.

The first question about the name “Theory of Constraints” was also discussed with Bill Dettmer, another TOC expert with a pragmatic point of view.

I totally share Nicolas’ frustration about TOC Body of Knowledge being overprotected and monetized.

In my case, I stopped my learning journey in the mid-1990 when Internet was still young and not that populated with available free material as nowadays, Amazon did not exist and buying books from foreign countries (remember I am a Frenchman) was expensive and complicated. I resumed studying TOC and the Thinking Processes developed in between in around 2010, buying carefully chosen second-hand books, still shockingly expensive.

I estimate I’ve lost 10 years in my TOC learning journey, being disappointed about the difficulties and costs to get to the educational material. I turned to Lean instead, and did well.

When the TOC old guard wonders why TOC is still confidential, they should rewind Nicolas’ interview and try to understand the way the younger generations operate; networking, sharing, hacking open source style.

Food for thoughts…


Related: Theory of Constraints is something great, except for its name


 

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Critical Chain and Lean Engineering, a promising pair

Critical Chain Project Management (CCPM) has proven its effectiveness to terminate projects on time and even quite often before estimated finish date.

In development, engineering or Maintenance Repair & Overhaul (MRO), using CCPM can give a significant competitive advantage.

It can outperform slower competitors, earn premium for faster achievement and/or allow multiplying projects within similar timeframe and often with same resources.

CCPM is the perfect companion for Lean Engineering, giving the means to win the race-to-market and multiplying new product launches.

True Lean Engineering is something long to develop and “install”, it’s about learning and developing a reusable knowledge base as well as turning engineers into Lean thinkers.

Terminating projects earlier and multiplying them offers the learning opportunities to test and gather knowledge.

CCPM is therefore a good Lean Engineering “forerunner” giving a competitive advantage faster than the sole Lean Engineering initiative.

What CCPM per se does not is discriminate added-value tasks and non added value, the wasteful tasks listed in a project in a Lean thinking way.

Of course, when CCPM takes care about the capacity constrained resources, it invites to check the content of the tasks and scrutinize the proper use of those precious resources, thus calling for Lean-minded scrutiny.

CCPM acts then as a focusing tool for Lean-minded analysis and improvement.

These two, Critical Chain Project Management and Lean Engineering, seem to make a fine, promising pair.
Something to consider.


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How can Theory of Constraints help startups – Purpose, Goal and how to achieve it

I believe most entrepreneurs started with a brilliant idea, a new product, a smart solution, new services… and the underlying desire to write a story on their own, not for a boss.

The startupers then start up as the brilliant new offer needs funding and some structure to bring it to the world.

But how many entrepreneurs started with a higher Vision, a Purpose beyond their product, smart solution or new service?

Once the initial project gets some uplift and before the scarce resources are wasted on inadequate investments, a short pause to think about Purpose and Goal is recommended.

Entrepreneurs, what is the Purpose of your undertaking? What is your Goal?

Make money now and in the future” are probably chanting those who got their basics about Theory of Constraints, first edition.

I don’t think that making money is the main driver for startupers, because if it was, a majority would go for more secure ways to achieve their goal and startuping wouldn’t be that popular.

There must be others drivers, each personal to the entrepreneur. Whatever the Purpose is, it is a Goal that requires some Necessary Conditions to be fulfilled in order to achieve it.

And precisely here Theory of Constraints can help, providing guidance and a structuring process with the Goal Tree!

I described extensively Goal Trees already on this blog, but in short the Goal Tree is a logical network of nested Necessary Conditions, describing what is absolutely necessary to achieve prior to achieve the Goal.

Taking some time to verbalize the Purpose or Goal of the undertaking and listing the first Necessary Conditions will give guidance about what is required and what to focus on. With this high level description of requirements, the entrepreneur can wisely allocated limited resources to what is contributing to achieving the Goal and avoid wasting them on nice-to-haves or totally off-topic things.

The Goal Tree stands out among other tools and methods with its merciless necessary-logic base: whatever does not answer the “in order to achieve… we must…” in a robust and logically sound manner is to be discarded.

Besides its robustness, building the first, most strategic layers of a Goal Tree requires only about a couple of hours, provided the Purpose / Goal is clear…

Once the Tree is built and scrutinized, amended and declared satisfactory, it serves as a guiding map and a benchmark.

Over time, the entrepreneur should check how many of the Necessary Conditions have been fulfilled (turned Green) and what is still to be achieved to get closer to their Goal.


>Related: Goal-Setting Theory and Goal Trees


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What are Categories of Legitimate Reservation?

Categories of Legitimate Reservation (CLR) are rules for scrutinizing the validity and logical soundness of Theory of ConstraintsThinking Processes logic trees and diagrams.

As with most of simple looking methods and tools, it is easy to get trapped or misuse the seemingly simple logical tools proposed by the Thinking Processes. In order to prevent decision making and actions based on flawed analysis, the CLR provide effective rules to check and validate the logical soundness of the various trees and diagrams.

Bill Dettmer call them “logical glue” that hold the trees together. In “The Logical Thinking Process”, Bill provides a full chapter (34 pages on the CLR).

There are eight Categories of Legitimate Reservation:

1. Clarity: is used to check the complete understanding of a word, idea or causal connection and avoid ambiguous wording. All the trees and diagrams are also good communication support, it is therefore important to insure the content is fully understood by anyone, even people not involved in the trees and diagrams construction.

2. Entity Existence verifies the reality or existence of the stated entity in the reality of the scope of analysis or problem solving. Sometimes people confuse building logical Thinking Processes trees and brainstorming, adding entities which are assumptions but not proven realities.

3. Causality Existence is the next thing to verify. Does the cause really lead to this effect? It is then important to read aloud the relationship, for example: “if A exist, then B exist” or “in order to have B, we must have A”.

4. Cause Sufficiency looks for one (set of) cause(s) to be sufficient by itself to create the effect. In complex systems, several independent causes could lead to the effect (logical OR) or some causes may combine to produce a given effect (logical AND).

If one legit cause remains hidden/unknown, the injections (solutions) may not always prevent the effect to occur. It is therefore important to list all causes.

5. Additional Cause is the check if no other cause, not mentioned so far, could have the same effect.

6. Cause-Effect Reversal checks the possible confusion between cause and effect.

7. Predicted Effect Existence is the search for an (additional expected and verifiable effect of a particular cause. Dettmer states that this reservation does not stand alone, but helps to validate or invalidate causality existence. If another predictable effect appears with this cause, the cause exists. If the additional effect does not show, the cause existence is very likely invalid.

8. Tautology, also called circular logic, is checking if the effect is not the sole and insufficient proof or rationale offered for the cause existence. It happens mostly when the cause is intangible: I strongly hopped for good weather ==> the weather was good because I strongly hopped for it.

“Long arrows”

Looking for “long arrows” is not formally part of the CLRs but I see it as such.

Long arrows are logical relationships linking causes to effects skipping multiple intermediate cause-and-effects, usually because the analysts know the intermediate links and do not feel necessary to describe them.

The risk of long arrows is to confuse people who weren’t involved in the tree building and/or are not sufficient familiar with the subject or situation.

Long arrows may also appear as flaws in the tree construction, thus making people reading them or attending a presentation doubt about the robustness and soundness of the whole.

The only acceptable long arrows, which are purposely used, are for Executive Summary Trees. And in this case, some caution is advised.


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How Lean can help startups – Do not repeat mistakes of established companies 2/2

Entrepreneurs, at the beginning of a new venture, have limited means and therefore should be waste-aware in order not to spoil their so limited resources.

>Have you read part one?

Waste is a central Lean concept widely known and documented. Here is the minimum to know about waste:

Waste is consuming resources without value creation.

Taichi Ohno, father of the Toyota Production System, has codified the various types of waste. Himself and his team spend significant time on factory shopfloor to observe and understand how and where waste happens.

Waste comes in 3 major families: Mura, Muri and Muda. These, although originally observed in manufacturing, are generic and transferable to any industry or business.

Variability (Mura) produces unpredictable results, uncertainty and variation in quality and delivery. Variability may lead to redo or correct what has already be done, thus “costing the double”, especially when the first widget has to be scrapped or a file discarded, etc. The impact of variability are dissatisfaction and corrective actions inducing additional costs.

The unreasonable (Muri) is the use of inadequate and / or poorly dimensioned resources, which carry risks on quality, safety or health; having people lifting heavy loads, overloading a transportation cart… Other Muri are more impacting costs, like renting a large office when a small one is enough, using a sledgehammer to crack a nut…

“Operational” waste (Muda) were classified into 7 original types to which an eighth was added later:

  • Waste from overproduction
  • Waste from waiting times
  • Waste caused by transport
  • Wastage due to unnecessary inventories
  • Waste in processes (overprocessing)
  • Unnecessary human movements
  • Wastage due to defects / poor quality

and the eighth: waste of human talent

The bigger an organization, the more opportunities to create waste exist: people and processes work with poor coordination, which means waiting, piling up of Work In Progress (another word for inventory), working on wrong versions…

The bigger the organization the more transportation of physical goods between departments (parts, paperwork, material, documents…) and human motion (walking, handling..), handovers, etc.

The list of examples can go on endlessly. It was all experienced in established companies.

For more details about the Lean obsession about waste, I invite you to refer to the related post.

How can this help startups?

Being waste-aware will help prevent waste. Remember: especially at the beginning resources are scarce and should be used wisely.

It is a question of sound management as well as a showing respect to the prime investors trusting the wannabe company.

It is far easier to prevent waste than to fight to reduce it afterwards, another learning from established companies.

So for instance when planning a layout, it should be done in a way to minimize unnecessary motions, handling, transportation and so on.

To avoid overprocessing and overproduction, think about Minimum Viable Product: the demo widget does not have to be perfect nor to come in huge numbers.

When defining a product or service features, remember that “best is enemy of good”; the customers may not want to pay for all the fancy bells and whistles.

Create a culture of “right first time” to minimize quality issues and the burden of rework or redo.

Wraping up

Waste is burning resources without creating value. Some of these wastes are inevitable and should be minimized, others are avoidable and should be eradicated.

Wastes, their effects and ways to prevent them are widely known and documented, therefore entrepreneurs have interest in using the accumulated and shared experience in order to avoid repeating bad practices.


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How Lean can help startups – Do not repeat mistakes of established companies 1/2

If there is one way Lean can help startups, it is to provide guidance or “Lean inspiration” from the very beginning and prevent them reproducing the same mistakes of long-established companies.

>Lisez cet article en français

Most established businesses are built on an outdated model in most cases: the mass production of low variety products, regardless of the actual reality of their business.

This model is characterized among other things by:

  • an organization built on functional silos
  • hypertrophy of overhead functions called “support”
  • a pyramidal hierarchical structure
  • an obsession about lowest unit cost
  • seeking economies of scale

This set of characteristics influenced the structure, management procedures and the rules of the organization.

Yet most startups are preparing to face a demanding market awaiting highly customized products in small volumes, possibly with specific additional services. They may go for pure services e.g. mobile apps, something relatively new compared to established businesses settled before the Internet or mobile phones even existed.

Consumption patterns have greatly changed. Owning something in full property is no longer the single or even principal modality in some cases, think about pay per view, download on demand, rental, subscription and freemium for example.

Thus, a business in creation must adopt a structure fit for the different upcoming challenges:

  • customer satisfaction, which notably includes timely access to services they request; pre-sale consulting, delivery, after-sales service, installation assistance and / or operation, maintenance, etc.
  • the satisfaction of stakeholders, the partners, suppliers, investors, employees, possibly residents, local authorities, etc.
  • the satisfaction of regulatory and legal requirements, including tax, accounting, social, etc.

and all this in a sustainable way.

This structure will evolve over time, because the requirements are not the same depending on the size of the company, its markets and business volumes.

The difficulties that established companies face when looking to return to leaner structures, should encourage entrepreneurs to remain vigilant and embed Lean into the Vision from the start.

It starts with thinking in terms of value-creation flows rather than operational subdivisions. It is often related to as “value chains” or “value streams” that are built specifically to quickly deliver the value expected by customers, without being disturbed nor burdened by artificial , expensive “additions”, without significant contribution to value creation.

The examples which we can think of are:

  • tending over complicated dashboards and lengthy reports
  • installing quality controls to filter and retain defective products
  • granting statutory functions, well paid but non-contributory
  • multiplying hierarchical levels

Experience shows that once such structures are in place, holders, beneficiaries and “supporters” will find ways and means to justify their continuation and even strengthening them, this is Parkinson’s Law.

It is therefore easier to be vigilant and to control the development of such (often called supporting) functions:

  • put in place only what it is a strictly necessary condition for the satisfaction of non-negotiable demands or requirements, by customers, markets or regulation
  • keep them “minimum” from the start rather than fighting desperately to restrict them later
  • do not hesitate to dismantle or convert them if the original requirement disappears or can be satisfied by a more flexible, more efficient or cheaper alternative

>Move on to part two


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Why secret weapons can’t remain secret 

A secret weapon, in its metaphorical or literal meaning, is a means that trumps the actual known ones. It brings a decisive advantage to its user/owner, is more effective and… unknown.

A secret weapon will create a surprise and grant its user a favorable opportunity to exploit,  and if exploited properly can lead to victory.

Once the competition – in warfare or business – aware of the existence of a secret weapon, it will relentlessly try to gather information about it, destroy it or get one too in order to restore balance.

A good reason for the owner to keep on trying keeping it secret and competition to catch up. What eventually will happen.

On the other hand, at some moment it will be politically, strategically or “marketingly” smart to advertise on the competitive advantage and reveal the secret.

For those reasons a secret weapon can’t remain secret.

This is the case with Critical Chain Project Management (CCPM), a “new” approach still somewhat “confidential”.

When we applied it to aircraft MRO and helped our client to halve the aircraft turnaround time, we helped our client to forge a competitive advantage. And when we wanted to advertise about the achievement, the client was reluctant to “give away his secret weapon”.

Well, I thought, how long do you think it will take for word of mouth to spread? How long before your sales team will boast about shorter aircraft grounding? How long before the information will leak via informal channels?

In business it is useless to waste energy trying to keep the secret weapon secret.

On the contrary, focus should be on exploiting the competitive advantage, advertising heavily on it and quickly reap as much profit as possible before competition closes the gap.


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