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Using TOC to Avoid Disappointment in Improvement Programs

This paper is based on a presentation made by Frank Patrick at the 2002 National Solutions Conference of the Institute of Industrial Engineers. A copy of the paper, in MS Word format for offline reading, is available for download through this link.


Organizations are brought together for a purpose — a goal. From time to time, the continued attainment of that goal requires changes in policies or processes in response to a wide range of pressures or predicaments. The practice of management can be defined, at least in part, as the analysis, development, and implementation of such adjustments or improvements in organizational systems. As such managers and associates often find themselves involved in improvement programs and processes. But unfortunately, too often, the results of these efforts are disappointing.

Some Definitions

Before we proceed, a few definitions are in order. First, disappointment is a feeling of sadness or frustration because something was not as good, attractive, or satisfactory as expected, or because something hoped for did not happen. The writer suspects that this word is familiar to those involved in improvement programs.

Improvement can, in general, be considered the process of making something better or of becoming better. But better, itself needs a context or definition as well. Since, as mentioned in the opening, organizations usually come together for a purpose or goal, both better and improvement need to be considered in relationship to the attainment of more of one’s goal(s).

The title of this article also refers to “TOC.” TOC is the Theory of Constraints, a philosophy of managing organizations, with a supporting body of knowledge that includes logical tools for analysis, design, and communication of strategies to improve system performance. In addition, these tools have been use to develop a set of generic “starting point” applications for various common organizational processes, consistent with the underlying philosophy. Originated by Eliyahu M. Goldratt, TOC is also know as a process of on-going improvement based upon focus on the few constraints that prevent a system from achieving more “goal stuff.” In some quarters, it is also known as “Constraints Management.” The specific and relevant concepts, tools, and applications of TOC will be introduced as appropriate later in this article.

Three Simple Questions

As mentioned previously, many organizational improvement programs lead to disappointment. They don’t meet expectations. They take a disproportionate amount of effort compared to results. If they don’t result in “sadness,” at least “frustration” is a common outcome. There are usually plenty of specious excuses for these less than satisfactory results, but there is also a set of real roots of this disappointment that, if recognized, can be avoided if given appropriate forethought. These roots can be categorized in terms of the three basic questions faced by management:

1. What to change?
2. To what to change to?
3. How to make the change happen?

What to change? First and foremost, disappointing improvement results come from failing to truly answer this question, or just as likely, failing to ask it. Unless the question of “what to change” is explicitly addressed at the strategic, tactical, and operational levels, any significant and sustainable benefit of the "improvement" is a matter of chance. Roots of disappointment associated with failure to clearly identify "what to change" include:

  • Effort wasted on local improvements with little or no consequence to global performance
  • Improving symptomatic situations without addressing deeper root causes
  • Jumping to solutions inappropriate for the specific system
  • Abandonment for a new "program of the month”

To what to change to? Assuming that an appropriate understanding of the real situation is developed, there are still a number of pitfalls facing improvement programs that result from the design of those improvements. Without development of a clear cause-and-effect understanding of the improvement effort, there is no way to predict the results with any confidence. Without this understanding, there is no way to truly assess whether particular tactics are truly supporting the overall strategy of improvement. Without getting a meaningful answer to this question, one is forced to either proceed with uncoordinated trial and error, or to borrow “benchmarked” solutions with the irrational expectation that because it worked for someone else, it will work in our system. When the question of what to change to is shortchanged, significant results can be lost to:

  • Jumping to solutions without truly assessing their improvement potential
  • Focusing on "low-hanging fruit" and forgetting about the health of the “tree” as a whole
  • Failure to take into account implications beyond the immediate target of the "improvement"
  • Being successful and not being able to take advantage of or build upon that success (or even backtracking due to such a blockage)
  • Allowing immediacy to threaten sustainability

How to make the change happen? No matter how well thought out a target and direction for improvement is put together, in the end, it boils down to three things: implementation, implementation, and implementation. Putting in place a significant and sustainable improvement deserves and requires careful planning, support of the necessary players, and tracking of expected outcomes along the way in order to effectively carry out those plans. Otherwise, program and effort results can fall to:

Failure to achieve buy-in for cooperation, collaboration and co-ownership

Lack of focus on the task at hand

Distraction of participant's local concerns

Failure to see progress toward significant objectives and a loss of momentum

What to Change? — A Holistic Two-Dimensional View

Many managers can probably recognize at least some of these common failures as a source of disappointment in their improvement efforts, and by reasonable extension, in their organizational performance. Avoiding them requires both systemic and systematic thinking in the targeting, design, and implementation of improvement. As suggested by the Theory of Constraints (TOC), this requires an appreciation for the holistic understanding of the organizational goal and the primary aspect of the system that prevents achieving more of that goal.

This holistic understanding requires a two-dimensional view. The first dimension is the logistical “value chain” of interdependent processes and functions. Since no individual link of such a chain is capable of delivering the value that the full chain can, this map of “what we do” constitutes the understanding of how inputs are turned into outputs and resources are used to get more “goal stuff.”

The second dimension of this holistic view goes deeper into underlying paradigms, policies, and measures that drive the overt behaviors and actions that constitute the first dimension. The understanding of these causal systemic pressures explains “why we do what we do” and the rationale for how we try to manage it. These two dimensions can almost be related as the overt conscious actions and the normally hidden sub-conscious (or, maybe too often, unconscious) reasons behind those actions.

Consider first the logistical dimension. A core premise of the Theory of Constraints is that no system is capable of infinite performance because there is some component of it that “constrains” that performance. At any point in time, there are very few (maybe even only one) such component, not unlike the concept of the “weakest link of the chain.”

Any chain has only one “weakest link,” and unless that link is addressed, the strength of the overall system — the chain — will not be improved. If it is addressed, then a new link takes on the mantle of “weakest.” No matter how often, or how quickly you say “good-bye” to an old weakest link, there will always be a new one to take its place. As a result, there will always be an appropriate point of focus for improvement — the weakest link.

These constraints, if properly identified and dealt with, provide the fastest route to significant improvement for the system and can provide the basis for long term, strategic improvement. If you care about the capacity and capability of the chain, strengthening any link other than the weakest is a waste of time and effort. Identifying, strengthening, and supporting the weakest link — the system's constraint — is the only way to strengthen the chain itself.

For example, in a commercial organization, if the weakest link is in it’s ability to serve existing customers due to long lead times or unreliable service, there is very little point in focusing attention on marketing programs to attract more customers. If improvement efforts in this case are appropriately and sufficiently focused on internal flow and delivery processes, the result may eventually yield productivity increases sufficient to raises capacity above demand. If so, the constraint will have moved to the market, and new appropriate efforts will be necessary to get the most out of that new weakest link — the ability to attract or close lucrative sales opportunities to take advantage of the new capacity.

Now if the appropriate focus of management attention is the system’s constraints, the question becomes how do deal with them. One approach provides a simple guide that, with a final iterative step, becomes an effective constraints-based process of on-going improvement. Known as the Five Focusing Steps of the Theory of Constraints, this approach provides a process to achieve on-going improvement by addressing these constraints in a continuous fashion:

1. IDENTIFY the system's constraint(s). You can't manage the constraint unless you identify it. And it's a surprisingly straightforward process to do so. Like a doctor assesses symptoms and draws a conclusion that they come from a common source, a review of the undesirable symptoms that an organization suffers from can quickly lead to a diagnosis of the system's constraint.

2. Decide how to best EXPLOIT the constraint(s). Since the output of the constraint is the limiting factor of the output of the whole system, our desire to exploit it translates to making sure that we are squeezing the most we can out of it. Unlike the situation with non-constraints, utilization and productivity of the constraint must be maximized.

3. SUBORDINATE everything else to the exploitation strategy. The idea of subordination suggests that our use of the constraint itself should not be allowed to be limited by any other aspect of the system, including policies, habits, and assumed requirements of non-constraints. A second aspect of subordination relates to the capability of the constraint itself. Just as it makes no sense to expect a chain to lift more than its weakest link can handle, we should not expect the system to do more than the constraint can handle. To push more work than the constraint can deal with into the system results in excess work-in-process, extended lead times, and too many conflicting priorities that often devolve into no real priority. This also drives the need to avoid pushing work into the system just to keep non-constraints utilized.

4. ELEVATE the system's constraint. Once you've isolated the constraint and are managing the system based on it, it is commonly found that there is far more untapped capacity than previously thought. But sometimes, demands for more throughput leads to the need to acquire more capacity, by finding alternatives to the constraint, offloading to other resources, or simply buying another machine or hiring more people at the constraint. Note that too often, systems under pressure skip the second and third steps and jump to capacity acquisition, investing more capital than might be necessary, if the system were managed appropriately. Step 4 — elevation — should only be considered once we've already fully exploited the constraint and subordinated other policies to that end.

5. If, in a previous step, a constraint has been broken, go back to step 1. PREVENT INERTIA from becoming the system's constraint. When the weakest link has been strengthened to the point that it's no longer the weakest link, guess what? There's a new weakest link. For example, as mentioned previously, you might raise production capacity to the point that the market is now the constraint. Or in a project, you may find a way to shorten the critical path of tasks to the point that it no longer defines how soon the project can get done. This new constraint, whether it be the market, a new critical path, or whatever, demands a whole new view of the system. So we loop back to step 1…thereby putting the "on-going" in to this constraint-based process of on-going improvement.

By using your organization's current constraint as the initial target, you will be able to apply your efforts in the most effective place, getting the most bang for the buck in the short term and setting the stage for a process of truly on-going improvement. You’ll notice that this belies the idea of the short-term improvement program, and instead transforms management to an improvement process. Maybe a single iteration of the Five Focusing Steps could be considered a “program,” focused on the current constraint, but the true purpose of management is to maintain the “process” of continual iterations of improvement to grow the ability of the system to achieve more of its goal, both now and in the future.

The second dimension of our full, holistic understanding of a system that we want to improve is that of the logical cause-and-effect system that perpetuates, or even exacerbates, the existence of the logistical constraints. In any organization’s current reality, performance (or lack thereof) is a result of the actions and behaviors of its participants. These actions and behaviors are driven by the measures of things that management has deemed important and limited by the design of the processes that are in place. Measures, in particular, are powerful drivers of performance, especially when tied to rewards or punishments. People will do foolish (or even criminal) things to make their measures look good.

Both measures and process design are driven by what might be considered policies. These policies may be informal and unwritten, in which case they constitute the organization’s culture. They may also be more formal policies, carefully crafted and communicated in the form of missions and strategies. These cultural and strategic policies — the agreed upon “way we do things” — come together to determine how we do what we do (our processes) and what we consider important (the things we measure).

Cultural and strategic policies are driven by assumptions and paradigms that define how we think organizations should be managed. These deeper beliefs are at the root of both good and bad policies, of appropriate and inappropriate measures and processes, of effective and ineffective behaviors, and of superior or inferior performance. When the result is inferior performance, the feedback most often goes to modifying processes, and maybe to policies. Too often, the feedback and modifications stop short of questioning the deeper assumptions. As a result, the organization runs the risk of only temporarily remitting from the less than satisfactory performance, and eventually relapsing due to the unattended root cause.

On the other hand, when questionable assumptions and paradigms are questioned, the likelihood of truly sustainable improvements fro quantum leaps in performance (rather than symptomatic fixes) is enhanced. But this requires the understanding of the causal linkages from the roots to the symptoms. Drawing the logical tree of cause and effect of these pieces of management and predicted behavior that defines the organization’s current reality is an important step to understanding perpetual problems and chronic constraints.

The proposed holistic view of an organizational system combines this logical cause and effect basis for action and behavior with the constraint-based logistical view of operations. If operational performance is linked, through policies, measures, and behaviors, to assumptions, and if the performance of the system’s constraint needs to be addressed in a way that will “stick,” then those assumptions associated with the management of the constraint need to be identified. And if they can be shown to be erroneous or result in conflicting measures or behaviors, they need to be corrected and aligned. This brings us to an answer for the first of our three questions — “What to change?”

The answer of “What to change?” for complex organizational issues is, more often than not, the assumptions about how the organization and its parts works. Some of the most common erroneous assumptions, if addressed here, would turn this article into a book. I’ll leave most unexpanded in the list found on this page as a provocation for the reader’s further consideration (or for later articles by the author). Of course, the specifics of the starting point for a solution, in any event, depend on the specifics of the situation.

Common Erroneous Assumptions

  • Global improvement is the sum of local improvements.
  • An idle resource is a significant source of waste.
  • The sooner you start a task, the sooner you'll finish it.
  • Good customer service requires pushing inventory out closer to the customer.
  • There is a "right price" for a product.
  • An order that has "negative margin" reduces the company's profitability.

But given the previous discussion of weakest links and chains, the first asumption in this list, “Global improvement is the sum of local improvements,” should be obviously questionable if the goal is kept in mind. It is equally applicable to the subject of this article — improving improvement efforts.

Focusing on improving the system’s capabilities to attain more of its goal — its global objective — means focusing on improving the constraint or bottleneck. Any improvements to already strong links, for example in the name of cost reduction or waste reduction, will not necessarily have any impact on getting more from the system. Indeed, emphasis on non-constraint local “improvements” will only tend to dilute and delay the results that require the limited time and attention of management and capital for investment. If we appropriately define “improvement” as actions that enhance the ability to achieve more of one’s goal(s), a lot of things that passed for local improvement will be understood to be distractions, or worse, sources of conflicts and dilemmas that make achieving the goal that much harder.

To What to Change to? — Strategic Constraint Management

So in order to avoid disappointment in improvement programs, we start by questioning the assumption of the value of widespread local improvements and instead set focus on improvements that address the capability and capacity of the system’s constraint. Continuing with our three questions in the subject of improvement efforts, we come to the second — To what to change to?

If a holistic view is necessary for the preceding analysis of what to change, a similar holistic view is beneficial for laying out the path to the objective of the change triggered by the new constraint focus. This path consists of the tactics that move an organization from one of primarily reacting to the external forces such as that of the market it serves to one of proactive strategy to become the preferred supplier to the preferred, lucrative portions of that market.

The first step in such a strategy is to improve internal system performance and capitalize it. It starts with using the Five Focusing Steps to identify and address its current internal constraints, maximizing the potential throughput of the value chain. Once this succeeds, two effects are predictable. The first is that the constraint can be expected at some point (perhaps after more than a single iteration of the Five Focusing Steps) to move to the market. The second is that the organization’s logistical performance and capability will exceed its previous performance, and therefore the requirements and commitments that its market has become accustomed to.

If the organization understands its markets, both current and potential, it can segment and price those markets based on the value of its new performance to different customers. As a result, it doesn’t just give away the benefits of its new level of performance, but creates offers for its customers that allow it to get maximum “bang for its performance buck.”

Assuming the constraint is still in the market, that is, the new performance provides new capacity and capability that is still underutilized, the organization can take its learnings with its current markets and customers and define new offers for new customers. Taking advantage of the new found appreciation for the value of addressing constraints, these new offers target the capabilities of the new performance to define and provide real value by helping customers address their own constraints. As a result, new customers and markets are attracted, eventually elevating the constraint to the point that it moves back into the internal operations. With the clear understanding of market segments and the value of performance to them, the company then has the ability to assess and address desirable lucrative portions of those markets.

With the ability to identify the lucrative customers (leaving the less lucrative for competitors, of course), the clarity and coherence of managing through constraints allows them to be used to focus the use of the constraint to serve them. Appropriate decisions for further exploitation, subordination, and elevation of that constraint can then be made, resulting in a rational on-going strategy for growth; for improvement both internally and in the value of the markets served.

How to Make the Change Happen? — Politics and Projects

Once a strategy is laid out, spelling out proposed tactics and the anticipated preferred future reality that will result with its implementation, it’s a matter of making it happen. Since no one, not even the most charismatic executive leader, can accomplish anything without the help of others, it is necessary to communicate the strategy in a way that cooperation, collaboration and co-ownership for it are the results. Once put into play, a carefully defined future reality can be the source of clear and stable priorities, at least at the macro level. This combination of communication and clarity is practical politics at its best.

Politics is just a catchall term that encompasses a spectrum of activity that ranges from clear communication to convincing persuasion to cajoling to conniving to coercion. To the extent that things in your organization get accomplished at the communication end of that spectrum versus coercion probably colors your feelings about omnipresent politics.

A culture based on effective realpolitik, i.e., pragmatic and practical politics, comes from clearly understanding and communicating where one wants to go, why to go there, and plans for getting there. Along the way, one needs to bring people to understand what’s in it for them and that going there won’t cause new problems.

One of the most important pieces of the TOC body of knowledge — the Six Layers of Resistance — provides a process to guide one through a potential political morass. In the order listed, focus on getting and moving from:

1. Agreement on the real problem, to
2. Agreement on a direction for a solution, to
3. Agreement on the efficacy of the solution, to
4. Agreement that the solution won’t cause new problems, to
5. Agreement on a plan, and to
6. Agreement to proceed

Logically addressing these steps, and making sure that earlier steps are dealt with before moving on to later ones, will help to turn political endeavors from one of conniving and coercion to growing collaboration, cooperation, and co-ownership.

The attentive reader may have noticed that the Six Layers of Resistance map nicely to our three questions of what, to what, and how to change. They also map nicely to another piece of the TOC body of knowledge — the TOC Thinking Processes. These Thinking Processes are cause-and-effect-based logical tools for analysis, planning and communicating problems, solutions, and plans to replace the former with the latter. It’s beyond the scope of this article to discuss details of logical clouds and trees that make up the Thinking Processes, but a brief overview should suffice to describe them and how they fit into improvement efforts. Such details are available in another article by the author, Using Resistance to Change and the TOC Thinking Processes to Improve Improvements. The following description is based closely on a summary of that article.

What to change? The Current Reality Tree links diverse undesirable effects (such as the persistence of a constraint) to root causes or conflicts that are the most efficient/effective things to attack. What to change becomes the logically demonstrated and agreed upon source of problems (Layer 1).

To what to change to? The Evaporating Cloud identifies an out-of-the-box starting point – a direction for the solution (Layer 2). The Future Reality Tree fleshes out the complete solution – the complete strategy for turning the collection of local undesirable effects into desirable outcomes (Layer 3). Finally, the Negative Branch Reservation completes that strategy/vision by adding things needed to avoid unintended negative consequences (Layer 4).

How to make the change happen? The Prerequisite Tree turns obstacles into an implementation plan so that ambitious outcomes can be achieved. The building of a plan as a group, based on individual input of foreseen obstacles, allows the team to become synchronized in its understanding of the task ahead of them and how their parts fit in to the whole. The Transition Tree (when necessary) gets into deeper levels of detail for paths of action, relating them to expected outcomes along the way (Layer 5).
The TOC Thinking Processes, addressing five of the six layers of resistance (the last — lack of agreement to proceed — is far easier to attain if the first five are clearly and certainly addressed), help link the three questions into a seamless process to assure complete construction, coherent communication and collaborative co-ownership for truly meaningful and powerful improvements.

But implementing the tactics along the way to this agreed-upon strategy also requires individual efforts — efforts that need to be managed along with day-to-day needs of the business. If productive change or improvement is, along with day-to-day satisfaction of customers, a valid subject for management time and attention, than those efforts need to be managed as well. If managed effectively, we again have clear and stable priorities — this time at a micro day-to-day level as well.

Effective project management provides processes for turning projects into relay races, with well-defined tasks and handoffs, and planning and control mechanisms that assure that resources are in place to accept those handoffs. This starts with efforts that have clear bottom-line improvement objectives, supporting deliverables and success criteria defined by the needs of the strategy. Scheduling and tracking processes that recognize the inevitability of Murphy’s Law, yet minimize the effect of Parkinson’s Law are needed to make rational project promises and, in execution, keep those promises. The third requirement for successful improvement projects, which usually live in either a multi-project or project and day-to-day work environment, is a sense of clarity of priorities so that necessary resources can make informed judgments regarding the best use of their time. TOC, as applied to the realm of project management and multi-project management, has resulted in a coherent and consistent set of processes, including Critical Chain Scheduling and Buffer Management, that yield, at minimum, these basic requirements for success with projects.

And success with projects that are defined and designed to address the constraining situation in an organizational system yields efficient and effective implementation of real improvement.

Summary - Don't Do Improvement Programs!

In summary, in order to avoid disappointment in improvement programs, don’t do improvement programs! Instead, effective management calls for the implementation of a consistent process of on-going improvement — a strategy for focused change.
As suggested in this article, this process needs to answer the question of “what to change” by recognizing the importance of the system’s constraint and by addressing the erroneous assumptions and paradigms that impede real, sustainable, bottom-line improvement. Once this new understanding of the organizational system and the source of serious problems are identified, “to what to change to” becomes obvious. Incomplete, unconnected, possibly conflicting local improvement programs need to be replaced with a consistent, constraint-based strategy and process for on-going improvement. Only when this new context is clearly delineated can an effective improvement process be implemented. Constancy of purpose, communication of proposals aimed at assuring collaboration and co-ownership, and clarity of priorities are at the core of “how to make the change happen.”

TOC — the Theory of Constraints — not only provides insight at a conceptual level, but also provides tools for analysis and design, functional applications for supportive local improvements, and processes for necessary buy-in. Probably even more important, the TOC approach to analysis, design and implementation is a scalable process that can result in an all-important holistic approach for getting out of the cycle of ineffective improvement programs and into a true strategic process of on-going whole-system improvement.


The Goal. Eliyahu Goldratt, North River Press, 1992.

It’s Not Luck. Eliyahu Goldratt, North River Press, 1994.

What is This Thing Called the Theory of Constraints? Eliyahu Goldratt, North River Press, 1990.

Thoughtware, Change the Thinking and the Organization Will Change Itself. J. Philip Kirby and David Hughes, Productivity Press, 1997.

Management Dilemmas. Eli Schragenheim, St. Lucie Press/APICS Series on Constraints Management, 1999.

By the author...

Taking Advantage of Resistance to Change,
IIE Solutions Conference 2001

Beyond the Fishbone - Root Cause Analysis for Complex Systems

Getting Out from Between Parkinson’s Rock and Murphy’s Hard Place,
PM Network Magazine, April, 1998

Program Management - Turning Many Projects into a Few Priorities,
PMI International Symposium, 1999

Unconstrained Thinking - A Series of Essays on Correcting Erroneous Assumptions

What concerns me is not the way things are, but rather the way people think things are. - Epictetus

Related links:

TOC and Six Sigma - Better Together

Clear Focus Planning - A Leadership Workshop for Building Your Future - A fast and effective process to align your efforts for success.

Unconstrained Thinking - If You Fail to Plan... - You know what you can plan on.

Unconstrained Thinking - A Route to Roots - A short piece on getting to root causes and core problems for complex systems (aka organizations)

Small Business Strategy - Think you're too small for strategic planning and structured problem solving? Think again!

Unconstrained Thinking - Strategy for the Masses - It's easier, and can be quicker, than you might think.

The Strategic Constraint and (local) Department Goals

TQM and Constraints

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